Dive Brief:
- Coca-Cola has bet on making milk another billion-dollar brand with its involvement in Fairlife milk. Coca-Cola part-owns it through its Venturing and Emerging Brands segment.
- Sales for Fairlife totaled about $90 million in its first year, which sent the specialty milk category's sales soaring 21%, a jump over 9% growth in 2014. Specialty milk includes milk with added calcium or no lactose.
- Coca-Cola enables Fairlife to operate autonomously while providing resources for R&D, chemistry, and marketing. "They know dairy better than anybody. We know consumers," Scott Uzzell, president and general manager for Coke’s Venturing and Emerging Brands group, told Bloomberg.
Dive Insight:
With Americans trending away from milk for the past several decades, this may not seem like the first category Coca-Cola would choose for growth. At its peak, per capita milk consumption in the U.S. was 42 gallons a year in 1945, but that number had dropped to 19 gallons a year by 2013, according to the USDA. The steady decline of cereal consumption has contributed.
The specialty milk category, while still small in comparison to traditional milk, has been growing. Consumers are looking for more functional foods and beverages and veering away from soda and sugary drinks. Coca-Cola is depending on these types of category switches and innovations to supplement top-line losses — but there's a long way to go from $90 million to $1 billion.
Coca-Cola hasn't seen much direct competition from major industry players. PepsiCo hasn't released a milk brand, though it did venture into nut-based dairy last year when it added a new almond milk-based drink to its Naked line of protein smoothies. Coca-Cola could see competition from startups, though they have trended toward nut-based dairy rather than traditional or specialty milk.