A business intelligence report published for the dairy industry of Ontario by Dairy Farmers of Ontario • June-July 2002

STRATEGY REPORT

This issue of the Milk Strategy Re-port provides you with updates onrecent developments in these areas,and more.

Fortification: The functional bev-erages market is predicted to almosttriple by 2007 to US$12 billion.Many beverage manufacturers are us-ing milk as a component in fortifiedfruit drinks, fruit juices, energydrinks and teas, but what about milkas a fortified, functional beverage inand of itself? Research results fromthe U.S. are very encouraging, andsome innovative dairies have begun– one is in our own backyard.

Organic: Organic milk is small inshare, but big in public interest, anddairies around the world continue tolaunch new products.

Carbonation: It began a few yearsago with a presentation by CornellUniversity scientists at a dairy con-

ference. Now some U.S. manufactur-ers are using this technology to in-troduce novel milk drinks thatcompete against soft drinks in vend-ing machines.

School Milk: U.S. and U.K. schoolauthorities, government and dairiesare taking action to improve milk’sposition within schools.

Also featured in this issue are ourregular columns:■ Hits and Hot Spots showcasesnew milk products that illustratepackage or product innovations.■ Round Up summarizes new milkintroductions from 2001.■ Marketing Opportunities pro-vides a snapshot of marketing pro-grams for kids.

If you have any comments or sug-gestions, please fax us at613.962.9516 or email us atquadra.res@sympatico.ca

Efforts to invigorate the fluid milk category tend to focus on select issues – new product opportunities such as fortification and functional beverages, organic milk and, more recently,carbonation, and new distribution opportunities such as vending machines and school milk programs.

This newsletter is one ofseveral initiatives fromDairy Farmers of Ontario,as part of its Milk MarketingInitiatives program.

In the Netherlands, organic milk salesincreased 23% in the first quarter of 2001

Benecol milk isthe latest productin a line of cho-lesterol-reducingproducts fromMcNeilConsumerNutritionals.Manufacturedunderlicense byLancashireDairies,U.K.

NAME: Stassano Boison Lactee aux PommesCOUNTRY: BelgiumPACKAGE: 500 mL and 1 litre plastic bottlesINNOVATION: A new slant to fortified/functional beverages: Fortified but-

termilk (inuline, oligofructose) to aid digestion

NAME: NesquikCOUNTRY: U.S.PACKAGE: 16, 32 and 64 ounce plastic bottlesINNOVATION: Fortified flavoured milk (contains 40% of the RDI of calcium)SALES: In markets where the 16 ounce bottle is sold, Nesquik sales

increased 111% and category sales (16 oz. flavoured milk)increased 43% (source: ACNielsen Scantrack)

NAME: FrusionCOUNTRY: U.S.PACKAGE: 10 oz. shaped plastic bottlesINNOVATION: Occasion-specific fruit and yogourt smoothie (breakfast)

NAME: Orchard Maid Organic Yoghurt DrinkCOUNTRY: U.K.PACKAGE: 250 mL Tetra PrismaINNOVATION: Organic drinking yogourt in a single-serve, contemporary

package

NAME: West Coast Simply OrganicCOUNTRY: U.K.PACKAGE: 750 mL resealable gable-top cartonINNOVATION: Organic flavoured milk with a 21-day shelf life

hits and hot spots

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INDUSTRY NEWS

Many consumers have embraced the concept of fortified orfunctional foods and beverages. According to the 2001Health Focus Trend Report:■ 95% of U.S. consumers believe certain foods providehealth-promoting benefits beyond basic nutrition,■ 91% have purchased fortified foods,■ 91% are interested in learning more aboutfunctional foods and would be prepared tochange their diet to use them,■ almost six out of ten agree that it is importantto eat foods fortified with added vitamins orminerals,■ just over a quarter of consumers surveyed al-ways or usually choose foods or beverages be-cause they are fortified with extra vitamins andminerals, and■ consumers are willing to pay a slight pre-mium for fortified foods and beverages.

ACNielsen data indicates that the beverage mar-ket is the fastest growing segment within thefunctional foods category.

Milk is in the ideal position to capitalize on this burgeoningopportunity. Milk’s opportunities go beyond its inherent nu-tritional benefits. Milk is also an ideal carrier of value-added

ingredients and essential nutrients that many consumers arelacking in their current diet.

