Fluid Milk Research: Updates and Strategic Insights

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Fluid Milk Research Updates and Strategic
Insights
Kikke Riedel - Assistant Director, Market
Research-International Dairy Foods Association
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Research Structure
Program
FMSTI
Syndicated Proprietary Score-carding,
benchmarking
Primary and secondary In-market Test, Best
practices and roadmaps
Trade Shows
Program Development
Sales Materials
Program Tracking
Seminars
Project Evaluation
B2B
Program Assessment
Trade Education
Business Performance
Expand knowledge base to guide new our own and
our partners programs and initiatives
Aid in strategy development, planning and
evaluation of existing programs
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DMI/MilkPEPResearch Initiatives
Creative Development
MilkPEP DMI
Promotion Evaluation
General Consumer Trends
Attitudes Awareness
Beverage Consumption Trends
External Market Analyses
Sales Purchasing Trends
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Milk Category Performance

• When properly accounting for Mass Merchandise
  channel, the CORE volume remains stable, growing
  slightly. This permits continued and increased
  emphasis on the GROWTH segments

Core Volume
2002
FDMx
FDMw
CATEGORY - FLUID MILK
-0.6
1.0
Total White
-0.8
0.8
Total White Gallon
-0.9
0.8
Total White Non-Gallons
-0.5
0.9
TOTAL FLAVORED MILK
8.0
9.2
Source IRI. FDMw Food, Drug, Mass including
Wal-Mart FDMx Food, Drug, Mass excl.
Wal-Mart
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Milk Category Performance

• Flavored milks continue to generate growth in
  fluid milk sales, driven mostly by chocolate
  milk.

Growth
Flavored
3
Share of Sales Sales 2002
White
97
Flavored
29
Share of Growth 2002
White
71
Source IRI 52 weeks ending 11/03/02 FDMw
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Milk Category Performance
Convenience Stores
Share of Sales
Dollar Sales Avg. Per Store
11.4
Share of Growth
Source 2002 NACS State of the Industry
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Multi-Outlet Study
Information Resources

• Consumer purchasing of milk in all retail
  channels

Channels
Issues Addressed
Fluid Milk White Milk Flavored Milk by Size and
Fat Level

• Food
• Drug
• Club
• Mass
• Convenience
• Dollar
• All Other

• Purchasing Dynamics by channel
• Importance of each retail channel
• Opportunities within each channel
• Total US and regions

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Multi-Outlet Study

• The Food channel accounts for 80 of total volume
  sales, while Mass accounts for more than 12
  across the US.

Fluid Milk Volume by Retail Outlet
Source IRI Consumer Insights Builder Mid Year
2002
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Multi-Outlet Study
While consumers continue to purchase Milk within
the Grocery outlet they are turning towards
alternative outlets for their Milk purchases.
Households Purchasing
Flat
Slight growth
Slight Growth
Source DMI On-line Milk Database, IRI Panel
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Fluid Milk Space Audit
IRI/Mosaic Infoforce
Research Objectives

• To understand key dynamics of the set, case
  conditions over time and the impact of different
  case set variables and conditions.
• Create a benchmark for future trends, help us
  identify in-store conditions that negatively or
  positively impact sales

Historical Data 2000-2002
Juice, CSD, BW, SED, Yogurt, Cheese, Cult, Eggs,
Dough, Butter, Lunch/Breakfast Meats, Pudding
Phase 1
Competitive Beverages and Dairy Case
US Food
Space and Sales
Custom Audit Week Ending 11/23/02
Flavored White White by Fat Content
Phase 2
US Food and Drug
Fluid Milk Category detail
Space and Sales
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Fluid Milk Space Audit
Competitive Beverages-FOOD

• Milk/Creamers, Water and CSDs have relatively
  stable Average Linear Feet per Store.
• Sports Drinks and RTD Teas appear to be losing
  presence in the store, most notably between 2000
  and 2001.

Average Linear Footage
Average Linear Feet represents the Total Linear
Feet for the category divided by the sum of the
ACV weights for the stores carrying the product.
Source Mosaic InfoForce Audit - Total US Food
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Fluid Milk Space Audit
Competitive Beverages-FOOD

• Of the Competitive Beverage Categories,
  Milk/Creamers has had the highest Dollar Sales
  per Linear Foot outselling the nearest
  competitive category by almost 4,500.

