Coke Launches 'New Milk' -- at Twice Regular Milk's Price
Coca-Cola (KO) is ditching the carbonation, caffeine and most of the sugar in its new beverage -- milk.
That's right. Coke, which has a strong footing in the soda, energy drink, juice and water markets, is hoping to make a splash in the milk market.
According to Forbes, Coca-Cola is rolling out Fairlife, a high-end milk drink, in January. The soda giant partnered with Select Milk Producers dairy co-op in its new venture.
Coke said that when compared with ordinary milk, Fairlife will have 50 percent more protein, 30 percent more calcium, 50 percent less sugar and no lactose. Says The Huffington Post:
Coke is looking to infuse new life [and money] into its business. Coca-Cola reported a 14 percent drop in profits last quarter, HuffPost said. As Americans turn away from soda and sugar, this is a way for Coke to diversify.
"We'll charge twice as much for [Fairlife] as the milk we're used to buying in a jug," the president of Coca-Cola North America told analysts at a Morgan Stanley conference last week. "It's basically the premiumization of milk," Coke's Sandy Douglas said, according to a transcript from the event.
But along with declining soda sales in the U.S., milk consumption has also dropped. Retail milk sales declined 3 percent in 2014 and 2 percent in 2013, according to HuffPost.
Still, Coke is convinced Fairlife will be a big seller. According to Bloomberg Businessweek, Douglas said Coke expects its new milk to "rain money." Bloomberg said it could happen.
According to the Fairlife website, it uses a cold filtration system to separate the milk (water, fat, sugar, protein, vitamins and minerals) and ditch most of the fat and sugars. The site said Fairlife has "no added protein powders or synthetic junk."
[I]t may well be appropriate to compare what Coca-Cola's doing with Fairlife to WhiteWave's marketing of Silk almond milk, whose sales grew 30 percent in the third quarter. WhiteWave's marketing efforts haven't paid off only in almond milk, sales of its Horizon Organic brand milk are also rising, showing there is demand for premium dairy products.
The premium milk is already available in Denver, Minneapolis and Chicago. Fairlife will be available nationwide next year.
Personally, I'm willing to pay more for premium milk. I worry about the hormones in milk, so I pony up more money to buy organic. My toddler drinks 16 ounces of milk a day, and my husband drinks a cup or two a day, so we go through a lot of milk. I guess we buck the national trend of declining milk consumption.
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