Where is Our Milk Being Produced, Who is Buying it?
Rick NacziADADC Inc.
1
2
The number of occasions of milk drinking per capita has “slipped” over time as well for younger kids and adults age 50
0 to 5 6 to 10
11 to 13
14 to 18
19 to 24
25 to 34
35 to 49
50 to 64
65+0
2
4
6
8
10
12
14Occasions per Capita 2012 vs 2006
By Age
2012 2006
Milk
occ
asio
ns p
er w
eek
Source: Kantar Worldpanel
Kids 0-5 had 2.4 fewer milk occasions/week in
2012 vs. 2006
-10.0%
-5.0%
0.0%
5.0%
$1.00
$2.00
$3.00
$4.00
$5.00
% Vol. Chg vs Yago Avg Price / Gallon
Monthly Milk Historical Snapshot: Milk Sales Maintain Downturn Through 2013 YTD; Average Prices Still Remain Down $0.20 From December Of 2012
3
Milk Sales % Chg- based on ADADC Multi-Outlet
Note: Milk includes White Milk, Eggnog, Buttermilk and Kefir milk segments Source: IRI DMI Custom database,ADADC Multi-Outlet.
-4.1%7/14/2013
$4.327/14/2013
Annual Average % Chg.
2010 : -0.6% 2011 : -0.7% 2012 : -1.9% 2013 YTD : -2.5%
Multi-Outlet (MULO) retail channel includes: Grocery, Drug, Walmart, Club, Dollar, Military, and AO Mass stores
Declining Sales + Growing Population = Falling Per Capita consumption
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
55,262 54,981 54,578 54,543 55,137 55,087 55,140 55,447 54,671 53,739 52,850
Total Fluid Milk Sales*million pounds through all channels
* Includes all milk products, buttermilk, eggnog and other misc. productsSource: USDA/AMS
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 % Change 2012 vs. 2002
Milk Sales
U.S. Population
% Change vs. PY -0.5% -0.7% -0.1% 1.1% -0.1% 0.1% 0.6% -1.4% -1.7% -1.7% -4.4% +11.9%
Since 2002, fluid milk through all channels has declined over 4%, while population has grown almost 12%
• DECLINE OF HOUSEHOLDS WITH CHILDREN IMPACTS MILK
5
Percentage of households with children under age 18
Beverage Milk Consumption by AgeAnnual Eatings Per Capita
Source: GfK Consulting
How Will this growing Consumer Base Affect US Beverage Categories in 2020?
People Age 65+
Boomers getting older• 12% of population age
65+
Fast growing• +36% 2010-20 versus
+6% Other Age Groups
Growth of 15 million• Between 2010-20
6
How Will this growing Consumer Base Affect US Beverage Categories in 2020?
HISPANICS
Largest minority group • 16% population
Fastest growing• +33% 2010-20 vs +6%
Non-Hispanic
Growth of 17 million• Between 2010-20
7
Other Retail6.6%
Shrink & Not accounted for
2.2%
8
2011 Milk SalesShare by Channel
% Change Volume 2011-12
TOTAL USDA Fluid Milk Sales
-1.7% Volume
Retail Outlets (measured by IRI, MULO + C-Store)
-3.1% Volume
Restaurants (Combined milk + specialty coffee milk)
slightly up
Servings
Schools*Flat to down
slightly
Volume
* SY 2010-11 vs. 2011-12
Schools7.2%
RetailMeasured through IRI
69.8%
Foodservice14.2%
In 2012, Fluid Milk Declines Most significantly through Retail, The Major Channel
Sources: Prime/MilkPEP All Channel Tracking, 2011;NPD/Crest;SymphonyIRI, DMI Custom DB Multi-Outlet Data (MULO), includes: Grocery, Drug, Wal-Mart, Club (ex. Costco), Dollar, Military and Mass Stores. Excludes Convenience Stores.
ADADC Multi-Outlet Milk Sales/Pricing: Milk Sales Are Down Nearly -3% For 2013 YTD, As Prices Begin Increasing
9
ADADC Multi-Outlet – Data Through 7-14-2013
Source: IRI DMI Custom database,ADADC Multi-Outlet.
