CASH COW

JONNA CRISPENS

Trend-watching dairy managers take note: Milk is repositioning itself as a beverage that not only answers nutritional needs, but also accommodates busy, on-the-go lifestyles.

Boosted by a growing number of market-savvy processors incorporating functional, single-serving containers that colas and juices adopted long ago, milk's image has been updated to appeal to young, hip, on-the-go consumers.

James Roesner, dairy merchandising manager of Clemens Markets, a 16-store chain in Kulpsville, Pa., says that his company began offering white and chocolate milk in round, 16-ounce containers from his local dairy about a year ago and sales have shot up a result.

"We've had a great customer response, with chocolate milk sales increasing 30% to 40%," he said.

"I think the main reason for the product's success is the convenience factor," he said, adding that the packaging -- different from the traditional cartons -- also helps sales, because it "gets noticed."

The figures coming in from elsewhere around the country paint a similar picture. According to A.C. Nielsen Market Research of Schaumberg, Ill., a number of metropolitan markets that have introduced these single-serving sizes have seen triple-digit increases in dollar and volume sales during the past year.

For example, Nielson year-to-date figures for the period ending July 11 show that dollar sales of single-serving containers of milk -- measured as pint-size and smaller -- increased 176% in Chicago, 185% in Milwaukee, 149% in Orlando and 120% in Miami.

Volume sales of the same single-serving containers, as measured in total gallons sold, increased 144% in Chicago, 154% in Milwaukee, 119% in Orlando, and 86% in Miami.

"I think that single-serving containers of milk is a whole new category within the milk category," said Greg Rotunno, director of milk marketing for Dairy Management, Inc. of Rosemont, Ill. "From our viewpoint, single-serve answers the need for convenience and triggers impulse purchases -- two areas that fit together quite well."

Mona Doyle, president of The Consumer Network, a supermarket research firm in Philadelphia, describes the packaging changes that are occurring within the milk category as "very exciting and clearly convenience driven."

"Consumers have always wanted the healthy aspects of milk, but the traditional packaging just didn't fit their lifestyles," she said. "Now the industry is responding to consumer demand, and as a result, consumers are looking at milk with renewed consideration."

Carol Christison, executive director of the International Dairy, Deli, Bakery Association of Madison, Wis., agreed that packaging is driving the category's growth. "It's convenient and lends itself to a grab-and-go lifestyle."

According to Jerry Dryer, president of The Dryer Group, a Chicago consulting firm, milk's new "consumer-friendly" packaging is "turning around the dairy case."

But just how did these changes occur? All of the consultants contacted by SN agreed that the driving force in the current growth of the single-serving milk market has been a product called Chugs, which was introduced in August of last year by Dean Foods of Franklin Park, Ill.

Chugs are basically resealable plastic round containers sporting graphics and a twist-top cap. The new look replaces the stodgy waxed paper cartons of yore, and has quickly been adopted as the standard by the rest of the industry.

The product is currently available throughout the state of Florida and in just over a dozen states located throughout the Midwest and the Mountain and Eastern regions.

Peter Jost, head grocery buyer at Harp's Food Stores, a 42-store chain in Springdale, Ark., said he will consider carrying the Chugs product, which is offered through a local dairy owned by Dean Foods, because it's a convenience-based product, and convenience is driving industry growth.

Chugs is packaged in 16-ounce containers, aimed mostly at the grab-and-go, impulse buyer, and 8-ounce six-packs and quart containers for more planned purchases, which are usually made by head-of-the-household shoppers, according to the company's director of marketing services, Dave Rotunno (not to be confused to DMI's Greg Rotunno).

The reason for the product's success, according to Rotunno, is that it's a ready-to-go product that positions itself as a "substitute for Coke or Pepsi" by creating an image that it's as "cool a beverage" as soft drinks.

As Christison of the IDDBA puts it, such products offer "a refreshing alternative to soda," and may bring the American market closer to what's happening in Europe, "where it's not unusual to see teenagers walking down the street drinking a container of flavored buttermilk."

But Dean's isn't the only company to offer one of the world's oldest drinks in a modern-day package.

Wilcox Farms of Roy, Wash., introduced single-serving pint-sized bottles of white and chocolate milk just over a month ago and have seen sales skyrocket as a result, according to figures provided by Carl Zook, the company's marketing director.

The packaging, which also features a round, plastic bottle with a resealable cap, has boosted sales of milk sold by the pint 100% for white and 500% for chocolate, according to Zook, who names Albertson's, Top Foods, Larry's Markets, IGA and Costco among those carrying the product.

"The dairy industry is finally realizing that it needs to compete against all types of beverages, and not just other milk products," he adds.

Wilcox Farms is offering the chocolate version of its new product under the label of "Big Smooth" and using Seattle Supersonics basketball player Sam Perkins -- whose nickname is also Big Smooth -- as a company spokesperson.

At Foremost Farms in Bariboo, Wis., the product that is moving milk into the modern age was introduced last May under the name "Grip It Sip it."

Available in single-serving pints, as well as quarts, the product resembles an "old-fashioned" milk bottle, but meets today's on-the-go needs by fitting nicely into car cup holders, according to a company spokesperson.

Available in white and chocolate, the product is being sold under the labels Golden Guernsey Dairy and Morning Glory in Northern and Western Wisconsin, as well as the Milwaukee area.

Retailers and industry observers alike point out that flavored milk -- chocolate in particular -- has been the biggest beneficiary of the rejuvenated milk case.

Although chocolate milk currently accounts for only 1.9% of the country's total milk sales, that figure is on the rise, as consumption of white milk decreases, according to figures from A.C. Nielsen.

Chocolate milk is the biggest seller among the flavored milks at Stew Leonard's, the highly creative two-store independent located in Norwalk, Conn., which owns a 1,500-acre dairy farm and operates a dairy processing plant in its Norwalk store, within view of its shoppers.

"Chocolate milk is the day-in, day-out best seller," said Stew Leonard Jr., the company's president, who adds that it accounts for about 60% of the company's total flavored milk sales, which in turn comprise about 25% of the total milk category.

Although Leonard said that he is aware of the activity surrounding Chugs, he said he had no plans to introduce a similar, single-serve program at his dairy plant, since much of the company's philosophy is based on moving volume.

"We sell four half-gallon cartons of milk for $4, so it would be kind of hard for us to come up with a good price for single serving sizes," he said, adding that he would, however, continue to monitor the growth of the single serve market.

Other retailers, like Pat Redmond, grocery merchandising manager for Rosauers Supermarkets, a 13-store chain in Spokane, Wash., said they were unaware of the new single-serving containers, but would consider any new product. Redmond said Rosauers already has a brisk single-serve milk business fueled by the store's deli.

"More than half of the customers that buy a deli sandwich also buy a half-pint of milk, which we offer in chocolate, banana and strawberry," he said, adding that chocolate outperforms the other flavors, accounting for more than half the flavored milk single-serving sales.