• Market Parameters
• Report Methodology

• Two Categories of Flavored Dairy Beverages
• Many Available Package Types and Sizes
• Single-Serve Packages Drive Innovation
• Historical Overview
• Dairy Industry is Highly Regulated

• 2001 Sales Near $2.0 Billion
• Sales Approach $3 Billion by 2006
• Table 1-1: U.S. Sales of Flavored Dairy Beverages, 1997-2006 (dollars)
• Market Share by Product Category
• Table 1-2: U.S. Sales of Flavored Dairy Beverages by Product Category, 2001 (dollars)
• Projected Category Growth Uneven
• Table 1-3: Projected U.S. Sales of Flavored Dairy Beverages by Category, 2001-2006 (dollars)
• Factors Affecting Market Growth for Ready-To-Drink Beverages
• Few Opportunities to Grow Flavorings

• Leading Marketers
• Just a Marketer
• Consolidation and Acquisition Frenzy
• Market Driven by Packaging Innovation
• Marketing by Season
• Advertising is Minimal Compared to Other Beverage Segments

• Channels of Distribution
• Supermarkets Claim Largest Retail Share
• Table 1-4: Share of U.S. Flavored Dairy Beverage Retail Sales by Outlet, 2000 (percent: Supermarkets, C-stores, Mass Merchandisers, Drug Stores)
• Milk Is Quite Profitable
• Alternative Distribution Channels
• C-Stores and Vending are Emerging Opportunities for Dairy
• Impulse Channels for Mixes Barely Exist

• Convenience and Nutrition are Key with Consumers
• Use of Flavored Dairy Beverages
• Table 1-5: Percent of Consumers Who Use Flavored Dairy Beverages by Product Type and Brand, April 2000-March 2001 (percent): 8 Products/Brands

• Consumer Products Segment
• Evolution of Category
• Chocolate Milk Enters the Market
• Flavored Milk Offerings Expand

• Two Primary Product Categories
• Ready-to-Drink Beverages
• Flavorings
• Flavored Milks and Shakes
• Not Enough Flavors For Consumers
• Table 2-1: Favorite Milk Flavors Other Than Chocolate (Adults and Teens): 5 Flavors
• Premium Flavors and Formulations
• Coffee and Milk Combo Craze
• Milk as an Ingredient, Sometimes with Carbonation
• Adding Some Culture
• Dairy and Juice Creates a Splash
• Organic Segment Small Yet Solid
• Old Fashioned Flavorings
• Upscale Coffee Mixes
• The Trendy Chai
• Blender Beverages
• Shakes for Breakfast

• Single-Serve Packages Drive Innovation
• Packaging as Marketing Tool
• Multi-Packs to Generate Larger Sales
• Stirrings Remain Mostly Unchanged

• Federal Regulations
• Understanding Price Supports
• Understanding Federal Milk Marketing Orders
• If Those are Orders, Then What’s a Compact
• Labeling Nomenclature
• Milk’s Claims to Fame
• Nutrition Facts
• Expiration Dates
• State Regulations

• 2001 Sales for Total Market Close to $2.0 Billion
• Table 3-1: U.S. Sales of Flavored Dairy Beverages, 1997-2001 (dollars)
• Sales Difficult to Quantify for Ready-To-Drink Products
• Figure 3-1: U.S. Sales of Flavored Dairy Beverages, 1997-2001 (dollars)
• Milk Flavorings Much Easier
• Ready-To-Drink Beverages at $1.4 Billion
• Milk Flavorings at $527 Million
• Table 3-2: U.S. Sales of Flavored Dairy Beverages by Category: Ready-To-Drink Beverages vs. Flavorings, 1997-2001 (dollars)
• Flavored Milk Sales Increase 10.1% Annually
• Table 3-3: U.S. Sales of Ready-To-Drink Flavored Dairy Beverages: Flavored Milk vs. Other Flavored Dairy Beverages, 1997-2001 (dollars)
• Coffee-Milk Drinks Experience Phenomenal Growth
• Table 3-4: U.S. Sales of Coffee-Milk Drinks, 1997-2001 (dollars)
• Drinkable Yogurt Finds Success in Kids Market
• Table 3-5: U.S. Sales of Cultured Dairy Beverages, 1997-2001 (dollars)
• Dairy-Based Shelf-Stable Drink Sales are Difficult to Measure
• Table 3-6: U.S. Sales of Dairy-Based Shelf-Stable Beverages, 1997-2001 (dollars)
• Traditional Milk Flavoring Sales Show Minimal Activity
• Table 3-7: U.S. Sales of Flavorings, 1997-2001 (dollars): Cocoa Mixes and Milk Flavorings, Other Flavorings/Drink Mixes
• Cocoa Mixes and Milk Flavorings Increase Only 2.0% Annually
• Table 3-8: U.S. Sales of Cocoa Mixes and Milk Flavorings, 1997-2001 (dollars)
• Coffee and Chai Mixes Liven Up Flavoring Category
• Table 3-9: U.S. Sales of Other Flavorings/Drink Mixes, 1997-2001 (dollars)

