Canadian Vending

Features Equipment Technology
got milk vending?


April 8, 2008
By Stacy Bradshaw


Topics

Right now in the United States, milk processors, vending suppliers – even vending equipment manufacturers – are throwing big money into initiatives aimed at optimizing the milk vending opportunity.  And American operators are saying, “we got it.”

But what does “got milk?” mean to Canadian operators? According to the Milk Processor Education Program (MilkPEP), it might mean a carton or a one-gallon jug in their fridge. But as far as their vending machines go, its fate has yet to be seen.

According to MilkPEP, architects of the extremely high-awareness “got milk?” campaign, it was no easy feat getting processors on board to promote milk vending. The new single-serve bottles are expensive to manufacture and the product, with an increased shelf life, expensive to produce. For the dairy industry, that one-gallon jug has always been their bread and butter.

So it makes sense that the Dairy Farmers of Canada, the national policy, lobbying and promotional organization representing the Canadian dairy industry, rarely speaks a word of milk vending. Is milk vending just not worth it for dairy farmers? Worse yet, is it not worth it for Canadian vending operators?

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In the U.S., the Milk Vending Advisory Council would tell their Canadian counterparts, recent legislative activity and increased product availability is providing huge potential for vended milk sales. The council, including panelists from Crane Merchandising Systems, Nestlé USA, and the Family Vending Company, hosted the Vended Milk Opportunities educational seminar at the recent NAMA National Expo in Atlanta, GA.

Moderated by Julia Kadison, managing director and COO of the Beverage Marketing Corporation, the panel discussion exposed milk vending as an untapped market relative to consumer demand. Milk consumption in the U.S. is down three per cent, according the MilkPEP. But the single-serve, out of home segment is growing. So vending seems the ideal solution to get consumers drinking the good stuff.

And it’s the obesity crisis that will drive the sales, according to Joe Malone, ready-to-drink division, Nestle U.S.A. Legislative action and nutrition demands in the education system are fuelling the milk vending business in America. And it’s not just schools, said Malone. He warned operators not to limit the potential of milk vending.

“Don’t think of it as a school-vending item, but as a general public item. If you’re talking about a shopping mall, or a family-friendly place, what we’re finding is, if you give them a choice, they choose milk.”

In Nestlé’s study, a dedicated milk vending machine in a Southern California high school averaged 313 units a week, up from 90 units last year. In the same test, a machine located in a shopping mall sold 235 units a week.

In 2002, MilkPEP and the Beverage Marketing Corporation conducted their own school milk-vending test, Evaluating Opportunities for School Milk Vending. They found that school milk carried with it some negative connotations amongst students. Students associated school milk with unattractive and inconvenient packaging; something they had to drink, not wanted to drink.

Results showed that the vending channel and the increasingly available 16-oz. resealable bottle with graphics deemed “cool” by kids remedy students’ concerns with school milk. Vended milk is available throughout the day, before and after school; it is kept very cold until dispensed and comes in a wide variety of flavours and fat contents.

Vending is the easy political mark in the obesity issue, and milk provides the solution, said Steve Harkins, director of marketing and national accounts, Crane Merchandising Systems. “Milk creates the chance to turn that problem into an opportunity.”

Crane is working to get operators in the schools to stay. They have produced targeted trade advertising and executed direct mail campaigns to foodservice divisions in schools. They have also liaised with Dairy Management Inc. in the U.S. to offer regional monetary subsidies as a resource for operators.

Barry Frankel, president of the Family Vending Company, shared his experiences with milk vending with fellow operators at the NAMA conference. Offering milk created a lot of in-roads for Family Vending, he said.  It opened the doors to offer other vending in schools.
Frankel was one of the first to test plastic bottles in his locations. “The newspapers got a hold of it … all of a sudden we were the wholesome vending company – the one that offers milk.”
And the press has not subsided for Frankel. An international print ad campaign features Frankel sporting the now-famous milk moustache. The caption reads, “A recent study reports that Barry Frankel has what people want.”
When asked how much he charged per unit, the milk-moustache celeb was reluctant to disclose numbers, but assured operators that he makes sure he gains a profit from his milk, and people are willing to pay for it.
And therein lies another problem for Canadian operators trying to tap into the white gold; it might as well be gold in Canada. Canadians pay among some of the highest prices for dairy products of any country in the world. According to the Canadian Restaurant and Foodservice Association, Canadian dairy prices are two to three times higher than world prices. And as prices continue to rise, consumers are cutting back on dairy purchases. Per capita consumption of dairy products in Canada has fallen by more than 10 per cent since 1990.
And as if the battle wasn’t tough enough for operators with soft drink companies targeting the high school and University levels as a critical market for recruiting life-long, loyal customers, now they’re going after their share of the dairy dollars.
PepsiCo. has moderately expanded distribution of its new milk product, Quaker Milk Chillers, to the Northeast and Mid-Atlantic United States. The 14-ounce single-serve product, designed for the school channel, boasts a disconcerting six-month shelf life and comes in a funky plastic bottle with hip-hop inspired graphics and “cool” new flavours.
All that aside, there is no shortage of fun flavours and funky bottles in Canada. Distributors are carrying it all: Neilson, Nesquick, Hershey, and Dairyland’s Milk-to-Go. And equipment manufacturers are doing their part to leverage milk sales with dedicated milk vending machines and graphics. The potential is most definitely there.
If it’s soft drink sales that are inhibiting opportunities in milk vending, it’s going to take a concerted effort in schools, homes and in foodservice industries to reverse the current trend in beverage consumption among today’s kids and teenagers.
If operators are apprehensive about picking up the already high-priced item, then perhaps one needs to consider location. In schools and in locations where cashless meal cards are used, these higher price point items are a proven success. But, if Canadian operators are going to see success the likes of their American counterparts, they’re going to need similar support  – from their suppliers, manufacturers, associations and milk processors. 
Are Canadians ever going to “get it”? Only time will tell.


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