Shelf Footage
/Shelf Ft Chg vs. YA
Dollar Sales Per Shelf Foot
Velocity
Milk/Creamers Bottled Water Sports
Drinks Refrigerated Juices/Drinks RTD
Teas Carbonated Beverages
75.6
-7.7
122.2
11.1
52.1
4.2
80.3
-20.7
33.0
0.2
316.7
-1.4
Source Mosaic InfoForce Audit - 2002 vs. 2001 -
Total US Food IRI InfoScan Data 52 Weeks Ending
11/3/02 - Total US Food
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Fluid Milk Space Audit
Dairy Case-FOOD

• Cheese and milk have the largest presence in the
  Refrigerated Dairy Case.
• Cheese gained Average Shelf Footage from 2000 to
  2001 but declined in 2002. Milk and other
  segments were relatively stable from 2000 to
  2002.

Average Linear Footage
Average Linear Feet represents the Total Linear
Feet for the category divided by the sum of the
ACV weights for the stores carrying the product.
Source Mosaic InfoForce Audit - Total US Food
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Fluid Milk Space Audit
Dairy Case-FOOD

• Milk/Creamers and Cheese are two of the top three
  categories in terms of Dollar Sales per Linear
  Foot in 2002. Milk declined 7.7 vs YA, while
  Cheese grew 6.4. However, much of this was
  driven by price fluctuations.

/ Shelf Ft Chg vs. YA
Velocity
Avg Shelf Footage
Dollar Sales Per Shelf Foot
75.6
Milk/Creamers Cheese Yogurt Refrigerated
Pudding/Gelatin Eggs Sour Cream/Refrigerated
Dips/Cottage Cheese/Ricotta Butter/Margarine Lunch
Meats Breakfast Meats Refrigerated Dough
-7.7
6.4
90.3
52.1
-0.2
-9.8
26.3
22.0
-14.1
29.5
-8.2
-9.1
44.5
-4.0
71.9
36.7
-4.1
-7.8
36.8
Source Mosaic InfoForce Audit - 2002 vs. 2001 -
Total US Food IRI InfoScan Data 52 Weeks Ending
11/3/02 - Total US Food
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Fluid Milk Space Audit
Fluid Milk Detail-FOOD

• The average US Grocery store has 192 facings of
  Fluid Milk, with White Milk dominating the shelf
  space with slightly more than 140 facings.

Facings
ACV Wtd Distribution
100.0 100.0 100.0 99.9 99.9 97.5
Average Number of Facings
Source Mosaic InfoForce Audit - Week Ending
11/23/02 - Total US Food IRI InfoScan Data 52
Weeks Ending 12/29/02 - Total US Food ONLY
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Fluid Milk Space Audit
Fluid Milk Detail-FOOD

• Within Flavored Milk, Chocolate Milk averages the
  most shelf space however, Buttermilk competes
  closely with Chocolate Milk in terms of volume
  sales per shelf footage but only occupies
  slightly more than half the linear footage per
  store in comparison to Chocolate.

Avg. Linear Footage/Store
Volume Sales per Shelf Foot
Velocity
Volume Sales per Shelf Foot Volume Sales/Total
Shelf Footage
Source Mosaic InfoForce Audit - Week Ending
11/23/02 - Total US Food IRI InfoScan Data 52
Weeks Ending 12/29/02 - Total US Food ONLY
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Fluid Milk Space Audit
Fluid Milk Detail-DRUG
The average US Drug store has almost 31 facings
of Fluid Milk, with White Milk dominating the
shelf space with close to 25 facings.
Facings
ACV Wtd Distribution
Average Number of Facings
85.3 85.0 80.9 10.1 62.1 63.2
Source Mosaic InfoForce Audit - Week Ending
11/23/02 - Total US Food IRI InfoScan Data 52
Weeks Ending 12/29/02 - Total US Food ONLY
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Fluid Milk Space Audit
Fluid Milk Detail-DRUG
White Milk is also the dominant player in terms
of Volume Sales per Shelf Foot. Among Flavored
Milks, Chocolate Milk generates the most volume
sales per shelf foot.
Volume Sales per Shelf Foot
Velocity
Avg. Linear Footage/Store
Volume Sales per Shelf Foot Volume Sales/Total
Shelf Footage
Source Mosaic InfoForce Audit - Week Ending
11/23/02 - Total US Food IRI InfoScan Data 52
Weeks Ending 12/29/02 - Total US Food ONLY
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DMI/MilkPEPResearch Initiatives
Advertising
MilkPEP DMI
Promotion Evaluation
General Consumer Trends
Attitudinal Change
Beverage Consumption Trends
External Market Analyses
Sales Purchasing Trends
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Research Objectives
Hispanic Tracker
TNS

