Challenges in Fluid Milk Consumption October 25, 2017
Increased Competition At Store
1970’s • Milk
• Soft Drinks
• Coffee
• Juice
1980’s • Milk
• Soft Drinks
• Coffee
• Juice
• Bottled water
• RTD juice
• Teas
1990’s • Milk
• Soft Drinks
• Coffee
• Juice
• Bottled water
• RTD juice
• Teas
• Wellness
• Sports drinks
• Flavored tea
2000’s • Milk
• Soft Drinks
• Juice
• Coffee
• Bottled water
• RTD juice
• Teas
• Wellness
• Sports drinks
• Flavored tea
• Functional
beverages
• Energy drinks
• Enhanced water
• RTD coffee
• Almond drink
• Coconut beverages
Today • Milk
• Soft Drinks
• Coffee
• Juice
• Bottled water
• RTD juice
• Teas
• Wellness
• Sports drinks
• Flavored tea
• Functional
beverages
• Energy drinks
• Enhanced water
• RTD coffee
• Almond drink
• Coconut beverages
• Veg/Fruit blend
drinks
• Sparkling juice
• Fusion drinks
• Fermented tea
• Coconut water
• Craft sodas
Increased Competition From sports drinks to coconut water, more products than ever
are competing for finite space in consumers’ stomachs
Overview
Cold Cereal Is Disappearing From Breakfast As cold cereal consumption declines, so does milk consumption
Innovation The milk aisle has not kept pace with other beverages in terms
of new product development
The Rise of Value/Combo Meals 8 billion value meals are sold annually; other than in kids’
meals, they rarely include milk as a component
Big Brands’ Advertising Budgets Continue To Grow Coca-Cola announced a plan to increase spending on media
and brand building to $1 billion this year
The past decade has seen increased ad spending by big beverage companies, myriad new product
innovations, and shifting consumer preferences. All of these have had an impact on milk consumption, which
has fallen in the last 25 years.
$1.3 Billion Spent on Drink Ads in 2013
Source: Rudd Center analysis of Nielsen data (2014); Ad Age Datacenter
$19
$20
$22
$32
$33
$41
$53
$74
$127
$140
$175
$210
$384 Regular Soda
Diet Soda
Energy Drinks
100% Juice
Sports Drinks
Fruit Drinks
Plain Bottled Water
Light Juice
Soda Brands
Iced Tea
Flavored Bottled Water
Other Diet Drinks
Other Sugary Drink Brands
Advertising Spending by Category (2013) (in millions of dollars)
FUN FACT:
From 2013 to 2015, Coca-Cola
increased its ad spend by 21%,
spending $565 million in the US.
Coca-Cola CEO Muhtar Kent
pledged to increase media spending
and brand-building initiatives by up
to $1 billion in 2016.
Advertising Beyond Television
In addition to the $1.3 billion beverage companies spent on traditional media formats (i.e., television, magazines, billboards, etc.), they also maintain large budgets to reach consumers in other ways.
Sponsorships PepsiCo spent more than $350 million on sponsorships in 2014, including $90 million on its sponsorship with the NFL. Coca-Cola spent $295 million on sponsorships in 2014 (and is estimated to spend $100 million on Olympic sponsorship alone).
Social Media Energy drinks and soda brands are very popular on social media. Not only do they have many followers, but Coca Cola averaged 25,000 display ads viewed on Facebook every month in 2013.
Smartphone Apps Apps such as Coca-Cola’s Freestyle and Red Bull’s Racers provide games, entertainment and music while promoting the brand. Estimates range from $250,000-$750,000 per app and many brands have more than one (Red Bull alone has 15 apps).
57% 18%
8%
5% 5%
2%
% of new milk beverages by source 2015
Dairy Nut Coconut Soy Grain Other
Dairy Alternatives Are Proliferating
74%
2%
24%
% of new milk beverages by source 2005
Dairy Nut Soy
Source: Innova New Product Database
Includes Milk/Milk Drinks, Cream/Creamers, Dairy Alternative Drinks, Drinking Yogurt/Fermented Beverages; US only
Dairy-based milks have fallen from 74% of new milk/milk beverage products introduced in 2005 to 57% in 2015.