As part of its efforts to research unexplored markets for milk,MilkPEP’s Fluid Milk Strategic Thinking Initiative (FMSTI) hasidentified 12 functional food opportunities for fluid milk (Table1).

By adding these ingredients, milk in theU.S. would be able to make claims not pre-viously applicable. Further, these twelve in-gredients meet a rigid set of scientificcriteria, which includes:■ A reasonable basis must exist in publishedliterature for the belief that the product willprovide a consumer benefit.■ Adequate information must be availableto determine appropriate intake levels for theproduct and its ingredients in order to derivethe anticipated benefit.■ It must be possible to identify a consumersegment or segments that would be expectedto benefit from the candidate functionalfood.

The following summary on these twelve ingredients does notinclude all details such as regulatory requirements. In On-tario, launching functional milk is expected to be met withregulatory hurdles that would have to be overcome.

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Product Opportunities -- Fortification and Functional Beverages

Functional beverages aredefined as those drinks thatreplenish essential vitaminsand minerals or boost en-ergy.

Functional beverages haveno regulatory existence,they are conventional foodsthat offer health advan-tages beyond meeting basicnutritional needs.

Ingredient Suggested Target Market Claimed BenefitsPackaging

Beta-Glucan 1 cup individual Individuals with: Useful in reducing the riskserving containers ■ elevated cholesterol levels of coronary heart disease.

■ hypercholesterolemia

Caffeine 1 cup individual Consumers currently consuming Helps maintain alertness serving containers caffeine-containing beverages for and cognitive performance.

the effects, but are looking for a Helps maintainbetter-for-you alternative product. athletic endurance.

Glucosamine 1 cup individual People suffering from osteoarthritis Aids in the repair of damageserving containers or in the early stages of the disease. due to osteoarthritis or

injuries.

Green Tea Extract 1 cup individual Health conscious adults. Rich in antioxidants.serving containers With caffeine, it may appeal to Reduces risk of cancer.

consumers who choose existing Reduces risk of cardiovascularcaffeine-containing beverages for disease.the effects of the caffeine. Possible protection Decaffeinated, the product potentially against osteoporosis.could be marketed to all age groups.

Table 1

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Ingredient Suggested Target Market Claimed BenefitsPackaging

Lactoferrin 1 cup individual The general population, except for Promotes growth of bifidobacteria serving containers individuals allergic to cows’ milk proteins. (possible defense against

pathogenic bacteria) and inhibits proliferation of pathogenic microorganisms.

Lutein 1 cup individual Consumers with age-related macular Helps maintain healthy vision.serving containers degeneration (visual impairment – Supports normal eye health.

ARMD). Smokers who may be at increased risk for ARMD.

Magnesium Any General population Helps maintain bone and mineral homeostasis, and pro-per cardiac and nerve function.

Phytosterols, Sterol 1 cup individual Individuals with elevated blood Reduction in blood total- and Esters or Stanol Esters serving containers cholesterol levels. LDL-cholesterol levels.

Probiotics 1 cup individual General population Helps maintain healthyserving containers gastrointestinal microflora.

S-Adenosyl-L- 1 cup individual Individuals suffering from minor Elevates mood, and promotesMethionine (SAMe) serving containers depression or seeking elevation of general feelings of well being.

mood

Soy Protein 1 cup individual Individuals with: May reduce the riskserving containers ■ elevated cholesterol levels of heart disease.

■ hypercholesterolemia

Vitamins C and E Any General population To help consumers meet nutritional needs.

INDUSTRY NEWS…cont’d

The FMSTI’s next steps are:

■ Investigate consumer acceptance of the 12 different func-tional ingredient concepts through research and communi-cate to the industry those concepts with the greatest potentialsuccess (2002);■ For functional ingredient concepts identified as having

high consumer acceptance, explore manufacturing and mar-keting barriers including availability, stability, labeling andGRAS status (Generally Regarded As Safe) and make recom-mendations on how to overcome these hurdles (2003).

For a full copy of the FMSTI’s report, please e-mail your re-quest to quadra.res@sympatico.ca.