• Assess the impact and effectiveness of Hispanic
  campaign
• Determine Hispanic attitudes and imagery towards
  milk and milks competitors
• Understand Hispanic consumption habits

Awareness
Attitudes
Behavior
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Rated Highest (97-99)
Hispanic Tracker
Key Learnings

• Mom is proving to be a strong influence on milk
  consumption for both kids and teens as reflected
  in consumption and the importance she places on
  milk and herself as a role model

Milk is essential for my childs growth
I encourage my child to drink milk
I feel good when I serve my child milk
It is important for me to set a good example for
my child by drinking milk
I give my child milk for more nutrients than
just calcium
Indicates higher relative agreement with
benefit statement vs. GM based on position within
total scale
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Key Learnings
Hispanic Tracker

• Flavors are extraordinarily strong with the
  Hispanic market
• A far greater percentage of Hispanic teen milk
  consumption is with flavored milk
• 91 of milk drunk daily is whole milk vs. 23 in
  the GM

of Milk Consumption
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Key Learnings
Hispanic Tracker
of People Consuming

• Hispanic are more likely to consume milk in other
  ways, most likely with cereal or as an ingredient
  in preparing a beverage

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General Ad Tracking Study
Knowledge Network

• Measures the communications impact of the Milk
  Mustache and Got Milk? general market
  advertising campaigns on our target audiences

• Identifies key attitudes that are changing milk
  consumption behavior

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The campaign is at the Top of Unaided Consumer
Awareness.
General Ad Tracking Study
Awareness
Total Campaign Unaided Advertising Awareness
Base Total Respondents Q2aceg. What did the ad
say or show?
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Recognition of the Got Milk? slogan is almost
universal
General Ad Tracking Study
Awareness
Got Milk? Slogan Recognition
Base Total Respondents Which of the following
slogans have you seen or heard recently?
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Milks Benefits Successfully Communicated
General Ad Tracking Study
Attitudes
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General Ad Tracking Study

• Milk is universally selected as the best source
  of calcium by women.
• Fortified OJ has pushed Cheese from the Number 2
  spot among teens and adult women.

Attitudes
Moms
Adult Females
Teens
Milk OJ fortified with calcium Cheese Yogurt Calci
um supplements Cottage cheese Frozen yogurt Ice
cream

• a/b Significantly higher than group noted at 90
  confidence level.
• Q11b1. Using the scale below please indicate how
  good a source of calcium each of these products
  are. Total 2002

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General Ad Tracking Study
Over time, consumer perception of the number of
glasses a day needed has risen.
Glasses Needed to Obtain Daily Calcium
Knowledge Networks
Roper
EL
Note Not asked in May/June 1996 among Teen
Boys Q11a. of 8oz glasses need to drink to
obtain daily calcium requirement.
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General Ad Tracking Study

• Moms who drink 3 or more glasses of milk daily
  account for nearly 60 of milk consumed among
  Moms.
• Kids who drink the same amount make up nearly
  three quarters of Kids' milk consumption.

Moms Milk Consumption
Kids Milk Consumption
Milk Consumption Yesterday
Heavy (3 Glasses) Medium (1-2
Glasses) Light (0 Glasses)
Base Moms With Kids 2-14 - Heavy (104), Medium
(307), Light (579) Kids 2-14 Heavy (N297),
Medium (N452), Light (N242)
Q6a/15a. Below are the beverages you mentioned
you consumed yesterday. Please type in the
number of 8 ounce glasses you had yesterday.
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General Ad Tracking Study
Moms consumption of milk is correlated to how
much milk their Kids consume.
Moms milk consumption is correlated with
Interaction Between Moms and Kids Level of
Consumption
Taste Belief in milks health benefits The
encouragement of their kids milk
consumption Their perception that milk is
popular.
Kids milk consumption is correlated with
Q6a/15a. Below are the beverages you mentioned
you consumed yesterday. Please type in the
number of 8 ounce glasses you had yesterday.
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General Ad Tracking Study
Applicability

