IT’S ON EVERYBODY’S LIPS!

VENDED MILK IS A HIT WITH KIDS…

KIDS LOVE MILK. SO IT’S NO SURPRISE THAT A RECENT STUDY SHOWS THAT VENDED MILK IS A BIG HIT IN SCHOOLS.

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School Test Per CapitaConsumption

SCHOOL PER CAPITA CONSUMPTION U

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(3 WEEKS)

…AND WITH ADULTS!

WHAT IS SURPRISING IS THAT A SIMILAR STUDY SHOWS

THAT ADULTS LIKE VENDED MILK JUST AS MUCH.

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B&I Per CapitaConsumption

SCHOOL AND B & I PER CAPITA CONSUMPTION

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(3 WEEKS)

THE SOURCE

THE STUDIES WERE CONDUCTED BY FMSTI - THE FLUID MILK

STRATEGIC THINKING INITIATIVE. THE OBJECTIVE WAS TO

EVALUATE THE OPPORTUNITY FOR MILK VENDING IN TERMS

OF:

• SALES POTENTIAL

• OPERATING DYNAMICS

• OPTIMAL PRODUCT MIX

THE RESULTS - GIVEN THE RIGHT PLACEMENT AND

PRODUCT MIX, VENDED MILK REPRESENTS A HUGE SALES

OPPORTUNITY ACROSS ALL VENDING CHANNELS.

VENUES– BUSINESS AND INDUSTRY– COLLEGES AND UNIVERSITIES– PUBLIC LOCATIONS

SCOPEFOUR MARKETS

2 IN THE SOUTHWEST

ONE EACH IN THE MIDWEST AND SOUTHEAST

THE MULTI-CHANNEL VENDING TEST

VENDER TYPES INCLUDED LIVE- DISPLAY, CLOSED-FRONT,

AND GLASS FRONT VENDORS.

PRODUCT OFFERINGS RANGED FROM A WIDE VARIETY (7+) TO

A MORE LIMITED SELECTION (4).

VENDER AND PRODUCT MIX

THE TEST SHOWED THAT THE DEMAND FOR VENDED MILK

AMONG ADULT POPULATIONS WAS STRONG.

THE DEMAND FOR VENDED MILK WAS STRONG…

Un

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AVERAGE WEEKLY SALES PER VENDEREXCLUDING POOR PERFORMING VENDERS(1)

(1) Venders with sales lower than the estimated requirement for profitability.

SALES WERE CONSISTENT

WITH INDUSTRY STANDARDS!

96.5

0

20

40

60

80

100

120

140

B&I Public C&U

All Vendors

Excluding PoorPerforming Labor

125.7

75.9

116.6

85.0

104.5

POST-INSTALLATION SALES WERE BETTER THAN INDUSTRY

AVERAGE.

…AND STEADY!

0 10 20 30 40 50 60 70 80 90 100

EstimatedIndustry Average

Multi ChannelTest

SALES RETENTION FOLLOWING INSTALLATION PERIODINSTALLATION PERIOD EQUALS THREE WEEKS

% % % % % % % % % % %

VENDERS THAT CARRIED MORE SKUS (7+) SOLD ALMOST

TWICE AS MUCH AS THOSE THAT CARRIED ONLY LIMITED (4)

MILK PRODUCTS.

VARIETY DRIVES SALES

Limited Product

Full Product

AVERAGE WEEKLY PER CAPITA CONSUMPTION

FULL VS. LIMITED PRODUCT LINE

.32

.18

(4 Varieties)

(7+ Varieties)

FLAVORED MILK SALES WERE SURPRISINGLY STRONG, WHILE

WHITE MILK SOLD THREE TIMES AS WELL AS IT DID IN THE

SCHOOL TEST.

WHITE MILK AND FLAVORS BOTH SOLD WELL

Other 11%

White 27%

Strawberry 15%

Chocolate 47%

FLAVOR VARIETY ANALYSISFlavor Totals

White 27%

Chocolate 47%

Strawberry 15%

Other 11%

Total

100%

Significantly higher than 9% in

School test

EVERY VEND OPERATOR WHO PARTICIPATED IN THE TEST

SAYS MILK WILL LIKELY BECOME A PROFITABLE COMPONENT

OF THEIR VENDING BUSINESS!

BEST PRACTICE• FULL VARIETY OF MILK PRODUCT OFFERINGS• PLACED NEXT TO SNACK AND/OR FOOD MACHINES• PLACE MILK AND HEALTHY BEVERAGE PRODUCTS TOGETHER

OPTIMAL PLACEMENT • PUBLIC VENUES WITH EXTENDED HOURS OF ACCESS/OPERATION • B&I WITH 300+ POPULATION• C&U LOCATIONS WITH HEAVY FOOT TRAFFIC

OPERATORS LIKED THEIR FIRST TASTE OF MILK

VENUES– MIDDLE SCHOOLS– HIGH SCHOOLS

SCOPE86 VENDING MACHINES

5 DIVERSE MARKETS

THE SCHOOL VENDING TEST

ALMOST ONE-THIRD OF ALL STUDENTS PURCHASED MILK

ONCE A WEEK.

VENDED MILK PASSES THE TEST IN SCHOOLS

SALES WERE CONSISTENT WITH

INDUSTRY STANDARDS!

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INSTALLATIONPERIOD - FIRSTTHREE WEEKS

BASELINE PERIOD- AFTER FIRSTTHREE WEEKS

ALL WEEKS

Uni

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Dur

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AVERAGE WEEKLY SALES

High School Middle School Total

415

263

307321

174

213

388

238

280

PROJECTING THE RESULTS OVER A SCHOOL YEAR, EACH

STUDENT WOULD CONSUME ON AVERAGE AN ADDITIONAL

ONE GALLON!

