Dairy Industry Pumps $500 Million Into Campaign to Bulk Up Milk Sales

(Milwaukee Journal Sentinel/TNS) -
(Vasily Smirnov/Fotolia/TNS)
(Vasily Smirnov/Fotolia/TNS)

With sales of milk as a beverage at the lowest level in more than 30 years, the dairy industry is fighting back with a $500 million campaign that includes products such as milk cartons that don’t require refrigeration until they’re opened.

Total U.S. beverage-milk sales were about 52 billion pounds in 2013, according to the most recent available figures from the U.S. Department of Agriculture. That’s about 6 billion gallons, the lowest level since 1982.

Changing consumer habits, more drink choices and a lack of dairy-product innovation are behind the steady decline in milk sales, according to the industry.

While Americans consume about the same number of gallons of beverages as they did in the past, they’re drinking a lot less milk.

Beverage-milk sales have fallen to such a low level that it may be impossible to curb the decline if the new campaign fails, said Tom Gallagher, Chief Executive of Dairy Management Inc., a national organization that promotes dairy products and is funded by dairy farmers.

“The numbers are devastating. At some point, milk could become an irrelevant beverage for the average consumer,” Gallagher said.

The new campaign stems from an alliance between Dairy Management Inc. and seven business partners, including Dairy Farmers of America, a cooperative that represents thousands of farmers nationwide, including Wisconsin.

Product innovation, including flavored milk and dairy-based sports drinks, is essential, said Monica Massey, a Dairy Farmers of America senior vice president.

“We need to understand consumer trends. We can’t just put a gallon of milk on a shelf and hope someone buys it,” Massey said.

In an effort to appeal to children, milk has been sold in small packages that resemble a cow’s head. There has also been more emphasis on aseptic packaging, which allows milk to be kept unrefrigerated on a store shelf, much like a juice box.

Consumers want more “grab and go” options in drinks, Massey said.

“We are still a country where people want to buy milk refrigerated,” Gallagher said, but there are cost savings for businesses if milk could be moved on non-refrigerated trucks or could be stored without having to be kept cold.

Besides Dairy Farmers of America, the others in the campaign include Kroger Co., Coca-Cola Co., Southeast Milk Inc., Shamrock Farms, Darigold/Northwest Dairy Association and Maryland & Virginia Milk Producers Cooperative Association.

With construction of milk-packaging plants, the campaign could easily exceed $500 million, according to Gallagher of Dairy Management Inc.

Most of the milk from Wisconsin dairy farms is used to make cheese. Dairy Management Inc. says it has had success with cheese promotions, including developing new products used in the pizza and fast-food businesses.

Sometimes, even small amounts of milk used by consumers add up to large amounts overall. Quaker Oats, for example, has changed its oatmeal cooking recipe to include milk instead of water.

That change could add up to millions of additional gallons of milk sold at a time when sales of cold cereal, and of the milk poured on cereal, have been declining.