Milk is a staple food in nearly every Australian household; from way back when it was delivered in glass bottles by a milk man, to the present where milk can be purchased on-the-go at almost any time of the day or night. It is often an emergency or ‘desperation’ purchase and a firm category within the convenience channel.
Despite the highs and more recent lows of pricing in the milk industry, a study by Shopper Tracker found that milk can drive traffic into the store simply because customers don’t want to run out.
The so called ‘milk wars’ saw the major supermarkets locked in a pricing battle: milk was sold for low-low prices, resulting in farmers suffering being paid even lower wages. The situation reached boiling point when consumers, seeking to support the farmers, stopped buying cheaper supermarket-branded milk as an act of economic protest. Instead, many shifted their loyalty to smaller labels to support farmers in getting better prices at the farm gate. Supermarkets copped the brunt of the backlash as shoppers drifted away, but the convenience channel benefited, keeping white milk as a key foot traffic driver.
Market research provider Euromonitor said C-stores, forecourt retailers and independent grocers remained smaller, but important distribution channels for drinking milk. C-stores have the upper hand with regard to emergency and top-up milk purchases: a shopper who has run out of milk is more likely to be prepared to pay a premium for purchasing their milk from a C-store or petrol station.
Educating the consumer
In June this year Lion Dairy & Drinks (LDD) launched a new campaign called Milk Loves You Back, in a bid to educate and encourage Australians to drink more milk and increase their daily consumption of dairy, using a new logo on their packaging.
LDD marketing and innovation director Darryn Wallace said only 20% of people understood that on average they ideally needed three serves of dairy per day.
“The category is growing… we think that there’s a lot of upside for it as people understand the benefits of dairy based on the benefits of white milk,” he said.
The nutritional label on the back of the pack was made larger to specify the eight nutrients naturally present in milk; an invitation to learn about the nutritional value of milk.
As this campaign grows and extends its outreach, retailers will be able to use this campaign to their advantage, implementing signage to invite customers outside, into the store and direct them towards the milk fridge as Lion Dairy & Drinks said it will be widely recognised by consumers as a mark of trusted brands and quality product.
The full-fat milk market
For a retailer, the growth of the white milk market is of particular benefit as people are leaning towards more convenient options for how and where they purchase their milk, as well as other dairy products such as cheese and yogurt.
A spokeswoman for LDD said that from a nutritional perspective, people are returning to full fat milk, with consumer wellbeing and health driving the swap from modified milk such as low fat and skim varieties.
“People want to be able to purchase their food and drinks in a convenient way,” she said.
The Australasian Association of Convenience Stores (AACS) 2016 State of the Industry report showed the petrol and convenience dollar growth in the milk category was 7.2%.
“Full fat is becoming synonymous with the wider shift back to real, whole foods,” the report said.
Branded milk outpaced private label, while full cream milk outperformed reduced fat.
The report found that full cream milk sold in C-stores accounted for more than two thirds of the segment (67%), with 7.1% growth whereas supermarket sales volumes grew by only 1.3% in 2015/16. Reduced fat milk saw a slump in sales, with a negative dollar growth of -7.4% in 2016.
A survey conducted by Nielsen, Consumers purchasing premium during their grocery shop, showed that one in three Australians considered spending more on a premium offering in key categories within grocery.
Dairy products were revealed to have been the third category of choice for which consumers were willing to pay more.
Nielsen director Julianne Westaway said premium products should be promoted in a way that amplifies the product’s unique proposition.
“Several considerations should be kept in mind when optimising how these brands are marketed, including how consumers see the products on the shelf, pricing promotions and emotional resonance of brands in managing perceptions,” she said.
Fresh from the farm
Euromonitor found specific trends leading the industry, including speciality milks, where manufacturers began to offer “indulgent experiences through fresh cow’s milk”.
Parmalat’s Paul’s milk began offering the Farmhouse Gold range, with a classic milk-bottle look, and is available in two variants; unhomogenised and a full-cream variety with extra cream.
LDD also launched an Australian first last year, a high-protein, lower-lactose white milk called The Complete Dairy. The milk contains 70% more protein and 25% less lactose than regular full cream milk.
Mr Wallace said it is only currently available in convenience South Australia, but the hope is to bring it to more outlets across the nation.
“As well as product innovation, we also see growth coming from initiatives such as shelf simplification, or making the shelf easier to shop,” he said.
The health conscious trend towards real and whole food products has even extended to accommodate a new niche market for raw milk.
In Australia, it is illegal to sell raw milk for consumption, due to harmful bacteria that is usually destroyed in the pasteurisation process, yet many people still want to drink the milk in its purest form, fresh from the farm.
Raw milk is a very different product to the pasteurised product so familiar to us all. It was once delivered fresh in a bottle, with separated cream on top and that ‘fresh-from-the-farm’ taste. These days we are much more aware that our milk is heated and homogenised, cleaned, processed and packaged.
All that has changed thanks to Made By Cow founder Saxon Joye, who spent years getting his cold-pressed milk process legalised. It is the first legal and government-approved for sale ‘raw’ milk. The process involves taking freshly bottled cow’s milk, submerging in water and ‘cold-pressed’ in a pressure vessel, using high pressure (equivalent to the pressure found 60km below sea level) as a “kill step” to destroy bacteria, instead of the usual pasteurisation.
“Our view is that raw milk is a wonderful life giving substance. When you’re standing on a farm you can drink that milk super fresh,” Mr Joye said.
“We feel like our cold pressing method really brings out the best of raw milk, in that we retain all of the nutrition and flavour.
“To be able to get our milk onto store shelves, sitting next to all the other milks and being just as safe, is fantastic. We were able to demonstrate that to the NSW food authority, and gained approval for sale under an alternative compliance scheme.
“Essentially that means we proved that our innovation of cold pressing the milk rendered [it] just as safe as commercially available, heat-pasteurised milk but with a lot of the benefits of raw milk.”
Milk in its unprocessed form is full of enzymes and nutrients that aren’t present, or aren’t as concentrated, in pasteurised and homogenised milks, and Mr Joye said that he plans to upscale production to bring the product to the convenience market, and into more Australian households, with a few changes to price point and product range.
“Most people don’t know who we are and what we’re about; we’re quite a different offering to heat pasteurised milk, so we occupy a unique niche. One of the things we didn’t know is whether or not we’d invented a product that would do well in the gourmet market. At the moment we’re in the non-majors and independents, and often our sales are far greater in regional areas, the kind of places you wouldn’t equate with the foodie, hipster demographic.”
“We think there’s a deep, rich movement in the health and wellness movement, and it exists the whole way across Australia,” he said.