Marketing Initiatives ProgramIf you have any comments on or suggestions for Dairy Farmers of Ontario’s Milk Marketing Initiativesprogram, or if you would like to raise a topic for discussion, please contact us at quadra.res@sympatico.caor fax 613-962-9516.

Some milk-based fortified beverages currently available are:

Docosahexaenoic acid (DHA) is an unsaturated omega-3 fatty acidthat is credited with several health benefits including helping reducethe risk factors associated with cardiovascular disease, and having afavourable effect on neurological disorders such as depression or anx-iety. Further, infants consuming breast milk that contains DHA andchildren who consume high-DHA foods perform better on intelli-gence tests and have sharper vision than those lacking DHA in theirdiets.

N.B.: In Ontario, the University of Guelph has already laid thegroundwork for Omega-3 milk, by developing a method of naturallyenhancing cows’ milk with DHA. Cows’ feed is treated with a nat-

ural-source coating that al-lows the DHA to survivethrough the rumen intact,pass into the cow’s blood-stream and then into herm i l k .Food Sys-tems Inno-v a t i o nInc., hassolicited amill tomake acommer-cial sup-p l e m e n t

available soon to dairy producers. The company in-tends to market DHA-enhanced milk nationallywithin the next year.

Stanol ester is a plant ingredient said to lower cholesterollevels.

In our own backyard

Natrel Nutrition 24, available in Quebec, is a nutri-tional supplement for-tified with 24 vitaminsand minerals plus pro-teins and glucides. It isavailable in fourflavours – Chocolate,Chocolate-Raspberry,Cappucino andVanilla.

Organic

The organic milk market remains small in absolute terms, but big in terms of public interest and newproduct development.

New Organic Milk Products

German new organic dairy items include a long life organic milk(which uses a steam-heating process to prevent the typical UHT taste),buttermilk, and low fat milk.Government subsidies are making new product development a reality,and it has pledged EU250 million to support the production andmarketing of organic food. The sector is expected to garner 20% ofthe German food market by 2010.

Prince Charles’ company, Duchy Origi-nals, goes organic with a line of whole andsemi-skimmed milk. The milk comesfrom cows on the Prince’s Highgrove Es-tate. All profits go to charity.

Milk-on-the-Moove by Horizon Organic is a first for several reasons – itis a single-serve, shelf-stable (90 days), flavoured organic milk. Avail-able in 2%, Chocolate, Vanilla and Strawberry, the reduced fat milk isdistributed initially through Starbucks in the United States.

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Fluorine is usefulin the treatment ofdental cavities andcaries, beneficial inthe prevention ofosteoporosis, andhelps protect thebody against infec-tions.

Duchy Originals is sold in750mL gable-top cartons

Berchtesgadener Land’s 3.5%organic milk grew almost100% during 2000

Distributionthrough Starbucksreinforces anupscale imagewhile expandingthe smaller dairy’sdistribution oppur-tunities

Aux Oméga 3 from France is sold in fourpacks of 50 cl plastic bottles

Grupo Leche Pascual in Spainlaunched Fluor fortified with flourine.

Pura Edge in Australia is fortifiedwith iron and six vitamins

Organic MilkProduction

European organicmilk marketsattempt to balancesupply and demandin a combined envi-ronment of growthand maturity.

The U.K. is experi-encing an organicmilk glut, and about50 - 60% of produc-tion goes to non-organic outlets.Factors leading tothis over supplyinclude:■ A sudden increasein volume fromfarmers who fin-ished conversionin the spring, and

the expansion of existing operations.■ Retail demand is not keeping up with increased supply,which includes imports from foreign markets.

Denmark may be contributing to the U.K.’s problem, as iteyes foreign markets for organic milk export.■ The USDA announced that the supply of organic milk inDenmark is growing by about 10% per year, spurred on bygovernment subsidies. Currently, Denmark is producing to itsmaximum quota.■ Consumption of organic milk now accounts for 25% ofliquid milk sales in Denmark, but growth has slowed to 3%per year … well below the expansion in supply.■ Organic milk consumption has been stimulated by thelaunch of products with strong consumer appeal, such as a0.5% fat organic milk that boosted sales by 20% in 2001.

However, in September 2001, a non-organic milk with sim-ilar fat content was launched and market share was recov-ered. This hints that there are limits to the Danes’ attach-ment to organic products per se.