Non Dairy Alternative Beverages
Reasons Consumers Choose Non-Dairy Beverages
Source: Packaged Facts January 2015 survey based on national online consumer panel of 2,000 U.S. adults age 18+, balanced to Census on primary demographic measures. Percentages correspond to 468 consumers in the sample who drink non-dairy milk. Published in Packaged Facts’ Dairy and Dairy Alternative Beverage Trends in the U.S., April 2015.
4.9%
9.6%
9.6%
12.2%
13.3%
13.3%
13.9%
16.7%
20.3%
21.6%
23.3%
24.8%
30.3%
36.3%
41.5%
Other
Grew up drinking them
Don’t have to be refrigerated
Price
They are better for the environment
They have no cholesterol
They are vegetarian/vegan
They are non-GMO
No use of antibiotics/hormones/steroids
Dairy/milk/lactose allergy or intolerance
They have healthier fats
Like the flavor varieties
They provide better nutrition
They are healthier to drink
Like the taste
Tea, juice and coffee accounted for more than half of all new beverage introductions from 2001-2012. This is particularly bad news for milk, since these beverages all play in the same morning consumption space when milk is most often consumed.
Tea 7,998
Juice 4,853
Coffee 2,549
Energy Drinks 2,506
Drink Concentrate/
Mixes 2,474
Soft Drinks [VALUE]
Iced Tea 1,565
Flavored water 1,205
Milk 1,170
All other
Milk Represents Only 4% of New Drinks
Source: Innova New Product Database
"Today, for all of us in business and government and civil society, the choice is between
innovation and irrelevancy. You either innovate or you become irrelevant.”
- Coca-Cola CEO Muhtar Kent
Milk Not Widely Available Away-From-Home
• 81% of people drink beverages away-from-home, but only 14% drink milk away- from-home.
• Though reasons are likely varied (availability, competition, flavor pairing, etc.) it is worth noting that 8 billion value meals were sold in 2011 and virtually none included milk in the offer. Only kids meals tend to include milk as an option.
Source: Kantar World Panel
Cereal Consumption Is Down
Source: NPD Eating Trends in America
Cold cereal is leaving the breakfast table which has an impact on milk consumption (only 26% of in-home breakfasts included cold cereal in 2016, down from a high of 35% in the mid 90’s.)
Fruit, sandwiches, yogurt, toaster pastries and bars are all replacing cereal.
31 31
32
34 34 34
33 33 34
34 35 35 34
34 34
33
32
31 31
30
29 30
30 30 31
30 29
30
28
27 27
26
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 16
% of In-Home Breakfasts that Include Ready-to-Eat Cereal
Wisconsin Needs More Milk
0
5
10
15
20
25
30
35
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Milk Production vs. Milk Requirements
Produced in WI Extra Milk Needed *Preliminary estimate Source: USDA/NASS, Milk Production
Milk Produced in Wisconsin
Bill
ions O
f P
ounds o
f M
ilk
Growth Rates (based volume sales)
Source: IRI Custom WMMB Database MULO+C, Exact weight and random weight combined
Demand for Wisconsin Cheese is Strong
1.8%
6.3%
5.3%
9.5%
Non Specialty Specialty
0.6%
4.3%
3.2%
7.5%
Non Specialty Specialty
Past Year Growth, 2015-2016 Five Year Growth, 2011-2016
Total Category
Wisconsin-Identified
Cheese
Opportunity: Whole Milk
Opportunity: Milk Segments
White gallon milk is driving decline in
sales
Flavored milk and lactose-free milk
continue to increase
Organic milk is in a weak position for
2017
Milk Packaging/ School Milk
Opportunity: 1% Flavored Milk at School
Offers students another
choice and perhaps a better
option at school meals.
School Nutrition Directors
need to request an
exemption from their state
agency. (WI- DPI)
School Nutrition Directors
currently are not pursuing.
Challenges in Fluid Milk Consumption Discussion & Questions