• Flavored Milk Accounts for Most of Market
• Figure 3-2: U.S. Flavored Dairy Beverages: Share of Dollar Sales by Product Type, 2001 (percent): Other Flavored Dairy Beverages, Other Flavorings/Drink Mixes, Cocoa Mixes and Milk Flavorings, Flavored Milk
• Traditional Supermarkets the Primary Sales Venue
• Figure 3-3: U.S. Flavored Dairy Beverages Market: Share of Dollar Sales by Retailer Type, 2000 (percent): Supermarkets, C-stores, Mass Merchandisers, Drug Stores
• Chocolate Rules
• Figure 3-4: Share of U.S. Sales of Flavored milk by Flavor, 2000 (percent): Chocolate, Strawberry, Other
• Sales by Season Only for Warm Drinks
• Figure 3-5: Share of U.S. Supermarket Sales of Cocoa Mixes and Milk Flavorings by Season, July 2000 - June 2001 (dollars)
• The South Loves All Flavored Milk While the Midwest Loves Chocolate
• Northeasterners and Westerners Prefer the Real Brew, Whereas Others Like Sweetened Mixes
• Westerners Flavor Their Milk the Least
• Hot Cocoa Mix is a Toss Up
• Table 3-10: Regional Distribution Indices for Consumption of Flavored Dairy Beverage: By Product Type, April 2000-March 2001 (U.S. Adults): Midwest, Northeast, South, West

• Convenient and Flavorful
• Consumers Coming Back for Calcium
• Milk Helps Kids Maintain Healthy Body Fat
• Maturing in a Different Way
• Coffee-Milks as Starter Coffee Drinks
• Extended shelflife (ESL) Presents Distribution Opportunities
• Changing Channels
• ESL Also Breeds Innovation in Flavors
• Shelf-Stable Flavored Milk on the Horizon
• Vending Becomes Sophisticated Meal Servers
• Multi-Packs for Growth
• Cultured Beverages Finally Catch On
• Premium Opportunities for Flavorings
• Other Opportunities for Growth

• Sales to Approach $3 Billion by 2006
• Table 3-11: Projected U.S. Sales of Flavored Dairy Beverages, 2001-2006 (dollars)
• Figure 3-6: Projected U.S. Sales of Flavored Dairy Beverages, 2001-2006 (dollars)
• Continued Healthy Increases for Ready-To-Drink Beverages
• Flavorings Show Little Growth
• Table 3-12: Projected U.S. Sales of Flavored Dairy Beverages by Category: Ready-To-Drink Beverages vs. Flavorings, 2001-2006 (dollars)
• Flavored Milk Shows Strongest Consistent Growth
• Table 3-13: Projected U.S. Sales of Ready-To-Drink Flavored Dairy Beverages: Flavored Milk vs. Other Flavored Dairy Beverages, 2001-2006 (dollars)
• Coffee-Milk Initially Grows with Jakada
• Table 3-14: Projected U.S. Sales of Coffee-Milk Drinks, 2000-2006 (dollars)
• Single-Serve Containers for Cultured Dairy Beverages
• Table 3-15 Projected Sales of Cultured Dairy Beverages, 2001-2006 (dollars)
• Dairy-Based Shelf-Stable Drinks, Small, Yet Important Segment
• Table 3-16: Projected U.S. Sales of Dairy-Based Shelf-Stable Beverages, 2001-2006 (dollars)
• Traditional Flavorings Not Going Anywhere
• Table 3-17: Projected U.S. Sales of Flavorings, 2001-2006 (dollars): Cocoa Mixes and Milk Flavorings, Other Flavorings/ Drink Mixes
• Cocoa Mixes and Flavorings Show Almost No Growth
• Table 3-18: Projected U.S. Sales of Cocoa Mixes and Milk Flavorings, 2001-2006 (dollars)
• Other Flavorings Offer Some Hope
• Table 3-19: Projected U.S. Sales of Other Flavorings/Drink Mixes, 2001-2006 (dollars)

• All Types of Marketers
• Refrigerated Business is Rather Regional
• Shelf-Stable Products Benefit Nationally
• Playing Both Fields
• Manufacture or Co-Pack?
• Dairy or Beverage Company
• Soft Drink Companies Want In
• Table 4-1: U.S. Flavored Dairy Beverages: Selected Marketers of Ready-to-Drink Products by Brand and Product Type (20 Marketers)
• Table 4-2: U.S. Flavored Dairy Beverages: Selected Marketers of Flavoring Products by Brand and Product Type (9 Marketers)