• Identifies key attitudes that can change behavior
• use attitude findings to guide internal message
  strategies
• leverage recognition and likeability of Got
  Milk?/Milk Mustache by incorporating
  off-the-shelf materials into your marketing tool
  kits and by branded local milk mustache celebrity
  ads

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DMI/MilkPEPResearch Initiatives
Advertising
MilkPEP DMI
Promotion Evaluation
General Consumer Trends
Attitudinal Change
Beverage Consumption Trends
External Market Analyses
Sales Purchasing Trends
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Share of Intake Panel Analysis
NFO/SIP 2001
SIP
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Share of Intake Panel Analysis
Milk ranks third in per capita beverage
consumption. Bottled water continues its strong
growth it is consumed almost as frequently as
fruit juice.
Per Capita Beverage Consumption
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Share of Intake Panel Analysis
The majority of milk consumption is lowfat.
Ready-to-drink flavored milk consumption,
although small, is growing.
Per Capita Beverage Consumption
Gallons Per Year
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Share of Intake Panel Analysis
Milk is primarily consumed with meals versus
between meals/snacks. The breakdown by occasion
has remained stable the last several years.
Milk Consumption by Occasion
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Share of Intake Panel Analysis
Milk consumption historically has dropped
precipitously during the teenage years. The
slight advantage in teen boy consumption vis a
vis the 6-12 year old boys is the first we have
seen since 1997.
Per Capita Milk Consumption
2002
2001
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Share of Intake Panel Analysis
Kids under 6 Teens Show Continued Growth Kids
6-12 Consumption Softens after 2 strong years in
2000 and 2001.
Per Capita Consumption
Gallons per capita
Source Share of Intake Panel Study (SIP)
conducted by NFO WorldGroup SIP
monitors individuals beverage consumption both
at home and away from home through a
national panel of 12,000 individuals per year
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Share of Intake Panel Analysis
Young Adults on a Long-Term Decline
Gallons per capita
Per Capita Consumption
Source Share of Intake Panel Study (SIP)
conducted by NFO WorldGroup SIP
monitors individuals beverage consumption both
at home and away from home through a
national panel of 12,000 individuals per year
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The Number of Teens Drinking Milk Increased in
2002
Share of Intake Panel Analysis
Teens
Penetration
10 oz per day
Teens 13-17 Consuming Milk in Two Weeks
Ounces Consumed per Milk Drinker per Two Weeks
"The Share of Intake Panel (SIP) study is
conducted by NFO WorldGroup." SIP monitors
individuals' beverage consumption both at home
and away from home through a national panel of
12,000 individuals per year. Teens 13-17
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The increase in total per capita consumption for
teens was driven by White milk while Flavored
Milk remained stable
Share of Intake Panel Analysis
Teens
Per Capita Beverage Consumption
Gallons Per Year
1995
2002
Source NFO SIP Note Beverage use only . Teens
13-17
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Share of Intake Panel Analysis
Along with a consumption gain, milk gained share
of stomach among teens. Currently about one
quarter of beverages consumed is milk. The
consumption gain translated into a share of
stomach gain of almost three points since 2000
share of beverage consumption
Teens
Source NFO SIP. Teens 13-17
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Share of Intake Panel Analysis
Applicability

• Identify growing key targets to aid in
  development internal marketing strategies
• Understand source of volume loss/gains in the
  context of the entire beverage universe over time

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DMI/MilkPEPResearch Initiatives
Creative Development
MilkPEP DMI
Promotion Evaluation
General Consumer Trends
Attitudes Awareness
Beverage Consumption Trends
External Market Analyses
Sales Purchasing Trends
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Positioning Research
Wirthlin Worldwide
Test Objectives

• Understanding the strengths and weaknesses of
  milk and of the primary the competition (water,
  juices soft drinks).
• Uncover core equities disequities of milk among
  both current lapsed users to more fully
  understand the emotional drivers of milk drinkers
• Identify the specific linkages between rational
  and emotional elements
• Fine tune and quantify consumer decision-making
  pathways for milk.
• Help lead us to positioning insights relevant
  across all targets.

