KID STUFF 2004-08-30 (1)

LYNNE MILLER

Retailers are milking sales from the dairy aisle with a new wave of milks, yogurts and cheeses specifically aimed at kids.

The kids dairy category isn't easy to measure, since many products popular with children, such as flavored milks, appeal to adults as well. For that matter, not all kid-oriented dairy products are runaway best sellers. Yet, certain categories and certain brands are experiencing explosive growth. It's definitely not kid stuff for retailers who monitor the category.

"You'll never see the kids category go away," said Britt Lindemann, who oversees dairy as a member of the shelf management team at Kowalski's Markets, St. Paul, Minn. "That category is going to keep growing."

Helping the category is recent research that touts the health benefits dairy products provide children, including one study that indicates dairy consumption may ward off obesity in teenagers. Products that pack convenience with a healthy image are in great demand, according to retailers.

Yogurt may lead the pack in the dairy aisle. Never before have consumers had so many choices of yogurt, widely regarded as a healthy food packed with calcium and other nutrients. Unlike milk, yogurt consumption has been growing steadily, and yogurts aimed at children are, in part, driving the growth.

Dairy managers at Yoke's Foods, Spokane, Wash., are taking a closer look at yogurt multipacks, since they sell at higher retails than single cups, and also have better margins. Four-packs, six-packs and eight-packs are becoming increasingly popular with shoppers, particularly those with young children, said Russ Martin, category manager for the 12-store chain.

While multipacks don't represent the majority of category sales, volume is up thanks in part to store promotions, while single sells are down a bit, he said. The retailer promotes multipacks regularly in store circulars, and that's helped boost sales.

Yoke's makes yogurt a priority. The retailer's stores typically offer bigger yogurt sections than competitors' stores -- 12 to 16 lateral feet vs. 8 to 12 at other supermarkets. Martin said. Kids' yogurt products occupy the second shelf from the bottom of the cases.

"We're reviewing what we want to do with the entire dairy case," Martin told SN. "We're trying to find a way to increase our profit dollars. Multipacks are the way to go." The kids market "is part of that scenario."

In the Twin Cities, yogurt multipacks and individual cups are strong performers in the dairy aisles at Kowalski's nine stores. The number of kid-oriented yogurt products has increased significantly in recent years, Lindemann said. Depending on location, the stores carry from six to 12 stockkeeping units of kid-oriented yogurts.

"I'm not sure it's the leader in the dairy category, but it does quite well," Lindemann said, noting individual yogurt cups are consistently strong sellers, too.

When targeting the kids market, dairy marketers appeal to parents by positioning their products in a healthy light and making them conveniently portable and ready to eat. But another equally important product attribute is strictly for the kids.

"They're fun," said Katie Koppenhoefer, spokeswoman for the International Dairy Foods Association, Washington. "There are yogurts out there with sprinkles you mix in, and the yogurt changes colors. Eating something out of a tube is fun for kids. If it's a healthy food that kids perceive as fun, they'll be that much more likely to eat it. A lot of companies are partnering with characters in movies that appeal to kids."

For instance, she pointed to Bravo! Foods International. The North Palm Beach, Fla.-based marketer of vitamin-enhanced, flavored milks has a licensing agreement with Marvel Enterprises to use its celebrity Super Heroes to promote branded single-serve milk products. Marvel owns some of the most beloved characters known to children -- Spider-Man, Wolverine, the Incredible Hulk, Daredevil and Captain America. Bravo's line of Slammers Ultimate Milkshake milk drinks features images of the heroic characters on its packages. Launched in the spring, the Slammers brand of flavored milk is in supermarkets as well as convenience stores.

Flavored milks, especially chocolate varieties, are a bright spot in Yoke's dairy cases. Gallons of chocolate milk are top sellers, but most of the other popular flavored milks are grab-and-go, ready-to-drink products that tend to be impulse purchases, Martin said, adding the company recently increased the number of flavored milk items offered in stores.

"We continue to bring in new SKUs," he said. "Our flavored milks continue to have nice solid increases in a dairy market that's been flat."

There's nothing flat about the natural cheese category, and string cheese, in particular, is exploding. A perennial favorite with kids, string cheeses are one of the fastest growing segments of the $5.4 billion natural cheese category. While total natural cheese sales were up 10.2%, string cheeses experienced an increase of more than 32% for the 52 weeks that ended July 11, according to Information Resources Inc., Chicago.

No other subcategory of the 10 natural cheese segments tracked by IRI experienced as much year-over-year growth.

Nearly all of the 25 brands of string cheese tracked by IRI enjoyed double-digit increases in sales from 2003 to 2004. Higher wholesale cheese prices played a part, but increases also reflect increased demand.

"String cheese is huge," said Lindemann. "That's grown. Sales of string cheeses are very big. We sell a lot of it.

"One of our stores has 10 SKUs of string cheese," he said. "When I was a dairy manager six or seven years ago, there were four."