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ROSEMONT, Ill -- A new report from the Fluid Milk Strategic Thinking Initiative (FMSTI), a marketing think tank that is part of the National "got milk?" Milk Mustache Campaign, said new single-serve packaging and growing profit margins have milk poised for rapid growth in c-stores.
With the study results, milk processors are expected to focus more on c-store accounts, and c-store operators may decide to put more emphasis on merchandising, stocking and promoting milk in their stores.
"Overall, we found that single-serve milk has the potential to increase total c-store milk profits by as much as 27 percent," said Tom Nagle, International Dairy Foods Association vice president of marketing. "Single-serve milk's gross margin was second only to bottled water and
surpassed that of carbonated soft drinks, juices, teas and isotonics."
The study also revealed some significant problems with how milk is currently marketed in c-stores. Milk suffers from very high out-of-stock rates and the lowest space-to-sales ratios of all beverages.
"The mechanism driving these kinds of great numbers is the introduction of a variety of new flavors in plastic, re-sealable packages, and the milk industry can now offer appealing products that are competitive with all the other immediate consumption beverage options," said Nagle.
"This is especially relevant as we plan for the late spring and summer when kids will be home from school wanting a variety of cool, on-the-go beverages that have nutrient packages moms can feel good about."
The case study on the impact of product variety showed that increasing the variety of single-serve milk improved sales and grew total milk sales in c-stores. Results were even better when variety was supplemented with a promotion.
A milk-and-donut promotion, for example, increased sales of milk and donuts by almost 13 percent and six percent, respectively, and the increases held steady for an equal period after the promotion ended, the report said.
The research revealed specific actions c-store operators could take to capitalize on these findings. Greater product variety, cross-promotions with other food items and frequent re-stocking all give consumers more types of milk where they want it, when they want it and how they want it, the report said. Other measures, such as installing shelf tags on the front and back of coolers and keeping a planogram nearby to ensure proper restocking, also help drive milk sales by decreasing out-of-stocks.