The opposite may be true in Germany where demandexceeds supply by as much as 12%. Total organic milk pro-duction is reported at 1.4% of all milk output, and about1% of total milk consumption. In 2000, German dairiesprocessed about 250,000 tonnes of organic milk, up from60,000 tonnes in 1991. Germany is looking to France tohelp meet demand.

But, French deliveries of organic milk fall short of con-sumer demand despite a doubling of organic milk deliveriesover the past two years. Fluid milk sales totaled 65m litresin 2000, and accounts for 2% of the French liquid market.

Organic Milk Marketing CampaignThe U.K.’s Organic Milk Suppliers Co-operative launchedthe "Drink organic milk" campaign to persuade consumersto buy British organic milk. The campaign is intended tohelp ease the oversupply situation, and highlights the health

benefits of organic milk and morehumane treatment of dairy

cows. Campaign ele-ments include the

motto, "good forpeople, good forcows, and goodfor the British

countryside" andfootpath signs

placed by organicfarms. Organizers also

placed a 30-foot high glass oforganic milk in the hand of the Cerne Abbas Giant land-mark, a 180-foot high chalk outline of a man carved intothe landscape of Dorset.

At HomeOrganic milk has been available in Ontario since early1996. From December 2000 to November 2001, DairyFarmers of Ontario marketed 5.4 million litres of organicmilk. A major supermarket is seeking a supply of organicmilk in order to add a dairy section to its stores’ organicdepartment.

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Harmonie Organic 0.5% Minimilk by ArlaFoods, Denmark

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Carbonation

Cornell University’s research and development on carbonating dairyproducts was realized with the launch of e-Moo, a carbonated, milk-based beverage by Mac Farms. Aimed at kids, e-Moo is fat free, forti-fied with calcium and available in a variety of flavours includingOrange Sparkle, Bubblegum, Fudge Brownie and Cookies and Cream.Carbonation extends the shelf life of e-Moo to six months, with refrig-eration.

Since e-Moos’ launch last summer, Mac Farms has introduced two morecarbonated milk beverages -- RPM and Perq-T.■ RPM is made with fat-free milk and fortified with extra potassium andmagnesium, for physically active adults.■ PERQ-T is fortified with vitamin E, zinc, copper and chromium; minerals and vitamins that are often missing from the diet of mature adults.

Carbonated milk is being tested in U.S. schools and reviews are mixed.However, its nutrition profile – fat-free, sweetened with fructose, fortifiedwith calcium, protein and vitamins – led the FDA to issue a special exemp-tion to its ban on the sale of carbonated beverages during school lunch.

Carbonated milk is expected to sell ‘a la carte’ rather than compete withmilk as part of a lunch program. Its particular appeal will be to kids whodon’t drink milk.

White Soda is a carbonated milk-basedbeverage made with skim milk (10%).It is available in three flavours –Strawberry Chill, Lemon Vanilla Ice andOrange Creamsicle

Your CommentsWe would like to know what you think of this issue of Milk Strategy Report. Please write in any comments or suggestions you have and mail or fax this portion of the newsletter, or send an e-mail to:

Ellen CooperMilk Strategy Report30 Hope CrescentBelleville, OntarioK8P 4S2Fax: 613-962-9516quadra.res@sympatico.ca

Milky Way Shake Plastic bottles Lancashire Dairies, Limited edition flavoured milk shakeJanuary 2001 U.K.

Stassano Boisson Plastic bottles Campina, Apple-flavoured buttermilk fortified to Lactee aux Pommes Belgium aid digestionMarch 2001

Roberts Dairy Pints Roberts Dairy, Strawberry-flavoured milk test marketedStrawberry Milk U.S. in North West statesFebruary 2001

Moovers 2% Reduced Plastic bottles Smith Dairy Products, UHT shake in a new packageFat Vanilla Shake U.S.April 2001

Wilcox Farms Wilcox Farms, Vanilla and Mocha Latte flavoursFlavored Milk U.S.April 2001

Tillamook Milk Gallons Tillamook County White and Chocolate flavoursApril 2001 Quarts Creamery, U.S.

