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Will Lactose-Free Fairlife Milk Be Coke’s Next Cash Cow?

Soft-drink giant The Coca-Cola Company will soon be launching a new version of milk branded as Fairlife. The launch is planned for later this month, with sales to begin nationwide next year. “Purely nutritious milk” states the slogan under Fairlife’s name on the containers.

The company’s optimism is riding high for this new lactose-free product, which boasts of containing 50-percent more natural protein, 30-percent more natural calcium, and 50-percent less sugar than ordinary milk.

Sandy Douglas

During a global consumer conference last month, Sandy Douglas, president of Coca-Cola North America, predicted that “it will rain money” once Fairlife gets established in the marketplace. Even so, he acknowledged that it will take considerable investments in the milk business and several years before that happens.

“We’ll charge twice as much for it as the milk we’re used to buying in a jug,” he said during the conference. Conventional prices for milk in a gallon jug vary but typically hover around $3.

According to Fairlife’s website, the new product will be sold at a similar price to value-added milks such as organic and lactose-free. It will offer skim and 2-percent milk varieties, plus a sweetened chocolate milk. The calorie count in a glass of 2 percent is 120; in a glass of skim, 80.

“The premiumization of milk” is how Douglas described this new approach to marketing— a challenge to anyone looking at the declining sales of fluid milk in the United States. Back in 1975, when everyone was encouraged to drink three or four glasses a milk a day “for the sake of your health,” per-capita consumption of beverage milk and cream was 262 pounds, according to figures from USDA.

But with increasing concerns about obesity and the adverse health effects of sugar in their diets — along with other beverage options such as flavored water and non-dairy almond and soy milk — Americans are drinking less milk. By 2012, per-capita consumption of beverage milk and cream had fallen to 195 pounds. And, according to some industry gurus, milk sales will continue to drop, which is certainly not a rosy picture for the industry.

So why is Coca-Cola, already seeing overall declines of soft-drink sales in North America, venturing into a marketplace beset with so many obvious challenges? Douglas points to the company’s success with its orange juice brand, Simply, as a good example of how the company can use its marketing knowhow and prowess to capture sales for an already known product “redesigned” to appeal to an ever-growing health-conscious audience.

‘Rising tides lift all boats’

Julia Kadison, CEO of the Milk Processor Education Program (MilkPEP), told Food Safety News in an email that, in today’s increasingly competitive environment, marketing innovation is key to gaining a competitive advantage and keeping consumer attention.

MilkPEP is funded by the nation’s milk processors with the goal of increasing fluid milk consumption.

“The fluid milk category is no exception,” she said. “Consumers want and expect options, and Fairlife provides another one. Coke is well-known for its product and marketing innovation and for reinvigorating mature categories.”

Like Douglas, she cited Simply orange juice as a good example of this.

“Twenty years ago, it was a generic commodity-like offering,” she said “Then Simply came onto the market, and others followed, giving consumers a plethora of choices in terms of product benefits and packaging.”

She also said that Simply and other category innovations have proven that “rising tides lift all boats.” And she predicted that the entrance of Coke’s Fairlife into the fluid milk arena “should be a nice complement” to her organization’s innovative marketing and education campaigns.

How is ‘premiumization’ done?

According to Fairlife’s website, the company, which sources its milk from 90 dairies across the country, has a special proprietary filtration process that allows it to reformulate the milk. The process separates the milk into five key components: water, butterfat, protein, vitamins and minerals and lactose, based on the different molecular shape of each component.

These components are then recombined but in different proportions that what you’d find in ordinary milk. The end result is a lactose-free milk with more protein and calcium and less sugar than ordinary milk.

Another plus, according to the company, is that the milk is chilled to 37 degrees F within three minutes after coming out of the cow, thanks to a special cold filtration system.

In a video about Fairlife, dairy farmer Sue McCloskey refers to consumer interest in healthy products, saying that Fairlife milk is “our first step in providing better nutrition so we can all lead our lives with energy, beauty and vitality.” In another video, she adds courage to the mix.

Business basics

Fairlife was established as a joint venture between Coca-Cola and dairy co-op Select Milk Producers, the company behind Core Power. Select Milk Producers describes itself as “a group of large dairy producers with high quality milk and efficient dairy farm operations.”

