Categories / Dairy
Category Insights: Milk and Juice

Cold Beverages

PLBuyer takes a look at how private label refrigerated juices and dairy and nondairy options can stand out in the beverages market.

May 10, 2013
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Milk accounted for about $15.6 billion in sales and refrigerated juice/drinks almost $6 billion in 2012, according to SymphonyIRI Group data.

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When it comes to private label milk, SymphonyIRI Group shows skim and lowfat milk bring in the most money at more than $6 billion alone, while kefir/milk substitutes/soymilk have made the most gains, up more than 17 percent to about $97 million. While certainly a surge in this category, private label still holds less than a 1 percent share.

The good news for private label cow’s milk is that this is a commodity item where consumers perceive little difference between private label and branded milk, according to Mintel’s “Dairy and Non-dairy Milk - US - April 2012” executive summary. This is why private labels continue to be the dominant force in the market, accounting for more than 56 percent of total market sales (in FDMx) in 2011. Consumers see 27 percent to 37 percent price savings when buying private labels over branded milk. The dominance of private labels continues to maintain deflationary pressure in the market.

Two industry research projects commissioned by the Innovation Center for U.S. Dairy in 2011, shed some light on the future of the milk industry as a whole. “Milk in the Competitive Arena” warned that milk’s competitors have catered to specific needs consumers have, and over time, they have done this better than milk. The needs milk excels in – nutrition and parent recommended – are age limited. Additionally, milk’s strengths – making a healthier choice, providing nutritional benefits, and parent recommended – are declining consumer needs. Opportunities for dairy beverages include milk in its current state – “milk as milk” – as well as “milk as an ingredient.”

However, there are challenges in using dairy as an ingredient in RTD products.

“Dairy RTDs are either retorted or UHT processed,” explains Laura Erlich, opportunity manager, Imbibe Inc., Wilmette, Ill. “Both types of processing require high temperatures. The extreme heat of UHT is hard on the proteins in the milk, which can cause a stability issue and start to produce a Maillard reaction – which creates brown and caramel cooked notes in the flavor. Depending on the product type, this could have either a desirable or an adverse effect on the flavor of the final product.

“For example, for a chocolate or coffee flavored dairy drink, the brown notes can have a positive impact on taste by enhancing those existing brown notes. However, for a product like strawberry milk, the fresh green notes of the strawberry have to fight against the formation of brown notes.

“In general, UHT is more abusive than retort and the extreme high temperatures can also cause flavor loss. As a beverage formulator, Imbibe is adept at formulating the correct flavor amount to account for any loss of flavor during processing.”

Beverage functional claims have nearly quadrupled in the last few years, reports the Innovation Center for U.S. Dairy, a forum for the dairy industry to work together pre-competitively to address barriers and opportunities to foster innovation and increase sales.

The majority of functional claims however, are coming from meal replacement beverages.

“I think the only competition might be from calcium-fortified orange juice,” said Althea Vanecosky, registered dietician, Mid-Atlantic Dairy Association. “I think the sports drinks are really not. However, I now see fortified sport drinks that have whey protein, which is milk protein, but I think the audience for that is small.”

If milk is to make functional claims, the Innovation Center for U.S. Dairy continues, it must be enhanced in such a way as to provide the functional benefits people are looking for, namely heart health, immunity, energy, digestive health, and cancer prevention.

Vanecosky feels that chocolate milk can be the big winner for milk in the functional beverages space.

“The message of chocolate milk as a recovery beverage has really taken hold,” Vanecosky said. “People understand it, they like it. I think many people that are in sports want something that tastes good and are turning more towards something that is, if you want to use the word ‘natural.’ It’s not something that was formulated in a lab and put in a bottle.”

The typical sports drink only have carbs, not carbs and protein, which is what athletes need, Vanecosky explains. Additionally, milk as a recovery beverage also is a lot less expensive than typical sports drinks.

As for using milk for other functional beverages, Vanecosky warns, “My take as a registered dietician is don’t mess with something that already works. I think people turn to milk because it’s a great source of protein, it’s a cheap source of calcium. Leave the antioxidants to the fruits and vegetables.”

As the farm to table trend continues to grow with consumers, private label milk can focus more on marketing itself for its existing strengths.

“A lot of people now really want to know where their milk comes from now,” Vanecosky said. “I’ve gone to Whole Foods and some of the stores that now will advertise ‘here is the farm where your milk came from,’ and that seems to be where the consumer is headed. And if that is the case you probably don’t want to mess with something that people already like the way it is.”

Retailers might benefit in this respect by lifting the veil on their private label milk and marketing it to the consumer as fresh from the farm. According to Vanecosky, people just want to know that their food isn’t traveling on a truck across the country.

“Dairy farmers have this wonderful thing that they can use to market their products, that dairy farms are mostly family owned, that milk isn’t traveling a long distance,” she said. “People like that. They like to see the farmers. They like to know that their milk is this pure, natural product that the dairy farmer gives to his kids. I think that’s the trend and the way the consumers are going.”

“Tout your horn where you really have something to tout,” Vanecosky added.

People who buy milk want to see the naturalness of the product on the package.

“I think people amazingly still want to see the cow grazing out in the field,” she said. “I think we should stick as close to that image as we can truthfully stick, to let people know they are getting a wholesome product.

“I think we need to do a good job letting the people know that whether the farm has 50 cows or 500 cows that all of those cows are really well taken care of. And then they’re buying into a food that’s good for the environment, that’s good for their family. I think that’s what private label dairies need to do because I think that’s what people want.”