Tilla-Milk Plastic bottles Pints Tillamook County Creamery, Vanilla Bean, Strawberry, Chocolate andApril 2001 U.S. Udderly Chocolate flavours

Tine Flavored Milk Tine, Three ‘iced’ milks targeted at youthsApril 2001 Norway

Dean’s Easy 100% Gable-top cartons Half gallons Dean Foods, Lactose-free flavoured milk Lactose Free Chocolate U.S.Lowfat MilkApril 2001

Parmalat Lowfat Milk Aseptic cartons 235 mL Parmalat New flavours – Banana, Strawberry, Vanilla June 2001 with straws USA – in Dragon Tales-themed cartons

Intense Plastic bottles 16 ounces Upstate Farms, New flavourStrawberry Milk U.S.June 2001

Splish Splash Splosh Plastic bottles 500 mL Staple Dairy Products, Shelf-stable flavoured milkJune 2001 U.S.

Mars Extra Milk Mars, Seasonal, calcium fortified, chocolate milk June 2001 U.K.

Regular Milk

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Around the World of

Minus L Aseptic cartons 1 litre Omira Group, Lactose-free UHT 1.5% milkfat milkSeptember 2001 Germany

Baerenmark products Aseptic cartons 150 g Nestlé, Long-life drinking milk (3.8% mf), September 2001 500 ml Germany cream (25% mf) and double cream

1 litre (32% mf)

White Stuff Plastic bottles 250 mL ACC Milk, Named after the advertising campaignOctober 2001 U.K.

FLAVOURED Milk

Roundup:

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New Products And Packaging

fortified MilkLocol Milk Gable-top cartons 1 litre Pauls Ltd., Fortified with a patented cholesterol-March 2001 Australia lowering ingredient

Aux Oméga 3 Plastic bottles 50 cl Candia, Fortified with omega-3 fatty acidMarch 2001 France

Nesquik Nestlé Beverages, Calcium-fortified flavoured RTD milkApril 2001 U.S.

Daisy Low Fat Gable-top cartons 1 litre F&N Dairies, Calcium-fortified milk High Calcium Milk 200 mL Malaysia available in plain and chocolateMay 2001

Magnolia Plastic bottles 220 mL F&N, Flavoured milk fortified with taurineFortified Milk MalaysiaJune 2001

Hershey’s Cookies Plastic bottles Single-serve Morningstar Foods, Line extension& Cream U.S.

Hershey’s Chocolate Plastic bottle Single-serve Morningstar Foods, Line extensionCream U.S.June 2001

Darigold DariGo Milk Plastic bottles 12 ounces WestFarm Foods, Bottle shaped like an old-fashionedJuly 2001 U.S. (WA) milk bottle

Cecemel Chocolate Aseptic slim cartons 1 litre Nutricia Drinks, Fortified milk targeted at women over 25Flavored Milk BelgiumJuly 2001

Ludwig Dairy Gable-top cartons 32 ounces Ludwig Dairy, Flavoured buttermilkFlavored Buttermilks U.S. (IL)July 2001

Crowley Grabba Plastic bottles 16 ounce Crowley Foods Inc., Cappuccino-flavoured milkFlavored Milk U.S.August 2001

FRijj Luvly Latte Plastic bottles 500 mL Dairy Crest, Limited edition milkshakeSeptember 2001 U.K.

ReFRESHers Plastic bottles 12 ounce Rockview Farms, Flavoured milkNovember 2001 U.S. (CA)

Flavoured Milk (continued)

Harmonie Organic Gable-top cartons Arla Foods, Organic low fat milk (0.4%)Minimilk DenmarkFebruary 2001

Organic Valley Quarts Organic Valley, New package sizeLactose-Free Milk U.S.August 2001

West Coast Gable-top cartons Lancashire Dairies, Flavoured organic milk with 28-daySimply Organic U.K. shelf lifeOctober 2001

organic milk and cream

Roundup: New Products And Packaging …cont’d

Around the World of

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Frusion Plastic bottles 10 ounces The Dannon Co., Fruit and yogourt breakfast drinkMarch 2001 U.S. (NY) with 25-day shelf life

DrinkFit Plastic bottles 330 mL ND Drinks, Yogourt smoothie (line extension)March 2001 U.K.

Yo Self Single-serve Stonyfield Farm, Synbiotic fermented dairy beverageApril 2001 U.S.

