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Dairy Beverage Reinvented

Reinventing Milk to Increase its Relevance To Millennial Consumers

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Dairy Beverage Reinvented:Understanding the Millennial

• Goal: Grow milk/dairy consumption among the Millennial generation – influencers as individuals, parents and future leaders

• Research Objective: Understand current beverage habits and mindset of Millennials in order to develop new compelling beverage concepts that utilize milk and dairy ingredients

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Why Reinvent Milk?

• Flat fluid milk sales

• Declining per capita consumption

• Milk falls short between meals

• Milk under-indexes on key needs

• Aggressive beverage competition

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101520253035

Per Capita Consumption* of Fluid Milk - Gallons

Slow, continuous shift downward in

per capita fluid milk consumption

Source: USDA ERS

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Why Millennials?Large Dip in Milk Consumption as Individuals Transition from Youth to Young Adulthood

• Millennials less likely to drink milko Large dip in milk consumption as individuals

transition from youth to young adulthood (“age effect”)

o Erosion in milk consumption vs previous generations (“cohort effect”)

• Millennials more adventurous in food and beverage choices; many new products target this age group

• Definition of healthful beverages shifting

0 to 5 6 to 10 11 to 13 14 to 18 19 to 24 25 to 34 35 to 49 50 to 64 65+0

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152013 Fluid Milk Per Capita Drinking Occasions by Age

# O

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Source: Kantar Beverage Panel

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• Racially/ethnically diverse• 21% Hispanic; 15% Black; 6% Asian; 3% 2+ Races• 1 in 3 immigrants is age 20-34

• Broad mix of life stages • 26% 18-32 year olds married

• Compared to 48% Boomers at same age and 65% of Silent Generation

Who are Millennials?

• No clear definition, most sources place in early adulthood

MILLENNIALSAge 18-33

22% of Population70 Million People

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What Defines Millennials?• Grew up during economic prosperity• Yet many entered work force during

recession• Many cannot get a job in their chosen field• Don’t expect to stay as long in a given job as

previous generations

• Rapid advance of technology during their life

• Social media is an everyday part of life

• Fiercely independent

• Feel powerful

• More liberal in views than older generations

• Information hungry

• Receptive to new ideas – often seek peer feedback

• Don’t have much to spend but will pay more for products

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Food and Beverage Habits Embraced by Millennials

Food is form of self expression

Food as source of entertainment

Value authenticity

Interested in how food is grown/produced

Less is more philosophy – clean labels, readable ingredients

More natural, organic foods

Appreciate reusable, recyclable, resealable

Embrace flavor variety, multicultural foods

Seek healthy options

Blurring of meals and snacks

Less brand loyal; willing to seek new outlets for food

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The Millennial Weekly Beverage Diary

% Who Drink Weekly (2013)

Beverage Share of Weekly Beverage Occasions

47% Dairy Milk 7%

68% Carbonated Soft Drinks 13%

48% Bottled Water 12%

46% Coffee 9%

44% Tea 7%

39% Fruit Juice 5%

26% Fruit Drink 3%

20% Drink Mixes 2%

15% Sports Drinks 1.2%

13% Smoothies 1%

10% Energy Drinks 0.8%

7% Nutritionals 0.8%

79% Tap Water 36%

Source: Kantar US Panel – Millennials approximated by age 19-34; self-reported beverage only consumption that is nationally projectable

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Products Gaining and Losing in Penetration and Occasions Among Millennials

WHOLE Milk

Non-Dairy Smoothies Total Coffee& Specialty

Fruit/Vegetable Blends

TapWater

DrinkMixes

ProteinDrinks

Beverages growing in penetration and share reflect food values embraced

A number of Millennials exiting the Dairy Milk, CSDS and Fruit Juice Categories

Fruit JuicePrimarily Orange Juice

DAIRYMilk

Carbonated SoftDrinks

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What Drives Millennial Beverage Consumption

