Milk Industry Fights to Combat Slumping Sales

Bovine Growth Hormone Issues, Consumer Apathy Hit Dairy Biz

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Everyone knows milk does a body good. But Americans are still drinking less of it every year.

The publicity on government approval of bovine growth hormone comes as the milk industry is struggling to boost consumption after a 20-year slide-with new products, promotions and a $50 million ad campaign.

The initiatives are designed to reverse what the American Dairy Association says is an 11% slide for milk as a beverage in the past decade, to 16 gallons per capita annually.

In the 1980s, the national milk promotion boards touted their product's virtues with the slogan "Milk. It does a body good," from McCann-Erickson Worldwide, San Francisco. The ads worked, said Madlyn Dailey, dairy association senior VP-marketing and economic research. Women in particular "believe they should be drinking milk, but they're just feeling guilty; they're not doing it."

That's the problem.

"Despite the fact the dairy industry has spent hundreds of millions of dollars, consumption of milk has gone down every year," said Jeff Manning, executive director of the California Milk Processor Board.

The National Dairy Board and the dairy association this year will join forces for the first time in an estimated $50 million ad campaign designed to make their beverage more competitive with soft drinks and juices.

"Even today, with all the controversy over additives, consumer attitudes toward milk are very positive," said Gordon McDonald, senior VP-marketing for the association. "Our new advertising will attempt to shift consumer interest to more immediate consumption."

The new campaign from J. Walter Thompson USA, Chicago, is likely to break in late summer, and will ask consumers: Wouldn't milk taste good right now? The ads will target teens and younger adults in an attempt to get them to consider milk as a stand-alone drink.

The milk boards would also like to boost consumption in restaurants, where only about 10% of milk is consumed. "From a consumer standpoint, milk is not a cool, trendy drink," Mr. McDonald said. "Plus, the package is not convenient, and for restaurants, milk is not as profitable as other beverages."

Mr. Manning's solution for the California group is slightly different: promote consumption in situations where no other beverage will do.

"We can't be Diet Coke; milk loses when you put it in that position," he said. "But when you talk about a beverage to eat with brownies at home, or on cereal, milk wins."

In a program that began in October, the California board has focused TV advertising on just those sorts of situations. Then in a promotion this month, packages of 10 General Mills cereals are carrying $3 instant rebates for shoppers purchasing milk and one of the cereals. The promotion is integrated into the board's $23 million ad campaign from Goodby, Silverstein & Partners, San Francisco.

Perhaps even more intriguing are attempts by local dairies to create new milk-based products.

"Do we need new products? Absolutely," said the dairy association's Mr. McDonald. "But the investment is huge. Until the milk processors-who are working on thin profits-feel there's a guarantee of success, they're not interested in investing in new products."

Flavored, lactose-free and other specialty milks are still a very small part of the market-less than 3%, says the dairy association. But skim milk, now accounting for 18% of consumption, is the fastest-growing segment.

One product that's trying to build on consumer interest in low-fat milk is Cool Cow, a cholesterol-free product. Milk-Maid, New York, created Cool Cow, which is made with a butterfat substitute called Farmelle.

Its niche: "Milk that's low in fat, has virtually no cholesterol but all the taste you want from a high-fat product," said Pat Cory, Milk-Maid president.

In December, Milk-Maid began testing Cool Cow in Fargo, N.D., through Cass Clay, a dairy that has licensed the name. Newspaper ads, in-store materials and outdoor boards from G.L. Ness Agency support.

Alice Z. Cuneo contributed to this story.

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