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Milk Meets Today's Concerns To Keep Sales Up In Down Market

by Tim Sanford and Emily Jed
Posted On: 8/17/2009

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Milk Processor Education Program, dairy trends, MilkPEP, vending, vending machine, vending business, vending route, automatic retailing, foodservice, cold beverages, Beverage Marketing Corp., Nesquik, milk sales

The dairy industry, which launched the Milk Processor Education Program more than a decade ago, reports that its campaign to restore milk to its former strong position as an out-of-home beverage choice continues to make headway.

Now available in a variety of attractive modern package varieties and a wide spectrum of flavors, milk also has benefited from increased consumer interest in healthier dietary choices, MilkPEP reports -- and these strengths are sustaining sales despite the sharp economic downturn that began last year.

"Milk sales in 2008 weathered the economic storm better than competitive beverages," officials at the education program explained, citing Beverage Marketing Corp. data showing declines in carbonated soft drinks, bottled water, sports drinks and fruit beverages, while milk held steady. "Vending operators have an opportunity to capitalize on the momentum the 'got milk?' program offers, and consider vending milk in viable locations," MilkPEP pointed out. Schools are an obvious market, but milk has proven popular across a broad array of grab-and-go sites.

Bill Schrim of W.S. Vending Co. (Pittsburgh) has been a big fan of milk vending for the better part of a decade. He was one of the first operators in Pennsylvania to place Automated Merchandising Systems' cow-spotted milk venders stocked with the new generation of flavored milk in plastic resealable containers that entered the market in the late 1990s.

Impressed by the response from school-age patrons, the operator soon extended his milk program with the addition of four branded Nesquik machines. Placed in two high schools, a junior high school and a shopping mall, the machines are still out on their original locations and their sales remain strong, Schrim told VT.

The 30-year vending veteran, sold on milk's place in vending, went on to incorporate milk in all the glassfront beverage venders on his two routes. He has found that there are no demographic constraints on its popularity.

"It's worthwhile for every operator serving patrons in schools, in malls, in offices -- whether it's a woman buying milk to drink with a granola bar or a man chugging one down with a doughnut," he said. "It's popular with factory workers, with secretaries, with lawyers. Milk's been around for a long time, but people still love it and consider it something special."

He added that MilkPEP has built demand and generated excitement for milk through its marketing campaigns. "I recommend to any vending company to try milk, get on board and they'll see that it's profitable, and will make an impact on their business," he summed up.

Most of W.S. Vending's glassfront drink machines feature two rows of milk -- priced at $1.25 to $1.50 -- which Schrim says is in such high demand that it is often one of the first drinks to sell out. The vending company exclusively carries Nesquik 8-fl.oz. plastic bottles in chocolate, vanilla and strawberry flavors. "The power of the brand sells; and not only is the 8-fl.oz. size compatible with the nutritional regulations of the schools we serve, I find people in other types of locations don't need or want a larger container of milk. They'd rather buy the smaller size for less," he commented. "My hope is that, by offering the smaller size, my customers will buy one in the morning and one at lunch or later in the afternoon, which many do."

Another benefit to carrying Nesquik, the operator pointed out, is that it is shelf-stable, with a 90-day ambient shelf life, allowing him to store inventory on the warehouse floor. "When I started, I had to keep the milk refrigerated in the warehouse and transport it cold in Omnicubes," he said. "It's so much easier to handle now that it's shelf-stable. We can treat it like a case of pop."

Schrim added that his only complaint, prompted by a glitch in the supply chain that he has been unable to identify, is that his milk shipments often arrive within two to three weeks of their expiration date. Additionally, he carries only three Nesquik flavors, not because he doesn't want more variety, but because he has a difficult time securing additional flavors from his suppliers. "Nestlé has great flavors like double chocolate and richer, thicker milkshakes, but I can't seem to get hold of them. When I can get them, people want them and buy them. The demand is there and I'd just love to offer more variety. The only milk I've seen no demand for is plain, white milk."

Milk clearly holds its own as a distinct beverage category and should command a place in every glassfront vender that can accommodate it, the Pittsburgh operator emphasized. "It's an alternative drink choice, something different that's more wholesome when you don't want a Coke or iced tea or flavored water," he pointed out. "By offering milk, we show the public that we're like a convenience store. Every c-store has single-serve flavored milk because people want it and it sells. If they want it -- and c-store customers are our customers, too -- then why wouldn't we have it in our machines?"

Matt Warner, purchasing manager of Columbus, OH-based Sanese Services, said the vending and foodservice company sells a large volume of flavored milk in contemporary packaging through its food machines. It has only a few dedicated milk venders on location, primarily at accounts where clients request them and subsidize their cost since most do not have a large enough population to generate sufficient sales. Schools represent only a small portion of Sanese's business, and Warner has learned from experience that the workplace clientele to which it caters is satisfied by 2% regular and chocolate milk.

"We sell quite a bit of milk; customers want it, no doubt about it," he told VT. "It helps round out the menu in the food machine, and customers perceive the food machine as the place to get it.

"We haven't gotten into selling milk from our glassfront drink machines," he added. "But soft drink sales are falling off as consumers look for healthier choices, and milk is certainly one of them."

The full-line vending and foodservice provider has delivered fresh food to thousands of clients throughout Ohio and the surrounding states for six decades, so the transportation and storage of refrigerated milk fits easily within its delivery infrastructure. The company offers 12-fl.oz. milk from Shamrock Farms and 8-fl.oz. milk from local Smith Dairy, both of which are processed for an extended (45-day) refrigerated shelf life. "The cost is less than Nesquik shelf-stable milk, and the longer shelf life really suits our needs," said Warner.

Jim Braker of Beaver Vend Inc. (Beaver Dam, WI) has five routes that serve a predominantly blue-collar clientele in rural Wisconsin. Like W.S. Vending's Schrim, Braker vends milk in contemporary flavors and packaging from two to five facings in all of his multi-select glassfront beverage machines. He also makes milk available through food machines in both plastic and gable-top half pints, providing two price points in locations that do not have a glassfront cold drink machine in their vending bank.

Braker purchases plain 2% milk and lowfat chocolate milk from a local dairy in plastic containers that vend for $1.25. Nesquik, especially popular in schools, vends for $1.50 to $1.75. The Wisconsin operator offers it in several varieties -- chocolate, vanilla, strawberry, and double chocolate, along with Nesquik milkshakes -- all of which have proven equally popular.

In half a dozen sites, Braker meets the needs of cost-conscious factory workers with classic dedicated National machines that dispense half-pint cartons of white and chocolate milk for 60¢. "It's a good solution for accounts that feel they deserve milk but won't pay $1.25 for a 'chug-type' container," he noted. "But I do have fewer and fewer of those machines out. In general, both blue-collar and white-collar workers like and want milk equally, and I manage to satisfy most of them by putting it in every type of machine that will hold it, and offering both cartons and 'chugs.'"

MilkPEP has expanded its promotional campaign steadily as milk has gained traction as an out-of-home beverage choice. The "Body by Milk" program, directed at teenagers, has proven effective and presently is educating young consumers about the value of drinking flavored lowfat milk within two hours after exercising. The protein supplied by milk enables the body to restore bone and muscle, and milk also provides Vitamin D and calcium. MilkPEP conducts clinics for high school coaches around the country to help inform them of these recovery benefits. And, in the 2009-2010 school year, a new "Drink for a Change" program will reinforce the teen awareness effort.