Top Beverage Needs Over-index on these NeedsMix with alcohol

New/different

Was sick/ill

Purifying/clean

Before/during/after exercise

Quick energy

Provide lasting energy

Needs Gaining Most Share

Thirst

Go with my food

Like taste

Replenish fluids

Goes well with food/snack

Wake up

Treat

Cool off

Healthier choice

Fun

Relax

Help me relax

Cool off

Replenish fluids

Quick energy

Treat

Be sociable

Fun

Before/during/ after exercise

Warm up

Green highlight indicates these needs gaining more than population overall

Health and Wellness Need States:

Burning Problem:“When I start feeling a little hungry, my willpower goes out the window and I end up snacking…and then feel guilty. I wish there was a simple, nutrient-rich beverage to tide me over and help me avoid eating things I may regret later. Give me something to curb my cravings and leave me feeling satisfied.”

Frame of reference: Food snacks

Burning Problem:“Sometimes I feel run down or depleted after physical exertion and need a beverage to reinvigorate my body and help build me back up. I’m not a professional bodybuilder, so I don’t want anything too macho or extreme. Give me a beverage that provides all the nutritional benefits my body needs so I can recover quickly and feel great.”

Frame of reference: Protein drinks

8 Innovation Platforms that Address Millennial Beverage Needs

Burning Problem:“Sometimes it’s hard to get all the nutrients I need in a busy day. I want a tasty beverage that packs it all in. I want balanced nutrition from fruits, veggies, dairy, even nuts and seeds. I can’t always eat right, but I know I’m covered when I drink right.”

Frame of reference: Smoothies

Balanced and Real Weight Management/ Curb Hunger

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Burning Problem:“When I start feeling a little hungry, my willpower goes out the window and I end up snacking…and then feel guilty. I wish there was a simple, nutrient-rich beverage to tide me over and help me avoid eating things I may regret later. Give me something to curb my cravings and leave me feeling satisfied.”

Frame of reference: Food snacks

Recovery/Restore

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Tasty Treat/Fun Need State:

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• Tasty Pick-Me-Up • Refresh

• Burning Problem:• “Sometimes the real craving is a break from my routine…a

special ‘me’ time to sit back and get away from it all. Give me a beverage that is oh, so indulgent and fun to drink, that transports me to my happy place and gives me a multi-sensory experience – all without leaving my seat.”

• Frame of reference: Espresso drinks (e.g., lattes, macchiato, coffee concoctions)

Burning Problem:“When I’m thirsty, I want an ice cold beverage. Soft drinks, iced tea and juice drinks are refreshing thirst quenchers, but they can be full of sugar and empty calories. Give me a fun, exciting beverage that cools me down, but doesn’t weigh me down with unnecessary ingredients or calories.”

Frame of reference: Carbonated soft drinks and iced teas

8 Innovation Platforms that Address Millennial Beverage Needs

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8 Innovation Platforms that Address Millennial Beverage Needs

Burning Problem:“Sometimes the day is like a race to the finish line. When I start feeling sluggish, I don’t know if I’ll ever make it through. I need a beverage that gives me an energy boost to sustain me through my day. Current energy drinks are too intense for me. I want a nutritionally balanced drink that provides long-lasting energy, through real ingredients, that gets me to the finish line.”

Frame of reference: Energy drinks, protein-rich foods and beverages

Burning Problem:

“At the end of the day all I want is to relax and unwind. After all the hustle and bustle of the day, it’s time to slow things down when I get home. Give me a beverage made with simple, natural ingredients that prepares me for a good night’s rest.”

Frame of reference: Warm drink choices (e.g., tea and coffee); milk and cookies

Long-Lasting/Sustained Energy Sweet Dreams Milk

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Energy Need State: Relax Need State:Thirst/Hydration Need State:

Burning Problem:

“Everyday my body needs hydrating and water does the job of quenching my thirst. But, I’m always looking for beverages that multi-task, like a water that hydrates AND replenishes my body, by delivering essential nutrients - like vitamins, electrolytes, and protein. I want a refreshing beverage that can do it all.”

Frame of reference: Water and sports drinks

Multi-Purpose Super Waters

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MILLENNIALS will be a powerful force in transforming the food industry

Appeal to their sense of adventure