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MilkPEP's 2nd Vending Study Suggests Strong Adult Appeal

Posted On: 11/11/2003

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WASHINGTON, DC - Research initiated by the Milk Processor Education Program (MilkPEP) shows that flavored milk is a hit with business and industry consumers, and that milk vending machines retain their popularity even after the novelty of their installation wears off.

The study, conducted by Bachtelle & Associates (Tustin, CA) was summarized in a presentation by Tom Nagle, vice-president of the International Dairy Foods Association, at the NAMA National Expo here last month.

The MilkPEP Multi-Channel Vending Test was conducted last summer under the auspices of the Fluid Milk Strategic Thinking Initiative. It involved working with local operators to place 150 machines in four market areas for six months. The machines were installed at a variety of locations, ranging from business and industry sites through colleges and universities to public places such as shopping malls and parks.

The test evaluated a variety of machines, milk in several flavors and fat content options and the volume potential for milk in different channels.

Results were impressive. Weekly milk sales initially averaged 78 units; when low-performing machines were withdrawn, that weekly average climbed to 126 at B&I sites, 117 at public locations and 105 on college and university campuses. Milk venders performed best in the B&I segment, in high foot-traffic areas without on-site foodservice. Higher-volume sites with competing food service produced higher total sales, although per capita sales were lower.


Especially noteworthy is that B&I locations averaged milk consumption of 0.27 units per capita, suggesting that  one in four adults in workplaces will purchase milk from vending machines if it's offered to them. This is a higher per capita consumption rate than the average for schools, where MilkPEP conducted a very successful vending test two years ago (see VT, Sept. 2001).

Flavored milk accounted for 73% of sales, with chocolate alone representing 47% of total milk volume. However, white milk performed well, chalking up 27% of all sales despite the many competing flavor choices. The strength of white milk in adult sites is a major difference from vended milk's performance in schools, where white milk averaged 9% of total sales.


Contributing to the strong appeal of flavored milk across wide demographic boundaries is the ongoing expansion of the flavor spectrum, which now includes not only strawberry and banana but such novelties as mocha cappuccino, peach and blueberry, as well as dulce de leche, a caramel-flavored beverage long popular south of the border.

In all the test locations, the milk machines remained popular after the initial bounce always produced by a new item subsided. Post-installation sales averaged 80% of the initial level, compared to the industry average of 50% to 60%.

Machines that stocked seven or more flavors and/or fat content choices outsold those with fewer selections by almost two to one.

Operators who participated in the multi-channel test concluded that "best practices" for successful milk vending include offering a full variety of milk choices from a machine placed next to a snack or food vender , ideally, in a location without a cafeteria that also serves milk. Glassfront machines outsell closed-front types, but the economics of the site will govern which design is chosen. A mix of milk and other beverages is preferable.

Best-performing locations for milk vending include public sites with extended hours of access or operation, which include hospitals and transportation facilities; business and industry locations with populations of 300 or more (by preference, a mix of white- and blue-collar workers with limited access to alternative on-site sources for lunch); and college/university areas with heavy foot traffic.

Conclusions of the study are that demand indeed exists for vended milk in all the channels tested. B&I locations generally produced the highest per-machine sales, even higher than schools, indicating that the availability of single-serve milk beverages can be a driver of increased milk consumption by adults. Offering a variety of brands and flavors generates higher sales volumes. Flavors (and not chocolate alone) represent the majority of sales.

In reviewing their test results, the participating operators expressed the belief that the best volume and profit opportunity is for "mixed" venders that offer milk plus other beverages. Of the location types tested, colleges and universities appear to be the best opportunity for fully dedicated milk machines.

Information on MilkPEP programs may be had online at whymilk.com or idfa.org. Complete results of the Multi-Channel Vending Test may be found at milkdelivers.org.