Industry pumps $500M into push to bulk up milk sales

With sales of milk as a beverage at the lowest level in more than 30 years, the dairy industry is fighting back with a $500 million campaign that includes products such as milk cartons that don't require refrigeration until they are opened.

Total U.S. beverage milk sales were about 52 billion pounds in 2013, according to the most recent available figures from the Department of Agriculture. That's about six billion gallons, the lowest level since 1982.

Changing consumer habits, more drink choices, and a lack of dairy-product innovation are behind the steady decline in milk sales, the industry says.

While Americans consume about the same number of gallons of beverages as they did in the past, a lot less of that is milk.

Beverage milk sales have fallen to such a low level, it may be impossible to curb the decline if the new campaign fails, said Tom Gallagher, chief executive of Dairy Management Inc., a national organization that promotes dairy products and is funded by dairy farmers.

"At some point, milk could become an irrelevant beverage for the average consumer," Gallagher said.

The new campaign stems from an alliance between Dairy Management Inc. and seven business partners including Dairy Farmers of America, a cooperative that represents thousands of farmers nationwide, including New Jersey and Pennsylvania.

Product innovation, including flavored milk and dairy-based sports drinks, is essential, said Monica Massey, a Dairy Farmers of America senior vice president.

"We need to understand consumer trends," Massey said. "We can't just put a gallon of milk on a shelf and hope someone buys it."

In an effort to appeal to children, milk has been sold in small packages that resemble a cow's head. There's also been more emphasis on aseptic packaging, which allows milk to be kept unrefrigerated on a store shelf, much like a juice box.

Consumers want more "grab and go" options in drinks, Massey said.

"We are still a country where people want to buy milk refrigerated," Gallagher said, but there are cost savings for businesses if milk could be moved on nonrefrigerated trucks or could be stored without having to be kept cold.

Besides Dairy Farmers of America, the others in the campaign include Kroger Co., Coca-Cola Co., Southeast Milk Inc., Shamrock Farms, Darigold/Northwest Dairy Association, and Maryland & Virginia Milk Producers Cooperative Association.

With construction of milk-packaging plants, the campaign could easily exceed $500 million, Gallagher said.

Not everyone backs the efforts to promote dairy products, including Physicians Committee for Responsible Medicine, which favors a vegan diet.

"Dairy Management Inc. tries to convince restaurants to throw cheese on everything they can think of," said Mark Kennedy, director of legal affairs for the group. "It spends millions of dollars working with fast-food chains to develop and actively promote cheese and other fatty, high-calorie foods."