THE POTENTIAL MARKET FOR VENDED MILK IS HUGE

7.9-8.67.2-7.9

VENDED MILK PROJECTED ANNUAL PER CAPITA CONSUMPTION

Uni

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onsu

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Dur

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Sch

ool Y

ear

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4

6

8

10

7.2-7.9

Middle School High School Total

• AN ALTERNATIVE TO OTHER VENDED FARE

• AVAILABLE THROUGHOUT THE SCHOOL DAY

• A WIDE VARIETY OF FLAVORS

WHY KIDS PREFER VENDED MILK

IN SCHOOLS, FLAVORED MILK OUTSOLD WHITE MILK 9 TO 1!

FLAVOR VARIETY DRIVES SCHOOL SALES

Strawberry Milk 27 %

Other 1% *

White Milk 10%

Chocolate Milk 60%

FLAVOR VARIETY ANALYSIS

*Flavors beyond chocolate and strawberry sold well where they were offered. During the test, coffee made up 29% of all flavors sold at Boston schools. In Omaha, orange made up 10% of all flavors sold.

OPERATORS ARE COMING UNDER INCREASING PRESSURE

TO IMPROVE THE NUTRITIONAL VALUE OF VENDED FARE IN

SCHOOLS. MILK CAN HELP!

72% OF MOMS WITH KIDS 2-14 SAID

THEY ENCOURAGE THEIR CHILDREN

TO DRINK MILK*.

TAKING ADVANTAGE OF MILK’S ‘HEALTH HALO’

*Source: 4Q 2002 Knowledge Networks Milk Consumption & Attitude Tracker

MILK IS A POWERFUL SOURCE OF CALCIUM, SOMETHING

EXPERTS SAY AMERICAN KIDS NEED MORE OF.

MILK IS NATURE’S BEST SOURCE OF CALCIUM

0

5

10

15

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35

Fat FreeMilk

ChocolateMilk

Cola FruitPunch

OrangeJuice

SportsDrink

Water

MILK IS NATURE’S BEST SOURCE OF CALCIUM

% of daily values is based on a 2,000- calorie diet. The daily requirement isbased on an 8 oz. serving.

SOURCE: US Dept. of Agriculture Nutrient Analysis

30%30%

2%0% 0% 0% 0%

% Daily Calcium Requirement

RESEARCH SUGGESTS THAT 3-4

SERVINGS OF DAIRY A DAY AS PART

OF A REDUCED-CALORIE DIET CAN

ALSO HELP PROMOTE WEIGHT LOSS.

PROVIDING MILK AS A HEALTHY

ALTERNATIVE WILL HELP ENSURE THE

LONG -TERM VIABILITY OF SCHOOL

VENDING.

MILK AND THE FIGHT AGAINST OBESITY

WHY MILK’S POPULARITY IS GROWING NATIONWIDE

MILK HAS BEEN EXPERIENCING A SURGE OF POPULARITY

AMONG ALL CONSUMERS. CONTRIBUTING FACTORS

INCLUDE:

• NEW FLAVORS

• NEW PRODUCTS

• INTEREST IN HEALTHIER EATING

MILK IS THE SECOND MOST POPULAR BEVERAGE IN

AMERICA AND #1 IN AMERICAN HOMES!

THE SWEET TASTE OF SUCCESS

ALMOST 1/3 OF MILK’S GROWTH WAS DUE TO THE

POPULARITY OF FLAVORS.

Flavored Milk 27%

Eggnog 1%White Milk 72%

FLAVORED MILK SHARE GROWTH

SOURCE:IRI 52 weeks ending10/07/01 and total 2000

NEW FLAVORS AND TRADITIONAL FAVORITES ARE ALL

EXPERIENCING REMARKABLE GROWTH

THE SWEET TASTE OF SUCCESS

0 20 40 60 80 100 120

All other Flavors

Coffee

Vanilla

Banana

Strawberry

Chocolate

Total Flavored Milk

THE GROWING POPULARITY OF FLAVORED MILK

Percent growth

Source : IRI 52 Weeks ending 10/07/01 and total 2000

MILK CONSUMPTION AMONG TEENAGERS IS UP

TWO YEARS IN A ROW!

ANOTHER CONTRIBUTOR TO MILK’S NEW SUCCESS IS

SINGLE-SERVE PACKAGING. CONSUMERS PREFER IT

BECAUSE:

• IT TASTES BETTER

• IT KEEPS COLD LONGER

• IT’S PORTABLE

PLASTIC SINGLE-SERVES – YOU CAN TAKE IT WITH YOU!

MILK’S LONG ASSOCIATION WITH

GOOD HEALTH MAKES IT A PERFECT

MATCH FOR BUSY FAMILIES LOOKING

FOR NUTRITIOUS ALTERNATIVES.

MILK AND THE HEALTH CONSCIOUS CONSUMER

MILK IS THE ULTIMATE BEVERAGE !

MILK IS AN IMPORTANT SOURCE OF NINE ESSENTIAL NUTRIENTS

THE NATIONAL "Milk Mustache got milk?" CAMPAIGN, ONE OF THE MOST

SUCCESSFUL MARKETING CAMPAIGNS IN HISTORY, CAN HELP YOU

PROMOTE MILK TO YOUR CUSTOMERS.

CONTACT YOUR MILK SUPPLIER TO SEE HOW THE CAMPAIGN CAN HELP

YOUR BUSINESS. OR VISIT WWW.MILKDELIVERS.ORG

LEVERAGING THE POWER OF ‘GOT MILK?’