LAS VEGAS -- I—and many other beverage-industry watchers—have given Coca-Cola Co. a hard time in recent years for the slip in sales of carbonated soft drinks. Once the clear leader in packaged beverages, CSDs have slowly seen their stock chipped away at by smaller beverage categories: energy drinks, iced tea, bottled water and others.
And so it was intriguing to me that Coca-Cola Co. would this year throw its weight behind another ebbing beverage: milk.
In fact, after pulling together four slideshows of new beverage products I found interesting from the NACS Show floor, Coca-Cola’s new milk offer—fairlife Ultra-Filtered Milk—is the one that didn’t fit into a growing category that I felt needed a spotlight.
Milk is one of the pillars of the convenience-store industry. It’s also a tough nut for the industry in recent years as grocers and mass-merchandisers play the pricing game, preferring volume to margin. The struggle is reflected in industry sales data. In the first half of 2014, milk unit sales dipped 2.9% (on top of a 6.1% drop in 2013) while dollar sales grew slightly at 1.6%, according to IRI convenience-store data.
So the question gnawed at me: Why would Coca-Cola Co., with problems to deal with elsewhere (It recently announced a multi-initiative plan to improve growth), decide now is a good time to get into the milk business?
“It’s a beverage” was the simple answer I received from Jim Dinkins, Coca-Cola’s chief retail sales officer, during an exclusive interview this month. “It’s Coke looking at categories where we can reach our consumers in more ways.”
Coca-Cola Co. made its initial move into dairy products in 2012, when it struck a distribution pact with Fair Oaks Farms in Indiana to distribute its Core Power protein shake, a smart move that moved Core Power to the front of the protein-shake pack. During the NACS show that year, a Coca-Cola exec told me how excited he was about the deal, which at the time seemed to me to be a simple move into the then-fast-growing protein-drink category.
“We’ve got some shared ownership now in a dairy business, which gives us access to the things that could be done in that space,” the exec said, foreshadowing this year’s unveiling of what Coca-Cola is calling a premium milk.
If you haven’t heard about it, fairlife debuted early this year with fresh packaging and a racy attitude. “Drink what she’s wearing,” read print ads that feature women in pin-up poses "dressed only in milk.”
“The milk category hasn’t seen much innovation over the years,” Doug Middlebrooks, assistant vice president of shopper marketing for Coca-Cola Refreshments, told me during this year's NACS Show. “We wanted to change that.”
Fairlife is “ultra-filtered” to provide 50% more protein and 30% more calcium than other milks, according to the company, and of course it will be reflected in the pricing.
But Coca-Cola Co. is currently accelerating the national availability of the new line. So take another look at that dairy door on your next reset. Is it ready for the kind of innovation that we’ve seen elsewhere in the cold vault?
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