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Indulgent Shelf-Stable Milk Drinks Broaden Vend Mix

Posted On: 4/6/2011

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milk-based drinks, dairy products, milk vending, vending machine, vending machine business, smoothie, vending machine drinks, vending machine operator, packaged milk, flavored milk, Gehl Foods, Main St. Café Protein Smoothies, John Slawny, Upstate Niagara Cooperative, Eva Balazs, MilkPEP, Byrne Dairy, Eric Greiner, North American Beverage Co.

Consumers across all demographics have developed a taste for the creamy satisfaction and rich flavors of contemporary milk-based drinks, and vending operators are better positioned than ever to represent the booming category in their cold beverage mixes. From chilled cappuccinos to smoothies, a number of novel dairy beverages entering the channel constitute a departure from the classic flavored milks aimed primarily at younger consumers. And many can be stored and transported at ambient temperature, easing the logistical problems long posed by their perishability.

Gehl Foods (Germantown, WI) is making its vending debut with a line of vendible, shelf-stable dairy-based smoothies. Called Main St. Café Protein Smoothies, they're available in strawberry, peach and mixed berry flavors. The line is packaged in 11-fl.oz. bottles and offers an unrefrigerated shelf life of six months.

"We're packaging today's dairy trends to fit consumers' busy lives," said sales and marketing vice-president John Slawny. "Main St. Café combines the appeal of foodservice smoothies and niche protein products in a fresh, simple way for the broader beverage market."

The aseptic process responsible for the long unrefrigerated shelf-life involves heating the product to a "food-safe" temperature and then bottling it in a sterile environment. Slawny said an important objective in refining the aseptic process used to prepare and bottle the drink has been to maintain its fresh, creamy taste throughout the distribution cycle.

"We have advanced our aseptic technology to the point that we get it up to sterile temperature and back down in as little as three seconds, which maintains the fresh milk taste," Slawny explained. "When I began in the industry, we heated the milk for two minutes, and consumers could taste what that did to the product. The technology to hold the flavor has really come a long way."

The dairy was an innovator in the late 1960s when it began producing shelf-stable dairy-based products. Until recently, its focus was on producing bulk-packed product for the foodservice market. The smoothies mark Gehl's entry into the single-serve retail arena.

In Slawny's opinion, Americans may have become averse to buying milk from a vending machine because of the fear that it might not be fresh, or the perception that if it's shelf-stable, it won't taste fresh. Yet they are receptive to purchasing other dairy-based products from machines. He instanced the success in the vending channel of iced coffee drinks, like PepsiCo's Starbucks Frappuccino, which is primarily made of milk.

"If you're going to vend anything dairy-based, you have to get away from the comparison to traditional milk. It has to offer added value," he stressed. "Consumers perceive value-added products like our smoothies -- that are creamy, with real yogurt and fruit purée -- differently from traditional milk."

Additionally, with 10g. of protein and 30% of the recommended daily value of calcium, Gehl's Main St. Café smoothies are both nutritious and satisfying. This makes them ideal snacks or meal replacements for consumers on the go, from college students and commuters to exercise enthusiasts at fitness centers.

Slawny added that retail consumers have shown that they are willing to pay a premium for smoothies and protein shakes, which they perceive as more than a refreshment beverage. Gehl's Smoothies have a suggested $2.50 vend price.

"There is a higher price that comes with shelf-stable products because of the cost of producing them," Slawny pointed out. "But the operator benefits from a six-month ambient shelf life, versus other smoothie products with 30 to 60 days.

"The vending operator doesn't have to worry about what will happen to the product if the plug gets kicked out of the wall, or how to warehouse it or get it out of the machine if it doesn't sell with a short code. This product changes everything."

The vending market also has been influential in the launch plans made by Upstate Niagara Cooperative Inc. (Buffalo, NY) for its new line of shelf-stable milk beverages, sold under the Crave brand in 12-fl.oz. aluminum bottles. The initial chocolate and strawberry-chocolate whole milk varieties are described as having a bold, fresh flavor and staying colder longer, thanks to the new "frost-flow" bottle.

"We're still establishing distribution and looking seriously into vending, which we can now really target as never before with the ambient shelf life," said Eva Balazs, product manager for the cooperative of dairy farmers. "It's very beneficial throughout the distribution channel to not have to refrigerate the milk, but then to sell it chilled. It opens up whole new possibilities."