Milk Alternatives

According to the Packaged Facts white paper “Dairy Alternative Beverages in the U.S: Soy Milk, Almond Milk, Rice Milk and Other Dairy Milk Alternatives,” in 2011, almond milk was the fastest-growing plant milk in sales and popularity in the U.S. retail market.  Packaged Facts estimates that total U.S. retail sales of dairy alternative beverages reached $1.33 billion in 2011.

Among dairy alternative beverages, almond milk also accounted for the most new product introductions from 2009-11 period.  Packaged Facts survey data show that 9 percent of U.S. adults now are using almond milk, and only a fifth of these current almond milk consumers used this product five years ago.

Besides being the choice of vegans, many lactose intolerant Americans enjoy milk substitutes. According to Ohio State’s Wexner Medical Center’s webpage, 30 million to 50 million Americans (adults and children) are lactose intolerant, with 75 percent of all African-American, Jewish, Mexican-American, and Native American adults – and 90 percent of Asian-American adults – being lactose intolerant.

According to the white paper, the most popular of the commercial plant milks is soymilk. Following in consumer recognition and consumption are almond milk, rice milk and coconut milk. Additionally, hemp milk, oat milk, hazelnut milk, flax milk, sunflower milk and multigrain milk are available at the retail level, while Quinoa, lupine, pea, peanut, cashew, and sesame are also used to make RTD plant-based milks in countries other than the United States. These products carry the potential to enter the U.S. market at a later date on a commercial scale, either through domestic production or importation.

Dairy alternatives come in flavored, sweetened, unsweetened, low-fat, lite, fortified, and others manufacturer-specific formulations, including blends formulated to address specific qualities such as promoting heart health, digestive health, energy, and calcium absorption, according to the white paper.

In a Whole Foods Market store, PLBsaw shelf-stable 356 Everyday Value brand organic flaxseed milk with label claims on the package pointing to the product as being vegan, a good source of fiber, calcium and vitamin enriched, and having omegas. In addition, a shelf-tag touted the private brand milk alternative as Non-GMO Project certified. 

Refrigerated Juice

In 2011, the market for fruit juice and juice drinks exhibited 1 percent growth, reaching $15.9 billion in dollar sales, according to Mintel’s report “Fruit Juice and Juice Drinks - US - January 2012.”

During 2011-2016, Mintel projects the market to grow by 14 percent to reach $18 billion in 2016 in current prices; the inflation-adjusted growth is forecasted to be much lower at 4 percent in the same period.

Producing refrigerated juice has its challenges, Erlich said. Transportation and storage must be done in cold environment, which makes logistics difficult and

Producing refrigerated juice has its challenges, Erlich said. Transportation and storage must be done in cold environment, which makes logistics difficult and more expensive. 

more expensive. Additionally, there is variability in flavor and product analytics from lot to lot because you have to adjust the quantity of juice used at the plant. 

“Imbibe has a very unique Quality Control program, where we ensure that if there are any modifications in spec of raw material (in this case juice), we adjust the quantity used in the formula,” she said.  “A lot of plants skip this critical step, which can cause adverse effects on the final product. If the plant doesn’t add enough juice, the brand risks not meeting their juice claim, or alternatively if they add too much juice, they are unnecessarily increasing their cost.”

According to the Mintel report, during 2006-11, orange consistently remained the top flavor in new fruit juice products, a flavor that Mintel’s research suggests juice/drinks users rate the highest on both taste and health benefit scales. It is also notable that orange juice – along with pomegranate juice, which tends to be considerably more expensive than orange juice – have the highest proportion of juice/drinks users who claim that they would like to buy or buy more often, but they are too expensive. Manufacturers might benefit by introducing cheaper blends or juice drinks that are diluted with filtered water to attract price-sensitive consumers.

In the Whole Foods Market PLBvisited, private label refrigerated orange juice included much more than your typical pulp and pulp-free versions of orange juice. In additional to organic options, the 365 Everyday Value brand offered 100 percent tangerine juice, 100 percent Florida Valencia orange juice, and organic mixed juice versions: orange, peach and mango; pineapple, orange, and banana; and orange, strawberry and banana. 

When it comes to sweetening juices, Mintel’s report finds that three quarters of all juice and drinks buyers agree that juice makers should not add sugar to 100 percent juices. Therefore, juice makers should refrain from adding sugar, and work on educating those consumers with a sweet tooth about the benefits of a natural flavor equivalent. More than half of all juice and juice drinks consumers do not like the taste of fruit juice and juice drinks that are sweetened with artificial sweeteners. “Free from” artificial sweeteners could become a differentiating factor for those brands incorporating natural sweeteners.

Adding juice to refrigerated private label drinks can help retailers with this, Erlich said.

“If the added juice contributes enough sweetness to the product, we can remove other sources of sweetener and therefore make the ‘no sugar added’ claim,” she said. “Depending on the quantity of juice in the product, private brands can also make a claim that the beverage contains ‘x servings of fruit.’ Consumers like that, especially for children’s drinks. Refrigerated juices do not need preservatives since they are kept at cool temperature, so another favorable claim is ‘no preservatives.’”

 Stevia also might be an answer to attract buyers who are looking for better-tasting diet juices and drinks, according to the Mintel report. Nearly one quarter of juice and drinks drinkers report that they have tried stevia-sweetened juice and they like the taste. The sweetener’s acceptance is manifest in the success of national brand Trop50.  

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