Acceptance, freedom, longevity, self-esteem
Values
Emotional Consequences
Responsible, satisfied, in control, healthy
Strong bones, quench thirst, nourishment, growth
Benefits
Attributes
Texture, flavor, essential nutrients
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Positioning Research
Wirthlin Worldwide
Update

• An in-depth presentation to the industry will
  take place at World Wide Food Expo 2003, held in
  Chicago Oct. 29-Nov. 1

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DMI/MilkPEPResearch Initiatives
Advertising
MilkPEP DMI
Promotion Evaluation
General Consumer Trends
Attitudinal Change
Beverage Consumption Trends
External Market Analyses
Sales Purchasing Trends
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Full Chill Flavor Promotion Evaluation
Information Resources

• Full Chill Flavor

Objective

• To understand the volume impact of a Flavored
  Milk promotion, as well as to compare the current
  results to results from two previous Flavored
  Milk feature ad incentive programs.
• Was the Full Chill Flavor promotion effective in
  driving incremental sales of Total Flavored Milk?
  
• Did the Full Chill Flavor promotion cannibalize
  White Milk sales?
• What is the impact on consumer purchase dynamics
  when Flavored Milk is on promotion?

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Full Chill Flavor Promotion Evaluation
Incremental Volume Sales By Flavor

• The FCF promotion had a positive impact on
  Chocolate Milk incremental sales. However,
  consumers may have taken advantage of
  merchandising activities in the pre-period which
  would affect incremental volume during the
  promotion.

1.5
-13.5
-9.0

• Sales of Strawberry Milk increased over 50. The
  promotion appeared to be effective in enticing
  consumers to try a new flavor.

51.0
2,202,273 2,245,918 1,943,685
Tot Flav Milk Increm Sales
Source IRI InfoScan
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Full Chill Flavor Promotion Evaluation
Both Gallons and Half Gallons had approximately
one quarter of total volume from incremental
sales. Gallon and Half Gallon sizes had the
largest increases during the FCF promotion in
incremental volume.
Base and Incremental Volume By Size
Volume Sales 34,267,272
3,638,445
41,367,140 4,188,000
Volume Sales 13,474,563
1,264,328
13,090,291 1,300,745
Source IRI InfoScan
52 Weeks 52 weeks ending 8/11/02 Promo
period 5 weeks ending 8/11/02
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Full Chill Flavor Promotion Evaluation
The promotion was successful at attracting new
buyers to the Flavored Milk segment.
Flavored Milk HHs Buying
Flavored Milk Promotion Buyers Buyers who
purchased Flavored Milk during the promotion, but
not during the pre period.
Flavored Milk - Volume Per Buyer
Source IRI Shopper's Hotline Multi-Outlet Panel
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Full Chill Flavor Promotion Evaluation
Information Resources
Key Findings

• Flavors beyond chocolate seem to respond well to
  feature incentive program. Use promotion to
  showcase you new and exciting flavors.
• Gallon and half gallon sizes enjoyed the largest
  increases. Promoting these large size can entice
  consumers to trade up, providing incremental
  volume to you and your retailer.
• Promotions are successful in bringing in new
  buyers to the category. Utilize national
  promotions or plan your own to build category
  excitement and maintain sales momentum.

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www.milkpep.org

• Look out for a new and improved website in the
  near future.

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Already on the website
www.milkpep.org

• The School Milk Market Leverageable System
  Growth Opportunities
• Enhancing School Milk Opportunities a la Carte
  and Vending Programs
• The Importance of Milk to Convenience Store
  Operators
• Floor Graphics Matched Store Test Final Analysis
• Continuing Fluid Milk Sales Tracking and Analysis
  - September 2002
• Latest IRI sales data
• Beverage Innovation Report
• Strategic Review of Competitive Kid-Targeted
  Marketing
• Times and Trends 2001
• Iconoclock A Century of Milk
• 2001 Single Serve Milk Overview
• Brand Growth Narrowing the Gap Report
• Beverage Image Study
• Culturama Milk Culture
• Cross Category Switching Analysis Fat Free Milk
• Milk Advertising Tracking Studies
• General market
• Hispanic Tracking
• EL claims study

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Other resources

• CPGNetwork
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• Next scheduled for April 3rd 200-400pm
• Please contact Andy Rosenstock with questions at
  202 220 3558

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Thank You