supplier, which has given the retailer the opportunity
to have the freshest dairy program available.”
Still, the fluid milk segment has had its ebbs and flows.
According to the latest from the U.S. Department of
Agriculture, both milk prices and production are expected to climb in 2014. Milk production estimates for
2014 have been raised, as USDA expects improved returns to support a more rapid increase in output per
cow. Milk production is predicted to reach 205.6 billion pounds in 2014, up slightly from 205.3 billion
pounds, which was forecast in December. The USDA
also foresees an increase in milk prices.
Although convenience stores were the only channel
that experienced dollar and unit growth in 2012, and in
light of competition from drug and dollar stores, milk
was not among the category leaders in terms of sales
growth, according to Dairy Management, Inc. (DMI).
Milk experienced substantial declines over the past
several years, with c-store sales down 8.4% in 2012 and
6.5% last year, according to a report from DMI and IRI,
a Chicago-based market research firm.
According to NACS State of the Industry (SOI) data,
milk comprised only 1.85% of in-store sales in both
2011 and 2012. However average sales increased more
than 2.6% during this period. In terms of gross margin
percentage, milk comprised 29.78% in 2012, an almost
3.3% increase from the year prior.
Looking at the top 10 in-store category sales, excluding cigarettes, milk was number eight on the list at
2.88% in 2012, a decrease of almost 3% from the year
prior, according to NACS data. In percentage of sales,
2% milk led the category at 31.21% in 2012. Whole milk
came in second at 28.71%, followed by flavored milk at
22.06%, according to NACS data.
A focus on healthier eating and, specifically, increasing protein in the diet also is expected to be a boon to
milk sales in the coming months, however. “Nearly
60% of Americans consider protein when purchasing
packaged foods and beverages,” said Kadison. “And the
majority are trying to get more in their diet.
Retailers looking to be successful in the fluid milk
segment should be prepared to offer a competitive gallon
retail price in order to become a destination for consumers.
Kwik Trip offers traditional plastic gallons as well as
a variety of milk products in unique half-gallon bags.
“Overall, national milk consumption is down, but sales
of these products in our stores continues to grow,” said
Steve Loehr, Kwik Trip’s vice president of operations.
“Because we operate our own dairy, we’re able to pro-
duce fresher product more efficiently.”
Kwik Trip’s milk products are delivered to stores
daily within 24 hours of being produced. Its lines
also are priced more competitively than big box
stores. “We’re seeing an ongoing trend of low fat
milk, such as skim and 1%, with sales of these prod-
ucts continuing to grow,” Loehr said. “Our goal is to
add different types of milk, whether with more pro-
tein or different flavors, to try and grow sales. Since
this is a healthy item people are purchasing every
week, milk helps build store traffic and gives us a
competitive edge over other c-stores as well as gro-
cery and big box outlets.”
To provide adequate visibility and potential for
these products, some distributors recommend
c-stores offer at least 20 top sellers. “The set should
include innovation, such as protein milk smooth-
ies,” Hobson said. “Stores also should have a dedi-
cated door and not include non-dairy items, as this
leads to consumer confusion and sends the message
that milk is an afterthought in the store.”
Recent innovative product introductions include yo-
gurt drinks, such as Skyland Foods, Ibex drinkable yogurt
and Lifeway coconut chia kefir cultured milk smoothie,
shelf stable milk and seasonal flavored milk lines.
With protein a growing consumer trend, an influx of
new product introductions incorporating milk, such
as Shamrock Farms’ Rockin’ Refuel beverage, have
emerged. “We know our primary target of active men
are looking for a quality, healthy protein beverage that
can be conveniently purchased on their way to or from
the gym or training,” said Blake Atkinson, Shamrock
Farms’ director of brand management.
Originally designed for post workout recovery, the
Rockin’ Refuel line has since expanded to include
high protein products for those looking to cut carbs
and calories, but still looking to build muscle.
As a highly perishable product, fluid milk faces a variety of obstacles and challenges when it comes to
distribution and shrink.
“One major challenge is that typical dairy delivery is about $200,” Hobson said. “This small revenue amount has caused the dairy DSD vendor to pass
on a much higher cost to the convenience channel as
compared with other channels. In many cases, conve-
51% of daily milk consumption
occurs during morning hours.