Q2 2013 2013 YTD
ADADC -3.9% -2.5%
Grocery -5.4% -3.7%
All Other +0.2% +1.2%
(Gallons) 2013 YTD
Avg Price % ChgYago
ADADC $4.29 +3.0%
Grocery $4.48 +3.1%
All Other $3.77 +3.6%73%
27%
Grocery All Other
Volume % Chg. vs. Year Ago Average Price Per VolumeTotal Fluid Milk Volume Share
2013 YTD - ADADC
All Other outlets have much lower prices than traditional Grocery stores
Grocery outlet declining while All Other outlets are growing, as consumers find lower average prices at Club stores
“All Other” Outlet includes: Walmart, Club, Dollar, Military, AO Mass
Multi-Outlet (MULO) retail channel includes: Grocery, Drug, Walmart, Club, Dollar, Military, and AO Mass stores
Volume Growth by Beverage Category
Fruit B
everages*
Carbonated Soft Drin
ksMilk
Total Coffee
Sports
Beverages
Total Tea
Bottled Water
Value-Added Water
Energy Drin
ks
-14.2%-10.1%
-2.3%
1.0% 1.0% 4.0%10.3%
25.6%
74.7%
% Change, 2011 vs. 2006
Source: Beverage Marketing Corporation
Fastest Growing Milk Segments
Produce Q2 2013 2013 YTD
Omega 3 +3.5% +7.2%
96 oz. +6.4% +7.0%
Organic +2.9% +4.6%
Flavored +1.8% +2.6%
Lactose Free +1.7% +2.1%
11
ADADC Multi-Outlet Milk Segments: 2013 YTD (Jul 14th)
Milk by Fat Level• Reduced Fat with small growth through July• Sharp downturn in Fat Free (19% share)• Reduced Fat Milk accounts for largest share
Milk by Flavor• White Milk holds 97% of Milk volume share• Flavored has 3% share of the Milk category and is growing +3% through 2013 YTD
Milk Branded vs Private Label• 45% of Milk is Branded, sales down -3%• Private Label is faring slightly better than Branded
12
Whole 29.1% -0.3%
2% 30.5% +0.3%
1% 21.2% -3.1%
Fat Free 18.7% -9.0%
White 96.9% -2.6%
Flavored 2.7% +2.6%
Eggnog 0.1% +35%
Buttermilk 0.3% 0.0%
Branded 45.2% -2.8%
Private Label 54.8% -2.2%
% Chg vsYago
Share of MilkSnapshot based on combined ADADC Multi-Outlet
Source: IRI DMI Custom database,ADADC Multi-Outlet.
Multi-Outlet (MULO) retail channel includes: Grocery, Drug, Walmart, Club, Dollar, Military, and AO Mass stores
Lactose-Free Milk• LF Milk accts. for nearly 4% of Total Milk• Lactose Free showing growth for 2013 YTD
Organic Milk• Organic accounts for 7% of Milk volume• Organic Milk outperforming Non-Organic
Other Value-Added Milks• Other value-added Milks remain very tiny• DHA/Omega 3 Milk with increasing sales
13
Lactose- Free Milk 3.8% +2.1%
Full Lactose Milk 96.2% -2.6%
Organic Milk 7.3% +4.5%
Non- Organic Milk 92.7% -3.0%
% Chg vsYago
Share of Milk
Creamy Milk 0.5% -28.9%
Omega Milk 0.8% +7.2%
Plant Sterols Milk 0.04% -36.8%
Snapshot based on combined ADADC Multi-Outlet
ADADC Multi-Outlet Milk Segments: 2013 YTD (Jul 14th)
Source: IRI DMI Custom database,ADADC Multi-Outlet.
Multi-Outlet (MULO) retail channel includes: Grocery, Drug, Walmart, Club, Dollar, Military, and AO Mass stores
ADADC Multi-Outlet Milk Segments: 2013 YTD (Jul 14th)
Milk Sizes• Nearly all sizes posting volume sales declines• High growth in 96 oz. size due to value-added• Gallon accts. for 65% of Milk; downturn of -2%
Milk Packaging• Milk packaging predominantly Plastic; declining• Paperboard holds 12% share and is down -5%• Premium Glass segment tiny but increasing
Non-Dairy Alternatives• Non-Dairy growing strong off small base• Almond remains key growth driver• Coconut continues to develop, although tiny
14
Tot Non Dairy 5.2% +15.0%
Soy 2.0% -14.1%
Almond 2.6% +53.9%
Coconut 0.2% +3.9%
Rice 0.1% -8.0%
16oz 0.3% -17.7%
32 oz 4.4% -1.2%
64oz 28.5% -3.2%
96 oz 1.5% +7.0%
128oz 64.6% -2.3%
% Chg vsYago
Share of Milk
Plastic 88.3% -2.1%
Glass Bottle 0.05% +46.3%
Paperboard 11.6% -5.2%
Source: IRI DMI Custom database,ADADC Multi-Outlet.