• The Big Get Bigger
• When Number-One and Number-Two Dairies Merge
• Buying Beverage Businesses to Grow Product Portfolio
• Acquired Similar Brands Create Dilemma
• Flavorings Stay Still

• Hershey Takes On NesQuik
• Milk Gets Looney
• Mickey Mouse Milk?
• Chugs Go National
• Dean Foods Leads as Top Ready-to-Drink Marketer
• Table 4-3: U.S. Supermarket Sales of Flavored Milk/Eggnog/Buttermilk: Top Three Marketer Sales and Shares, 2000 (dollars)
• Table 4-4: U.S. Supermarket Sales of Flavored Milk/Eggnog/Buttermilk: Top Ten Brands Sales and Shares, 2000 (dollars)
• Yoo-hoo On First
• Latte and Cappuccino Craze
• Chai Tea Time
• Cultured Beverages Catch On
• Table 4-5: U.S. Supermarket Sales of Cultured Dairy Beverages: Top Five Brands Sales and Shares, 2000 (dollars)
• Adding Carbonation
• Specialty Milks
• Flavoring Marketers Hold Onto Business
• Table 4-6: U.S. Supermarket Sales of Milk Flavoring/Cocoa Mixes: Top Three Marketer Sales and Shares, 2000 (dollars)
• Table 4-7: U.S. Supermarket Sales of Milk Flavoring: Top Three Brands Sales and Shares, 2000 (dollars)
• Table 4-8: U.S. Supermarket Sales of Cocoa Mixes: Top Five Brands Sales and Shares, 2000 (dollars)

• Company Overview
• Pernod Ricard Adopts Yoo-hoo
• Updating an Image to Boost Sales
• Cadbury Schweppes Is Potential New Home

• Company Overview
• What’s Up Doc?
• Two Features to Business Model
• It’s a Looney Business

• Company Overview
• Reshaping Its Business
• Project Mother
• Coffee for Mom (and Dad)

• Company Overview
• Leading Milk Marketer
• Manufacturing Product for Top Brands
• The Borden Business
• Goodbye to Suiza Venture
• Hello to Yo-J

• Company Overview
• U.S. Operations
• Dedicated to Research
• Investing in Others

• Company Overview
• Milk Chugs For Everyone
• Investment in Soy Could Be a Problem
• Getting to Number-One
• Table 4-9: Dean Foods-Owned U.S. Manufacturing Facilities, 2000 (31 Locations)

• Company Overview
• Battling Mars
• Hershey, Pennsylvania—It’s All About Chocolate
• Hershey’s Affection Towards Milk

• Company Overview
• Kefir Culture Differences From Yogurt
• Growing Here and Abroad

• Company Overview
• History Built on Dairy
• The Beverage Division
• Leader in Beverage Branding
• New Name, Same Bunny
• Disney Alliance

• Company Overview
• Parmalat’s U.S. Origins
• Flavors For Preference
• Broadening the Product Mix

• Company Overview
• Merging and Diverging Brands
• Moving From Beverage to Food Company
• Association With Milk Dates Back to Laverne
• Global Outlook

• Company Overview
• Table 4-10: Suiza Foods-Owned U.S. Manufacturing Facilities, 2000 (32 Marketers)
• Thinking Nationally, Acting Locally
• Getting Bigger

• Company Overview
• Table 4-11: Source of Milk Processed by WestFarm Foods (Number of Farms): California, Oregon, Idaho, Washington
• Full Line of Dairy Products
• Table 4-12: WestFarm Food‘s Key Product Categories (pounds): (7 Products)
• Strategic Brand Partnerships
• Investing in Technology To Be Competitive
• Introducing DariGo

• Packaging Drives Innovation
• Seasonal Products
• Something for Everyone
• Table 4-13: U.S. Flavored Dairy Beverages: (42 Marketers)
• Table 4-14: U.S. Flavored Dairy Beverages: (20 Marketers)

• Flavored Dairy Beverages are Out-Advertised
• Promoting Dairy as Fun
• Playing Tough
• Playing Soccer
• Generic Flavored Milk Campaign
• Coffee is Cool
• Shaking Convenience
• Samples of Promotional Materials

• Retail Distribution Methods
• Perishable Preferences
• Direct Delivery Advantages
• The Cost of Face-To-Face Business
• Cutting Costs With Carts
• Advantages of Warehouse Delivery
• Refrigerated Warehousing
• Acquisitions Result in Enhanced Distribution Efforts
• Non-Perishable Distribution
• Leaving the Warehouse
• Technologies For Refrigerated Fleets
• Computerizing Distribution for Dairies
• Smaller Marketers Work Through Brokers