Fairlife milk was tested in three markets — Minneapolis, Denver and Chicago. Fairlife spokesperson Melanie Kahn said that those test markets were successful and “have led us to believe there’s a good opportunity to drive growth in the milk category through our compelling new innovation.”

The question of food safety

To begin with, Fairlife’s milk is pasteurized, which means foodborne pathogens such as E. coli, Campylobacter and Salmonella are killed. According to the company’s answers to frequently asked questions, unlike ordinary milk, which is pasteurized at a high temperature for 15-20 seconds, Fairlife’s milk is pasteurized at an even higher temperature for less time. This, the company states, gives its milk a much longer shelf life when it’s unopened. Once opened, its shelf life is the same as ordinary milk.

Out in the marketplace, food safety comes into the picture when considering whether Fairlife will provide consumers who prefer raw milk, which is not pasteurized, with an option that differs from conventional milk.

Many raw-milk consumers say they choose raw milk because their systems can’t tolerate the lactose in conventional milk. Others say they get allergic reactions from drinking conventional milk because the enzymes and bacteria killed during pasteurization remain in the milk as dead cells, which can trigger allergies.

It was not clear whether Fairlife’s filtration process can filter out these “dead cells.”

Mark McAfee, owner of Organic Pastures, the largest raw-milk dairy in the United States, doesn’t expect Fairlife to give raw milk “a run for our money.”

When considering the relatively high price for Fairlife milk, McAfee said that consumers looking for alternatives to conventional milk will likely reach for raw milk, which is also higher priced than conventional milk.

“It’s a dead-end venture,” he said. “Our core consumer wants unprocessed, whole, delicious, easy-to-digest full-fat raw milk from a farmer they know and trust.”

But Greg Miller, chief scientific officer for the National Dairy Council and who is known as “Doctor Dairy,” sees a bright future for Fairlife.

“I think it will be very successful,” he said. “It tastes like traditional milk without the sweetness you find in other lactose-free milks.”

Miller also said there’s no good science behind claims that what some refer to as “dead cells” in pasteurized milk are what cause milk allergies. And while milk is one of the top allergens for very young children, he said that many of them outgrow the allergies.

What about organic milk?

Oregon dairy farmer Jon Bansen, a member of, and spokesman for, Organic Valley, said he doesn’t think people will abandon organic milk for Fairlife. But even so, he conceded that Coke has a formidable marketing and distribution system.

Referring to the inexpensive ingredients in Coca-Cola and the generally low prices conventional dairy farmers get for their milk, Bansen said that, “What Coke is saying is, ‘What else can we buy cheap and make expensive?’”

Bansen also said that he doesn’t anticipate seeing Fairlife taking over the organic market “until its cows are raised on pasture.”

According to USDA standards, milk that’s sold as organic must come from cows that graze on pasture for the full length of the local grazing season. While the grazing season must last at least 120 days, in many areas it will be much longer.

The organic rules also say that animals must get at least 30 percent of their food from pasture during the grazing season.

While Fairlife states that its cows have access to shelter 24/7, the company doesn’t say anything about how long they’re actually out on pasture each year.

Bansen said the high cost of Fairlife milk might actually nudge consumers over to organic milk, which generally costs more than conventional milk but less than raw milk.

The average price of a gallon of conventional milk is $3. On average, a gallon of organic milk costs $6. The average price of a gallon of organic raw milk is $14. At stores, Organic Pastures’ raw milk sells for about $18 a gallon; at the farm, a gallon is $12 to walk-in customers and about $14 at farmers markets.

Those pin-up girls

Coke ran into a barrage of public outrage, some of it international, over an original advertising scheme that featured pin-up girls scantily clad in “a splash of milk.” One article described the campaign as “heinously sexist.”

The company says it has moved on.

“The pin-ups advertising may have been eye-catching, but we’re taking a totally new approach,” asserts the Fairlife website. “That campaign was retired in June and we’re super excited about what’s to come.”

 

 

 

 

© Food Safety News
  • BB

    Humans…………the only species drinking (another species) milk after weaning.
    Coca-Cola………….thinking they can convince me to drink it by making it “better” than nature intended….not going to happen.

    • Al

      Why is drinking milk so odd for us? We’re the only species that does lots of things.

  • FoodSci

    Why would they sell raw milk? They are smarter than that at Coca Cola.