Revitalizing the Opportunities Around Milk in C-stores

CHICAGO — When it comes to convenience store retailers, the question they should be asking themselves is: Got milk?

Offering unmatched traffic, basket rings and higher profit potential than most other categories, milk is the third-largest beverage category, delivering $25.1 billion in sales across all channels and $14.3 billion in sales specifically at retail.

"Now, more than ever, there are opportunities to turn that wall of white into a fresh, convenient and inviting experience for shoppers," Lauren Navas, managing director of the Great American Milk Drive for MilkPEP, commented during a recent webinar hosted by Convenience Store News and its sister publication Progressive Grocer, and sponsored by MilkPEP.

The webinar, titled "Revitalizing Milk in Your Stores: How to Optimize Your Milk Opportunity," explored three key areas where milk offers opportunities for c-stores.

1. Dairy Milk is a Powerhouse Category

Dairy milk offers unmatched penetration, according to Adam Landau, vice president, global innovation partnerships for Dairy Management Inc. Dairy milk accounts for four times the foot traffic and three times the annual basket value of plant-based milk (30 annual trips vs. eight trips, respectively).

"The subcategories within [dairy] milk are huge, including flavored milk, lactose free and whole milk, collectively growing more than $1 billion over the past four years," Landau noted.

Opportunities for flavored dairy milk are expansive, as the subcategory appeals not only to kids, but also to adults. Flavored milk hits need states most similar to soda and juice. 

While under-represented on the shelf, lactose-free milk experienced a 12.6-percent compound annual growth rate (CAGR) over the past five years, so c-store retailers should consider innovation surrounding this subcategory, including flavors, sizes and added-benefits.

Whole milk is also on-trend and growing, representing $4.8 billion in sales, up 10 percentage points. This subcategory is in line with current consumer needs as they look for the health benefits of this kind of fluid milk, such as fat type.

2. Today's Consumer TRENDS

Milk is relevant and delivers against today's consumer needs. The beverage aligns with arching trends — not just in dairy — that consumers are looking for and following.

These trends include:

• Farm-to-Table: “Milk is the original farm-to-table food,” Landau remarked.
• Hyper-Local: Milk arrives to stores from within 200-300 miles of a plant.
• Snacks & Mini-Meals: Milk offers snackability and portability.
• Sensory Experience: Milk allows drinkers to experience new flavors, indulgence and customization.
• Nutrition: Milk offers basic nutrition (lower sugar, lactose free, protein-fortified); enhanced nutrition (milk combined with something like oats or whey); gut and brain health (probiotics and vitamins); and energy (energy of milk and espresso or cafe latte).

Shopper segmentation research also reveals that consumers are using milk in many different ways. The seven segments are:

• Milk Mavens, who consume milk across all occasions.
• Morning Quenchers, who prefer milk in a glass with breakfast.
• Perfect Pairers, who prefer milk in a glass with snacks.
• Entrée Enhancers, who drink milk in a glass with lunch or dinner.
• Milk Magicians, who put milk in their cereal/oatmeal and recipes.
• Mixologists, who use milk as a base for lattes, smoothies, milkshakes and more.
• Diluted Drinkers, who just put a splash in their coffee or tea.

"We encourage incremental purchases with marketing and merchandising solutions that speak to [these consumers] in more relevant ways," MilkPEP’s Navas shared.

3. The Dairy Milk Opportunity

Navas shared an example of a western U.S. convenience store chain that turned its disastrous declines in milk into a dairy destination. The chain had multi-year declines in milk sales across its 230-plus stores because it didn’t prioritize the category.

As part of the turnaround, the retailer expanded its variety of milk offered and increased its regularly scheduled promotions. This resulted in a 340-percent increase in average weekly milk units sold and $4 million in incremental sales.

Recounting this example, Landau shared two main optimization points that retailers can maximize. The first is artwork and claims, such as nutrition (protein, calcium, no added sugar) and milk’s story (locally produced, farm-fresh). The second is package structure (stickers, caps) and packaging type (kid-friendly, glass, can, single-serve and multipacks).

A replay of "Revitalizing Milk in Your Stores: How to Optimize Your Milk Opportunity" is available here.

Convenience Store News and Progressive Grocer are both properties of EnsembleIQ.