Friday, December 5, 2014

From Soda to milk-What a climb down!

Backlash from the consumer community and sociological groups who have been berating the soda industry for the unhealthy beverages being produced, marketed and made popular among kids through over drive promotional activities. Some of the major players seem to be seeing the writing on the wall, viz there is no future for this industry and if they continue to indulge in this business, a day may not be too far way when they will face consumer wrath of Himalayans proportions and possibly face massive class action suits for economic reparation to the consumers for the health damage caused by these unhealthy drinks as in the case of cigarette industry two decades ago. Though global production of soft drinks is more than 20 billion (bn) cases valued at about $ 300 bn, USA alone accounting for about 50% of this, the ever declining trend of sales has been a cause of worry for many of the major players in this segment of industry. In USA alone the sales of soda are declining on an average 1-3% every year since 2004, an alarming signal indeed. This has probably been the reason for the new found love of this industry to nutritious and healthy products like value added milk based beverages. Here is a take on this important turning point in the fortunes of soda industry as is being reported.

Soft-drink giant the Coca-Cola Company will soon be launching a new version of milk branded as Fairlife.  The launch is planned for later this month, with sales to begin nationwide next year. "Purely nutritious milk" states the slogan under Fairlife's name on the containers. The company's optimism is riding high for this new lactose-free product, which boasts of containing 50-percent more natural protein, 30-percent more natural calcium, and 50-percent less sugar than ordinary milk. During a global consumer conference last month, Sandy Douglas, president of Coca-Cola North America, predicted that "it will rain money" once Fairlife gets established in the marketplace. Even so, he acknowledged that it will take considerable investments in the milk business and several years before that happens. "We'll charge twice as much for it as the milk we're used to buying in a jug," he said during the conference. Conventional prices for milk in a gallon jug vary but typically hover around $3. According to Fairlife's website, the new product will be sold at a similar price to value-added milks such as organic and lactose-free. It will offer skim and 2-percent milk varieties, plus a sweetened chocolate milk. The calorie count in a glass of 2 percent is 120; in a glass of skim, 80. "The premiumization of milk" is how Douglas described this new approach to marketing— a challenge to anyone looking at the declining sales of fluid milk in the United States. Back in 1975, when everyone was encouraged to drink three or four glasses a milk a day "for the sake of your health," per-capita consumption of beverage milk and cream was 262 pounds, according to figures from USDA. But with increasing concerns about obesity and the adverse health effects of sugar in their diets — along with other beverage options such as flavored water and non-dairy almond and soy milk — Americans are drinking less milk. By 2012, per-capita consumption of beverage milk and cream had fallen to 195 pounds. And, according to some industry gurus, milk sales will continue to drop, which is certainly not a rosy picture for the industry.

If consumers think that this is a genuine realization on the part of the soda industry, they better listen to the logic for opting for milk based products as made clear by them. They are simply following the trend of higher and higher awareness about health and nutrition among the consumers who want more healthy products than soda for which they are prepared to pay a higher price. This willingness to pay extra for health boosting milk products is the key to the new thinking on the part of the soda makers. As milk is one of the top most nutritive products available to man and since plain fluid milk is invariably shunned by kids, the soda makers see in this emerging situation a golden opportunity to make a fast buck. In the words of some market pundits "there will be raining of money" for the industry if right products with health value are positioned before the consumer. Who can resist buying a milk product with higher protein, higher calcium, significantly less sugar compared to "run of the mill" colored and flavored milks now in the market! While this development may be encouraging, one has to be watchful to see what ingredients these super technology companies will use while designing their new products to make them extremely appealing to their target users, viz kids.


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