Milk marches into new era with branded product push

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The dairy industry is finally beginning to put some marketing money where its milk mustache is.

While local dairies have for three years funded the $110 million "milk mustache" effort from the National Fluid Milk Processors' Education Program, their commitment to branding milk products often has ended there.

Accustomed to investing in production rather than marketing, they've avoided introducing concepts such as flavored milks, pour-spout packaging, vitamin-laced "nutraceutical" milks--and product-oriented advertising.

That's changing.


"Now dairies are getting marketing religion," said Gary Slack, a consultant at Slack Barshinger & Partners, although he admits local dairies still have "a long way to go" as marketers.

Among the newer projects are Milky Wave, an orange-vanilla product introduced in a single-serve plastic pint container by Quality Dairy Co., Lansing, Mich.; institutional single-serve milk pouches for schools with a straw, called Mini Sip, from Foremost Farms, Baraboo, Wis.; and the treatment of gallon milk containers as media, using a wrap-around label to promote companion products such as cookies or cereal, from Purity Dairies, Nashville, Tenn.

Even if willing to introduce new products, milk processors--whose $75 billion industry has undergone sweeping consolidation--largely eschew large-scale marketing programs to support them.

"There were 1,400 dairies in the 1970s; there are 500 of them now and they are huge," said Michael Sammons, a longtime dairy executive who notes that "a lot of great names, like Sealtest and Borden, have fallen by the wayside."


There's one exception to the industry's marketing reticence, and that's Dean Foods, based in Franklin Park, Ill., but operating over a 12-state area.

"Dean has taken the bull by the horns," said Mr. Sammons, now a partner in Power Nutrition, which sells dairies the process for producing PowerMilk, a high-nutrition milk co-branded with athletic shoe marketer New Balance.

Dean has allocated $40 million just to retrofit its plants to make Chugs, a portable-milk line marketed in plastic jars shaped like milk bottles of old. Also, the company has budgeted about $12 million for marketing support for Chugs, a princely sum by dairy standards.

"It takes a dairy of size not just to change operations but to invest in an integrated marketing program," said Sylvia Oriatti, director of marketing at Dean and a former Quaker Oats Co. executive who worked on Snapple. "It's no small endeavor."


Dean, which controls about 8% of the national fluid-milk market, first introduced Chugs in Florida and in one year saw a 96% increase in sales of chocolate pints and a 77% rise in overall pints. The product entered Illinois in November, Indiana and Michigan this month, the Southwest in March and will move into Ohio, Pennsylvania and western New York in May.

What really gave Chugs its legs was the advertising from Euro RSCG Tatham, Chicago, which emphasizes portability, "chug-ability" and coolness. Print, outdoor and TV are being used.

The animated TV spot follows a teen-ager who has a Chug in his pocket and is set to a "Chug-a-lug" chant; outdoor ads show a jeans pocket stuffed with a Chug. The theme is "Milk where you want it."

Since it broke in Chicago, sales of Dean's milk are up 60% to 70%, said Ms. Oriatti.

Jim Page, Dean VP-marketing, said the company is exploring other initiatives including a test of cross-couponing and instant-win games on labels via Flair Communications, Chicago.

"I feel very good about what `milk mustache' and [dairy farmers' group Dairy Management's] `Got milk?' has done," said Mr. Page. "It increased awareness but not consumption. Our job is to take this to the next level."


Now in its third year, MilkPEP's program has hiked sales of milk only 1.1%.

"Fluid milk has been so flat for so long any increase is good news," said Mr. Slack, who pointed out the sales increase came after milk prices rose.

MilkPEP Managing Director Kurt Graetzer believes efforts like his program got dairies to act.

"There has been 20 years of per capita decline because [individual dairies] never embraced marketing practices," he said. "[Now,] you're going to see a wholesale change in attitude."

But it may be a slow change.

"I'm not sure [whether marketing] will set the world on fire," said Foremost Farms Exec VP Joe Weis, whose company also is marketing a new bottled product but is doing limited advertising behind it, via Market Street Communications, Milwaukee.

"It's sexy and fun to talk about how we're in the beverage business, but I'm not really sure we are," he said.

Copyright January 1998, Crain Communications Inc.

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