• Traditional Supermarkets Account for 73.1% of Retail Sales
• Table 5-1 Share of U.S. Flavored Dairy Beverage Retail Sales by (percent): Ready-to-Drink, Flavorings
• Figure 5-1: U.S. Flavored Dairy Beverages: Share of Total Retail Sales of Ready-to-Drink Products by Outlet, 2000 (percent): C-store, Drug, Food, Mass Merchandisers
• Figure 5-2: U.S. Flavored Dairy Beverages: Share of Total Retail Sales of Flavorings by Outlet, 2000 (percent): Drug/C-store, Food, Mass Merchandisers
• Receiving Product
• Milk Crates Are the Enemy
• Retailers Profit From Milk
• Dairy Case vs. Beverage Cooler
• Competing with Soft Drinks
• Secondary Merchandising Creates Incremental Growth
• Merchandising for Mixes
• Value-Added Pricing
• Table 5-2: U.S. Flavored Dairy Beverages: (10 Marketers)
• U.S. Flavored Dairy Beverages:
• Table 5-3: U.S. Flavored Dairy Beverages: (9 Marketers)
• Private Label Pricing
• Table 5-4: U.S. Flavored Dairy Beverages: Private Label vs. Branded (Chugs, Hershey’s, NesQuik, Private Label)
• Table 5-5: U.S. Flavored Dairy Beverages: Private Label vs. Branded (Hershey’s, NesQuik, Private Label)
• Table 5-6: U.S. Flavored Dairy Beverages: Private Label vs. Branded (Hershey’s, NesQuik, Private Label)
• Table 5-7: U.S. Flavored Dairy Beverages: Private Label vs. Branded (Nestle Carnation, Swiss Miss, Private Label)

• The Increasingly Popular Warehouse Club Store
• Membership Benefits
• Multi-Packs and Family-Size Products
• Table 5-8: U.S. Flavored Dairy Beverages: (6 Products)
• Milk Means Business for C-Stores
• C-Stores Are for Impulse Beverages
• Vending Improves Availability
• Dairies Evaluate Vending Machines
• Vending Machine Options
• Impulse Channels for Mixes

• Consumers Want Convenience
• Consumers Turn Away From Soft Drinks
• Milk Consumption is Up

• Simmons Consumer Survey
• Simmons Data on Flavored Dairy Beverages
• Table 6-1: Percent of Consumers Who Use Flavored Dairy Beverages by Product Type and Brand, April 2000-March 2001 (13 Products)
• Purchasers of Chocolate and Other Flavored Milk
• Table 6-2: Demographic Characteristics Favoring Purchase of Flavored Milk: Ready-to-Drink Chocolate Milk vs. Other Flavored Milk April 2000-March 2001 (Age, Gender, Race, Education, Employment, Occupation, Marital Status, Region, Household Income, Household Size, Children in Household)
• Milk Makes Coffee Popular With Younger Consumers
• Table 6-3: Demographic Characteristics Favoring Purchase of Coffee-Milk Products: Brewed Espresso/Cappuccino vs. Coffee-Milk Mix April 2000-March 2001 (Age, Gender, Race, Education, Employment, Occupation, Marital Status, Region, Household Income, Household Size, Children in Household)
• Purchasers of Milk Flavorings Tend to be Homemakers
• Table 6-4: Demographic Characteristics Favoring Purchase of Milk Flavorings April 2000-March 2001 (Age, Gender, Race, Education, Employment, Occupation, Marital Status, Region, Household Income, Household Size, Children in Household)
• Table 6-5: Demographic Characteristics Favoring Purchase of Milk Flavorings Powdered vs. Syrup April 2000-March 2001 (Age, Gender, Race, Education, Employment, Occupation, Marital Status, Region, Household Income, Household Size, Children in Household)
• Differences By Brand
• Table 6-6: Demographic Characteristics Favoring Purchase of Milk Flavorings by Brand April 2000-March 2001 (Age, Gender, Race, Education, Employment, Occupation, Marital Status, Region, Household Income, Household Size, Children in Household)
• Hot Cocoa Mix Demographics as Boring as Category
• Table 6-7: Demographic Characteristics Favoring Purchase of Hot Cocoa Mix April 2000-March 2001 (Age, Gender, Race, Education, Employment, Occupation, Marital Status, Region, Household Income, Household Size, Children in Household)
• Table 6-8: Demographic Characteristics Favoring Purchase of Hot Cocoa Mix by Brand April 2000-March 2001 (Age, Gender, Race, Education, Employment, Occupation, Marital Status, Region, Household Income, Household Size, Children in Household)

Appendix II: Addresses of selected marketers