Mild and Fruity Campina, Juice and yogourt beverage targetedMay 2001 Netherlands at adults

Primaliv Gable-top cartons 1 litre Skanemejerier, Flavoured 0.1% milkfat fermented May 2001 Sweden drinking yogourt

Epocca Cool Peach, Gable-top cartons 4 ounces Fermented dairy beverage. Cool Peach Pine Cool fortified with omega-3May 2001

Old Home Shakers Plastic bottles Single-serve Old Home Foods, Flavoured yogourt shakes that foamMay 2001 U.S. (MI) when shaken. Targeted at children.

Organic Yoghurt Tetra Prisma 250 mL Orchard Maid, Flavoured yogourt drink in singleDrink U.K. serve packageJune 2001

Wow! Yogomix Cans 11.6 ounces Wow! Beverages, Flavoured, fermented milk beverageYogurt BrazilJune 2001

Pascual Yosport Pascual Dairy, Flavoured yogourt drinkYogurt & Juice Drink Inc.June 2001 Spain

Rowntree’s Drinking Nestlé Rowntree, Flavoured drinking yogourt targetedYoghurt U.K. at childrenJune 2001

Alta Dena Yo-Burst Plastic bottles 8 ounces Dean Foods Co, Flavoured yogourt smoothie targetedDrinkable Yogurt U.S. at ‘women on the go’SmoothieJuly 2001

Panier de Yoplait Boire Plastic bottles 75 cl Yoplait, Flavoured yogourt drinkSeptember 2001 France

Tropicana Smoothies Plastic bottles 340 mL Tropicana Products, Yogourt and fruit juice beverageSeptember 2001 U.S. (FL)

Milk Alimentaria Penasanta, Fortified with royal jellyMay 2001 Spain

Anlene High Cans New Zealand Milk Calcium-fortified flavoured milkCalcium Milk ThailandJune 2001

Fluor Aseptic cartons 1 litre Grupo Leche Pascual, Fortified with fluorineAugust 2001 200 mL Spain

Enjoy Xtra’ Aseptic cartons 1 litre Nile Co., Calcium and vitamin-enriched UHT milksSeptember 2001 Egypt

Benecol Milk Gable-top cartons 750 mL Lancashire Dairies, U.K. Fortified with stanol esterSeptember 2001

fortified Milk (continued)

YOGOURT AND CULTURED BEVERAGES

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INDUSTRY NEWS…cont’dSales / Distribution Opportunities

Convenience Stores

"Milk sales growth opportunities abound from applyingboth basic and advanced marketing and fact-based sell-ing practices" is the key finding from the CSNews Out-of-stock study conducted by the Fluid Milk Strategic ThinkingInitiative (FMSTI), in the U.S.

Other findings from the study are:Variety, Sales and Space■ Retailers distribute all sizes of take-home milk – quart, halfgallon and gallon sizes.■ For single-serve milk (16 ounces), plastic containers aremore prevalent than gable-top containers. Plastic pint salesprovide US$4,400 in annual sales to the average retail store.Chocolate flavoured milk accounts for approximately 58% oftotal single-serve milk sales in the study.■ Pint milk is allocated the least space of all single-serve bev-erages (5%), while soft drinks are given 40% of single-servecooler space.■ Plastic pints are under-spaced when compared with paper,which is over-spaced. Within plastic, chocolate needs agreater amount of space than white milk.■ Convenience stores take-home milk sales are highest forgallons, but milk gallons are very under-spaced within alltake-home sizes.

Out-of-Stocks■ Milk suffers from high out-of-stocks (10.1% in 2000,10.4% in 1998).■ Single-serve milk out-of-stocks are 11.4%, and are highestin the chocolate flavour.■ Out-of-stocks decreases as stocking frequency increases.

Promotions■ Retailers tend to promote single-serve milk the least oftenof all single-serve beverages and less than take-home milk.■ Suppliers do not initiate promotions for milk as they dowith other beverages.■ When milk is advertised, similar vehicles are used (POS atthe cooler, window signage).

The report recommends processors and convenience storestake the following actions to lower out-of-stocks and improvemilk sales:■ Hang a laminated planogram in the back of the coolerhighlighting the fastest turning milk sizes.■ Work with retailers to obtain a dedicated time segment tohave employees stock the cooler, making it a part of a store'sdaily routine. The laminated planogram can be useful for thisstocking.

