Making more out of milk

June 18, 2012

If supermarkets decide to promote milk more, there's a chance to grow trips and total-store sales.

This article originally appeared in Facts, Figures & the Future. To read more from this issue and for a subscription to this free newsletter, click here.

To supermarkets, milk is the staple that pulls traffic to the back of the store. To drug stores, it is a promoted beverage typically near the front that adds convenience and underscores grocery presence. Other channels leverage milk in different ways.

Naturally. It’s a $12 billion+ annual sales behemoth that Americans consume at a 204 pounds per capita pace, according to 2010 U.S. Department of Agriculture figures posted by the Wisconsin Milk Marketing Board.

Who wouldn’t want in?

Yet The Lempert Report believes if supermarkets chose to promote milk more than they do—if they saw this as a way to stem encroachment by many kinds of food sellers—they could possibly gain more in trips and total-store dollar sales than they give up in milk category margin dollars. We feel that’s an approach worth exploring.

Milk promotions could be about more than price. Food stores could build events around milk—teaching shoppers about the different kinds they sell, their nutritional benefits for children and adults, their use in many recipes and more.

National Dairy Month in June seems an opportune time for retailers to think about connecting stores more to year-round marketing campaigns by the Milk Processor Education Program. One recent campaign, The Breakfast Project, reinforces the importance of that meal for consumers and the sales-growth opportunities for retailers. Another, Refuel With Chocolate Milk, aims to persuade adult athletes to drink the beverage for post-workout recovery. Also, the California Milk Processor Board has a Decode The Dairy Aisle initiative underway with registered dietitians of the Dairy Council of California to teach consumers more about milk.

Specifically, shoppers bought $11.99 billion of milk in supermarkets, drug stores and mass market retailers (excluding Walmart, club stores and gasoline/convenience stores) during the 52 weeks ended March 18, 2012, according to Infoscan Reviews of SymphonyIRI Group, a Chicago-based market research firm. That’s up 7.1% over a year ago, despite a 3.51% decline in unit sales.

Refrigerated skim and lowfat milk, which is the largest segment, drove a 6.92% dollar sales rise to $7.63 billion over the year-earlier period, even though unit sales fell 3.76%, the data show.

Similarly, refrigerated whole milk, the second-largest segment, grew dollar sales 7.02% to $2.85 billion, while unit sales slipped 3.71%, added SymphonyIRI Group.

One segment that lagged in this period was refrigerated flavored milk/eggnog/buttermilk. Its dollar sales edged down by 0.66% to $750.4 million, as unit sales dropped by 9.66%, according to the data.

By contrast, two smaller segments showed pickups in both dollar sales and unit volume during the same 52-week period:

  • Refrigerated kefir/milk substitutes/soymilk jumped ahead by 16.12% in dollar sales to $686.0 million, on a 12.58% increase in unit sales.?
  • Refrigerated milkshakes/non-dairy drinks posted a 46.88% advance in dollar sales to $75.54 million, on just a 2.68% gain in unit sales, the data showed.?