The company has considerable experience with vending; it has been selling its fresh Intense-brand flavored milks to this segment since its 2000 launch of the single-serve PET line. Balazs reported that the Intense line has been well received by a wide audience, but as with most milk products, the limitation is the short shelf-life.

"We describe Intense as 'an explosion of flavor in your mouth,' which is something today's consumers really seek," Balazs explained. "It's far more flavorful than your basic chocolate milk, which really broadens the consumer base that drinks it."

The Intense line is offered in whole milk chocolate, vanilla and mint chip and 1% chocolate and strawberry varieties. The dairy also rotates limited-edition flavors through the mix, including the latest novelty: red velvet cake.

The dairy cooperative also offers traditional single-serve Upstate Farms brand milk in whole, 2% reduced fat and fat-free varieties, as well as lowfat mocha, vanilla cappuccino, chocolate and strawberry. Upstate Farms products are sold in schools, colleges and businesses; the company anticipates a similar market for its new Crave milks, but skewed more toward young adults.

"It's more of high-value offering; consumers pay more to offset the cost of the bottle and the processing, but they feel they get more," said Balazs. "The cool bottle especially speaks to young adults. And because the product is shelf-stable, it appeals to people who are out and about, from sports to camping." Upstate Niagara also is promoting the value chocolate milk offers to athletes and others involved in strenuous exercise, taking advantage of scientific research that has identified milk as a desirable alternative to conventional sports recovery beverages.

The dairy cooperative decided on a 12-fl.oz. portion size for Crave, according to Balazs, because it is more in line with the portion the typical consumer drinks with a meal. The 16-fl.oz. flavor-rich Intense line, on the other hand, is often consumed on its own as a meal replacement.

"We've seen rising demand for grab-and-go items, because people nowadays are busier and often consume on the run," said Balazs. "This is where conventional milk was at a disadvantage: you had to keep it refrigerated. Crave chills in 20 minutes, and in its aluminum bottle, it stays cold longer than most beverages. Or you can just throw it in your bag and put it in the refrigerator when you get where you're going, with no need for a cooler bag and freezer packs."

The product manager added that schools are not the prime target for the new drink, since they have the infrastructure to store and serve fresh milk, which can sell at a lower price. The vend price for conventional 16-fl.oz. Upstate Farms and Intense milks is $1.50, versus $2.50 for 12 fl.oz. Crave.

"Schools get deliveries several times a week, so we can serve them regionally with single-serve fresh milk," she pointed out. "When we ship far away, which we're now able to do, shelf-stable milk comes into play for distribution and storage purposes at the other end." She added that schools remain a big market, and said the company is keeping close watch as the U.S. government develops federal school nutrition guidelines to ensure it is ready to offer products that comply.

Byrne Dairy, based in nearby Syracuse, NY, has also been addressing the vending market in recent years. Its major single-serve push began when the dairy added a single-serve bottle filling line at its ultrahigh temperature processing plant, which has been running since 2009. The technology allowed Byrne Dairy to extend the shelf life of its popular single-serve PET bottles to 120 days, versus the traditional 18-day standard.

Director of sales Eric Greiner told VT that before it converted to UHT processing, Byrne was confined to delivering its milk to customers within a 180-mile radius, on routes that retrieved the milk cases after making deliveries. "Now we can use a common carrier and ship to Virginia, offering a 100-day shelf life, with far fewer returns," he said. "We were limited to New York state distribution. Now we can effectively supply the eastern half of the country."

The longer shelf life also enables the dairy to produce more flavored varieties, ranging from chocolate and strawberry to mocha cappuccino and vanilla. "In the big picture, flavored milks are slower movers than white milk; the minimum run size is small, which is ineffective for a fresh plant," Greiner explained.

He noted that Byrne has seen single-serve sales rise 50% since converting from fresh to extended shelf-life products. Much of that increase is attributable to the addition of new flavors, and to the new ability it has given many of its customers who previously could not deal with the short shelf life of conventional milk.

Greiner pointed out that while the technology to extend the shelf life increases the wholesale cost to the operator, the reduction in out-of-dates and reduced service frequency offset the higher price.

"We've seen wide demand in all types of locations since we've been in vending, and more so with the UHT product," he said. "Milk is finding a real prominent place among other drinks. Consumers are more health conscious. In vending especially, it offers an alternative to mainstream drinks and complements a lot that is available, whether sandwiches or cookies. Food drives milk consumption."

Greiner told VT that Byrne Dairy is developing new value-added products, including milk drinks fortified with more protein and electrolytes that add another level of nutritional benefit for today's increasingly health-minded and mobile consumers.