Snapshot based on combined ADADC Multi-Outlet
Share of % ChgMilk + Non-Dairy Yago
Multi-Outlet (MULO) retail channel includes: Grocery, Drug, Walmart, Club, Dollar, Military, and AO Mass stores
Lasting EnergyLow Carb
Quick EnergyLightly sweet
To relaxLow CalCool Off
Pure/CleanNutritional Benefits
TreatFun to Drink
Wake UpHealthier Choice
Goes Well w Food/SnackReplenish Fluids
Goes w FoodTaste
Quench Thirst
2%3%4%5%5%6%6%6%6%6%7%8%9%
12%22%
26%29%
33%
Total Beverages
2%1%2%2%
4%4%
1%2%
22%3%4%
2%11%
22%5%
57%34%
10%
White Milk
Milk’s Strengths Do Not Fully Align With Consumer Beverage Needs
15Source: Kantar World Panel12 months ending March 2012
16
Competitiveness Ramped Up
• Milk• Soft Drinks• Coffee• Juice
• Milk• Soft Drinks• Coffee• Juice• Bottled Water• RTD Juice• Teas
• Milk • Soft Drinks• Coffee• Juice• Bottled Water• RTD Juice• Teas• Wellness• Sports Drinks• Flavored Teas
• Milk • Soft Drinks• Coffee• Juice• Bottled Water• RTD Juice• Teas• Wellness• Sports Drinks• Flavored Teas• Functional
Beverages• Energy Drinks• Enhanced
Water• RTD Coffee• Almond Drink• Coconut Bevs
• Milk • Soft Drinks• Coffee• Juice• Bottled Water• RTD Juice• Teas• Wellness• Sports Drinks• Flavored Teas• Functional Bevs• Energy Drinks• Enhanced Water• RTD Coffee• Almond Drink• Coconut Bevs• Vegetable/Fruit
Blend Juice• Sparkling Juice• Fusion Drinks• Fermented Tea• Coconut Water
1970’s
1980’s
1990’s
2000’s
Today
The number of choices Consumers have at retail has exploded in the past 40 years
Total U.S. new milk product introductions account for only 5% of all new beverages introduced worldwide
Asia
West
Europe
East
Europe
Latin Ameri
ca
Middle Ea
st
United St
ates
Africa
Australa
sia
748
569
322
235168
116 110
21
2012 New Product Introductions
Source: Innova
MANY NEW U.S. PRODUCTS WERE FAMILIAR FORMS, FLAVORS
TruMoo Limited Edition Halloween Orange Color Vanilla Milk
Friendly Farms Pumpkin Spice Milk
Outside the box
Lucerne Protein + Refuel Protein Fortified Dairy Beverage: Chocolate
Shamrock Farms' Rockin' Refuel Protein Fortified Low Fat Strawberry Milk Drink
Core Power 26g Protein Honey
Source: Innova
Beyond our bordersMilk Multi-Taskers
Source: Innova
Nutricima Bliss Smoothie Fruit Milk: Orange and Pineapple. Contains vitamins A, C, and E for immunity; vitamin B complex for energy
Jalea Vital with vitamin B6 to boost the immune system
• Vitamin B for Energy, Immune System• Fiber for Intestinal Health• Vitamin A for Healthy Eyes
Fibre to boost intestinal transit
Japan: Yakult Compressed Healthy Glucosamine Dairy Drink: Apple. Includes glucosamine to strengthen chondrocyte. Also include chondroitin for the endurance of cartilage. Added 20% of apple citrus to give refreshing flavors.
Vanilla flavored semi-skimmed milk with added vitamins and minerals. With vitamin A for healthy eyes.
Skimmed Milk Drink Enriched with Plantsterol. Scientifically proven. Skimmed milk drink with additional plantsterol. Actively reduces cholesterol.
Nesfluid Hydra Nutrition Renforce Cocoa Flavored Milk Drink with Coconut Water. For enhanced hydration
• Coconut Water for Hydration• Glucosamine for Healthy Joints
Worst of the Worst
Walgreens - East Windsor, NJ Stewarts - Ballston Spa, NY
CVS New Hyde Park
Before After
Walgreen’s NYC and Western NY
Specialty Coffee Accounts for Significant and Growing Share of Fluid Milk Through Restaurants
Servings of Milk and Specialty Coffee are used to gauge Milk’s performance at restaurants:
as servings of milk as ingredient in other beverages such as specialty coffee and shakes
- Specialty Coffee drinks often contain at least an 8 oz. serving of Milk*
23
* As determined by review of ingredient/nutrition data on Starbuck’s and McDonald’s websites
Source: NPD/Crest
Milk1.45
Spe-cialty
Coffee 2.75
Billion Servings,2012
Restaurant Servings, % Change
2011-12 2007-12
Specialty Coffee +5.0% +20.7%
Milk -4.4% -12.8%
Total +1.5% +6.5
Milk Jug Packaging Promotional Materials
McPlay App
McDonald’s: Despicable Me & Fluid Milk
Safeway: Make It with Milk
Quaker17%
Milk5%
Next Steps• Monitor long-term behavior
change• Expand to more retailers for
sustained effort• Make It with branded Milk• Support with print campaign
and social media
Results• Higher sales volume• Retailer support• Loyalty program activation• Online consumer engagement
April 2013: 2 weeks in 1400 stores nationwide
26
When Milk Stretches Into Other Categories, Success has Followed
LattesDrives Milk Usage at QSRs, propping up adult milk
usage
SmoothiesSteep growth curve – currently more juice than
milk-based
Weight Loss BeveragesThis segment has grown more than 30% over last
5 years with rosy forecast
Nutraceutical BeveragesFocus on health/wellness, aging population, surging health care costs have fueled growth
Thank [email protected]