■ Practice space management in the "back of the store" aswell as the front. Ensure the correct amount and mix of back-stock is available.■ Install shelf tags in the front and back of the cooler shelvesto increase stocking efficiency and draw attention to stocking.■ Develop planograms with trading partners to take full ad-vantage of all available data and consumer information.■ Perform space-to-sales analyses to determine where spaceand SKUs might be changed, and combine this with store-specific knowl-edge to gainoptimal bene-fits.■ Work with re-tailers to obtainmore space us-ing the space-to-sales analyses.

Data were provided by participating convenience store re-tailers, Information Resources Inc., and processors.

The International Dairy Foods Association supports the FM-STI’s convenience store strategy. The IDFA sees ‘immediateconsumption venues’ as a huge opportunity for milk. Specif-ically, they cite convenience stores, drug stores, vending ma-chines and schools.

School Milk

School milk programs are picking up speed as schools, gov-ernment and dairies recognize the importance of good nutri-tion and the need to defend milk’s territory.

A USDA report found that kids will spend their money onsoft drinks and candy from vending machines in school hall-ways rather than go into the cafeteria to purchase milk. Fur-ther, about 200 out of America’s 12,000 school districts havecontracts with soft drink companies, giving them exclusiverights to sell their products in schools. As a result, the USDAis urging Congress to consider actions to improve nutrition inschools:■ Strengthen the statutory language to ensure that all foodsold on campus meets nutrition standards;■ Return revenue from competitive food sales to the schoolfoodservice account;■ Provide financial incentives to state agencies to establishspecific educational training standards for school foodservicedirectors and managers; and,■ Authorize financial assistance to schools for the purchase offoodservice equipment.School officials, the American Academy of Orthopedic Sur-

Frappuccino uses cold merchandising racks hungon the outer edge of the dairy case in order toincrease shelf space and drive impulse purchasedecisions

Marketing OpportunitiesMarketing to kids, just for fun.

In an effort to market to kids, some manufacturers are:■ collaborating with popular entertainment brands such as Nick.com (Saputo Cheese,U.S.), or Headbone.com, a website for 8-14 year olds, to sponsor an on-line camp that fea-tures chat rooms, multi-player games, ghost story writing and a sweepstakes (Yoplait).

■ adding a kids’ component to a website:■ Stonyfield Farm’s "Kids’ Stuff" section offers a variety of activities such as colouring and

word searches, and information on its Planet Protectors program.

■ Nesquik’s web site offers kids ideas for everyday, recreational activities such as building a virtualtree house, and sticking animated stickers in a virtual album.

■ Parmalat Canada’s web site features a "Shake ‘n’ Surf" game, a story contest, a Milk NutritionQuiz, and a Milk Tour.

geons and the Got Milk? campaign will champion a new cal-cium campaign targeted at teenagers. Some schools will in-stall new vending machines featuring milk moustachecelebrities. In other schools, single-serve packages of choco-late and strawberry milk have been introduced. But the bat-tle has just begun. Coca-Cola announced that it is in theprocess of improving its relationships with schools and hascreated a new program that involves an education advisorycouncil, lightening its exclusivity requirements, and promot-ing a greater variety of beverages including those fortifiedwith calcium.

The American School Food Service Association will conducta study to determine ways of encouraging students to eathealthier and eat lunch in school more often. The one-yearstudy will evaluate how enhancing milk products might at-

tract students (e.g. improving packaging, new flavours, dif-ferent serving temperatures).

The U.K.’s Dairy Council has undertaken several initiativesto revive school milk programs:■ Working with facilitators from the School Milk ResearchProject to educate parents, teachers and governments in tenregions.■ Enlisting two primary schools to star in a video that depictshow easy it is to set up and run a School Milk Scheme.■ Securing the support from MPs to bring milk back intoBritain’s classrooms.■ Handing out prizes on National School Milk Day, Octo-ber 11, 2001.■ Organizing a series of one-day conferences to examine theissues surrounding school drinks.

U.K. schoolmilk cartonsfeature RottenRalph, a popu-lar BBC chil-dren’s cartooncharacter

Thailand intro-duced the TertaWedge Aseptic200mL school milkcarton using thePower Kids brandname

School Milk Packaging