John Imbesi, president of North American Beverage Co. (Ocean City, NJ), says the market for premium flavored milks like his company's flagship Chocolate Moose continues to grow as consumers gravitate toward drinks that not only refresh, but satisfy with a rich, indulgent taste and a nutritious profile. Adding to Chocolate Moose's appeal, from the vending operator's perspective, is the two-year ambient-temperature shelf life of the 12-fl.oz. cans. They vend for $1 to $1.50.

"Just about everyone likes chocolate, and Chocolate Moose, like the dessert it's named after, is a liquid chocolate treat," said Imbesi. "Yet the main ingredient is fat-free milk: it's cholesterol-free and offers all the nutritional benefits of milk. So healthwise, it also appeals to all audiences." Publicizing the beverage's healthy attributes to consumers, Chocolate Moose has earned the American Heart Association's "Healthy Heart" checkmark and the American Dairy Association "Real" seal, both displayed boldly on the packaging.

Imbesi added that the key to a well-balanced diet is moderation, and that the 12-fl.oz. portion is just the right size to be satisfying, but not excessive.

Increased attention to health and wellness probably was a key driver of Chocolate Moose's double-digit growth last year. "When you have a product that's good for you, it's extra important that it tastes good," Imbesi emphasized. "Our Chocolate Moose is perceived as a treat, and it needs to live up to that expectation."

In addition to cans, the dairy drink is offered in ambient 16.9-fl.oz. bottles in the original chocolate and cookies and cream and strawberry flavors, which Imbesi says are equally rich and satisfying. North American Beverage Co.'s strawberry Mega Moose, with a slightly higher fat content and fortified with vitamins A and D, is marketed as a kid-friendly energy drink alternative.

The company entered the beverage arena in 1995 with the launch of Chocolate Moose, and has established a presence in vending primarily through Pepsi bottlers who merchandise it in their machines.

Imbesi sees plenty of room for expansion in the vending channel. "It's perfect for vending, since spoilage is not an issue and it's a refreshing treat that's different from soda nutritionally; and because it's creamy and chocolatey," he said.

North American Beverage Co. expanded its lineup in 1998 with the addition of shelf-stable, milk-based Havana cappuccino in 15-fl.oz. bottles. The drink is made from premium arabica coffee beans and 1% milk; a diet version sweetened with Splenda is also available.

"There's big demand for coffee drinks with the sweet and creamy profile that consumers are used to getting in coffee shops, and Havana has been very well received," said Imbesi.

He emphasized that a key to success with milk drinks in the competitive beverage market is to recognize that it's not just kids who drink them. Today's consumers have sophisticated palates, and demand the superior taste and more healthful nutrition profile that comes from top-of-the-line ingredients. North American Beverage Co.'s products feature real milk rather than artificial substitutes, and premium ingredients like arabica coffee beans and cane sugar in both its chocolate and coffee drinks, he pointed out.

The advent of milk-based beverages with wide appeal at retail, plus storage and handling characteristics allowing them to be integrated into typical cold-drink vending routes, continues the marketing revolution launched by the dairy industry's Milk Processor Education Program more than a decade ago.

The challenge identified by MilkPEP was to restore the beverage to its former prominence in the away-from-home market by positioning it as an appealing drink in its own right, not just an adjunct to a meal, and by developing new flavor varieties and packaging that would appeal to the contemporary demand for "grab-and-go" convenience.

These initiatives had obvious appeal to the vending industry, but vendors have had to deal with the consequences of their long success at selling milk to out-of-home consumers in workplaces. These people expected to find white and chocolate milk in the refrigerated food machine, and they bought it faithfully. They were not prepared to pay more for a larger portion, a modernized package and a wider flavor spectrum.

At the same time, operators recognizing the appeal of the new widemouth PET containers and other innovative packages, and those attractive new flavors, could not readily add them to their existing cold drink routes because they required refrigerated transportation and machines equipped with the same health controls as food venders. Forward-thinking vendors looked ahead to the advent of shelf-stable milk-based drinks that could overcome those constraints. Their patience is now being rewarded.

The new generation of premium dairy beverages seems to combine the appeal of milk to today's health-conscious market with a novel presentation involving new textures and flavor profiles. These attributes are combined in products that can command the higher price needed to offset the added expense of ultra-high-temperature processing. And the vending industry's shift toward payment systems that no longer make higher-priced purchases inconvenient may provide the finishing touch. The result is a genuinely new cold drink category addressing a contemporary demand that vending is able to meet.