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Why is fluid milk consumption declining?

PD Editor Walt Cooley Published on 07 June 2011

The feature story about demand for fluid milk on the cover of this year’s June Dairy Month issue has been in development for several months. Fluid milk represents a significant portion of U.S. domestic demand. And it’s in trouble again.

For all but one month since the beginning of 2010, the rolling three-month percentage change for fluid milk sales has fallen. That means fewer sales of fluid milk.

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Of course, a 28-month high in retail milk prices is partially to blame, but does the category have bigger concerns even if prices were to improve? Are there other market factors bigger than price driving fluid milk’s decline?

As rosy as any forecast about global export opportunities may be, this issue is of equal or more import. A huge chunk of U.S. demand is at stake.

New data shows milk is losing a share of the U.S. consumer’s overall beverage consumption. ( Click here for more information.) The new survey validates what milk marketers have known for a while –most milk consumption occurs at home.

The recession proved that. 2009 was a good year for fluid milk sales. Then retail milk prices were low, and more Americans stayed home to eat, driving up demand.

But when the economy recovers, Americans will return to the lifestyle not as friendly to milk –eating on-the-go and away from home. These locations are where milk isn’t keeping up with the innovation and marketing of other beverages.

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Granted, even today there is a huge opportunity to increase milk consumption at home. The checkoff organizations charged with generating demand for fluid milk –DMI and MilkPEP – both say they can only do so much with advertising to help remind consumers to take out the gallon in their fridge.

Advertising milk’s nutrition story may help maintain milk’s overall market share when consumers have access to it. But it alone won’t help milk compete against water or grow its share of on-the-go American beverage consumption.

Currently, only one-quarter of all U.S. fluid milk consumption occurs somewhere other than at home. Nearly one-third of that disappearance occurs at schools.

Away-from-home milk consumption must increase if milk is to become more competitive. Few want to claim that job.

I suggest at least half the battle will be in milk’s on-the-go packaging.

I just finished reading Malcolm Galdwell’s Blink , about the subconscious way we make decisions, while traveling to Sweden to see the first commercial robotic milking rotary parlor in action. (Read more about this by clicking here .)

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In the book, Galdwell describes a concept from a Ukrainian-born American immigrant, Louis Cheskin, known as sensation transference. Galdwell says of Cheskin’s theory:

“Cheskin believed that most of us don’t make a distinction – on an unconscious level –between the package and the product. The product is the package and the product combined.”

Cheskin showed margarine in the 1940s how to compete with butter by changing its color from white to butter’s yellow-gold color and wrapping individual servings in foil like butter.

I believe Cheskin’s theory could also be applied to on-the-go milk packaging. Most current adult-sized, on-the-go milk package shapes resemble the now-new containers distributed at schools.

Does this milk container transfer the image of milk to on-the-go adults as a childish beverage? What would a more sophisticated, professional or even hip adult-size package look like?

Milk’s competitors offer plenty of package sizes and shape examples. Innovation in milk packaging is the long-term way for milk to become more competitive and increase its market share. PD

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