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Market Watch Diary: Have You "Got Milk" Sales?

May 30, 2014
By: Jerry Dryer, Dairy Today Contributer
 
 
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The answer to this question is an emphatic NO!!!

Beverage (fluid) milk sales have been in a free-fall for years, soon to be measured in eons.

Dairy farmers and processors have spent millions upon millions of dollars trying in vain to stop the steady year-to-year declines of 2% or more. During the first quarter of this year, sales were down another 2.2%.

I would sum up the results of these advertising and promotion efforts with a rework of an old
adage: You can lead a consumer to the dairy case, but you can’t make him or her buy it.


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Bonus Content

Other ways to rev up fluid sales


We really need to focus on the key reasons why people buy something. In no particular order, there are three decision points: the product, the packaging and the price/cost/perceived value. Let’s take a look at each.

Keep in mind, this is purely personal prejudice. I’ve only been in the dairy business for 40 years.

Product: Chocolate milk is a poster child for how to do it wrong. There for a while, on almost a daily basis, schools were ditching chocolate milk. Why? Because the food police said it had too much sugar. We lost that argument in far too many school districts.

In addition to arguing, we could have fixed the product. Dean Foods got the job half done, but in many respects it was too little too late. We could have avoided the argument a long time ago by fixing the product.

Lactose-free milk is naturally sweetened. Add some real cocoa. Don’t add any artificial flavor. Maybe add a little sugar—"real" sugar, not corn syrup. Keep chocolate milk and other natural flavors in schools and on dinner tables.

Packaging: This issue is old enough to collect social security. All I’ll add: Better packaging (easier to open, colored plastic, glass, etc.) will cost more, but it will help sell more milk. See the price discussion.

Price: Could someone please explain to me why the ever-increasing demand for nonfat dry milk in China has anything to do with what we try to charge consumers for beverage milk in the U.S.? The inmates are in charge of the asylum!

class i milk sales

Fluid milk sales have declined for at least the past decade, with declines accelerating since the Great Recession of 2009.




At the very least, your cooperative could price milk to processors based on a six-month rolling average of the Class I mover. Take the spikes out of the retail price. Protect consumers from price shock. Avoid at least some of the sales decline.

Much of what I’ve advocated will raise the price of the beverage being delivered to consumers. But price is only part of the story. Perceived value is the key to a purchase decision.

Organic milk, perceived as better, commands a huge premium to conventional milk. I don’t care if you "know" organic milk isn’t any better than conventional milk. The folks paying for organic milk "know" it is better. Perception is reality.

Create a better product. Put it in a better package. Price it appropriately. Then you’ve "got" more Class I "milk" sales.

Jerry Dryer is the editor of Dairy & Food Market Analyst, www.dairymarketanalyst.com. You can contact him at jdryer@dairymarketanalyst.com.

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FEATURED IN: Dairy Today - June/July 2014
RELATED TOPICS: Dairy, Milk, Consumer Demands

 
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COMMENTS (1 Comments)

MNDEB - MN
While I agree with your proactive ideas, the second and more relevant issue for the consumer is declining household income.
Milk sales and declining consumer income are in direct proportion with each other. You know since the great recession of 2009.
It will not make any difference what you do to the product or packaging if the consumer does not have the income to purchase the product.
Producer milk prices are propped up by exports to counties that have better economies and consumers with more household incomes for the first time in recent history than Americans. Improving the American economy i.e. higher household incomes and increasing milk sales will follow.
This is when you "got" more class I "milk" sales when the consumer has the money to purchase it.
6:46 AM Jun 17th
 



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