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MILK VENDING SESSION November 5, 2003 Kathy Belcher, Program Coordinator, Southeast Dairy Association.

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Presentation on theme: "MILK VENDING SESSION November 5, 2003 Kathy Belcher, Program Coordinator, Southeast Dairy Association."— Presentation transcript:

1 MILK VENDING SESSION November 5, 2003 Kathy Belcher, Program Coordinator, Southeast Dairy Association

2 AGENDA I.Welcome& Samples II.Why Vended Milk? III.Machine Options IV.National Vended Milk Test Results V.Milk, Cheese & Yogurt Test Results VI.Local Results VII.SUDIA Milk Vending Grants VIII.Questions & Answers

3 WHY MILK VENDING? nMilk vending offers students a healthy and “cool” alternative to soft drinks and juice drinks nIn the appropriate setting, milk vending can deliver a profit to schools

4 Research Has Shown… l90% of teen girls and 70% of teen boys do not get enough calcium lChildren who followed a diet rich in dairy foods had lower body fat than children with lower calcium intakes lEach additional serving of sugar-sweetened beverages such as soft drinks increased the risk for obesity

5 Research Has Shown… lStudents prefer plastic, re-sealable containers to traditional paper cartons of milk lSecondary students prefer larger servings of milk lWhen given flavored milk options, milk and calcium consumption increased lAdding a 3 rd flavor of milk increased in-school milk consumption

6 Setting the Record Straight on Flavored Milk nChildren who drink flavored milk drink more milk and have higher calcium intakes than those who don’t. nChildren who drink flavored milk consume fewer nutrient- void soft drinks and fruit drinks. nChildren who drink flavored milk do not consume more fat and sugar than those who drink unflavored milk. Johnson,R.K. et al. The nutritional consequences of flavored milk consumption in U.S. school –aged children. JADA 2002; 102,2: 853-856.

7 Ideas for Funding Support? nCommunity Health Organizations nSchool Health Advisory Committees nPTA’s or other school organization nCommunity Ag-related Businesses nSUDIA Grants

8 SUDIA Grant Process nSchool Foodservice Director or Principal may apply for $1000 SUDIA grant (10 still available) nMay be used for purchase or lease of a milk vending machine nUp to 2 grants per school district nPurchase or lease by December 15, 2003 nSubmit copy of purchase order or lease agreement for funds to be released.

9 Milk Vending Machine Options Clyde Paschal, The Vending Center David Pisacane, Shaffer Distributing Co. Why special milk machines? lConstant temperature of 37° ensures freshness and great taste l Typical soft drink machines chill only the bottom 1/3 of the cabinet l Health guard renders machine inoperable if the temperature goes above 40° for 15+ minutes

10 Machine Features What to look for… l Front of machine l Capacity l Stocking method l First-in, first-out function l Storage - vertical or horizontal? l Currency mechanism l Ease of adding different size products

11 Dixie Narco n360 16 oz bottle capacity nNew, smaller capacity now available nGlass front with celebrity graphics on sides nHealth guard nCoin, bill or card system nWarranty nAnti-theft system nPrice: $3900 / $4500

12 AMS Automated Merchandising Systems nUp to 288 16 oz bottle capacity nDrawer-like, pull-out trays make rotating product easy nCan accommodate yogurt & string cheese nGlass front with graphics nHealth guard nCoin, bill changer system nWarranty nPrice: $3900

13 School Milk Vending Test : Evaluating Opportunities for School Milk Vending September 5, 2001 Funded By: Milk Processor Education Program (MilkPEP) Dairy Management Inc. (DMI) Managed By: Research and Consulting For the Global Beverage Industry

14 Test Objectives and Methodology Primary Test Objective To evaluate the opportunity for milk vending in schools Supporting Objective To quantify the profit potential To understand the operating dynamics To identify optimal products, placement and merchandising To build vending economic models for schools, processors and vending operators

15 Test Objectives and Methodology The five test markets were selected based on processor capabilities/interest, third-party vend operator capabilities and geographic representation Vending machines were placed in middle and high schools, with dual machine placements in 13 high schools

16 Test Objectives and Methodology The vended milk was priced at $1.00 across all test markets, which was in line with competitive vended products in similar serving sizes Typical Beverage Vending Prices in Schools ItemOmahaBostonAustinLos AngelesMiami 20-oz. Plastic Soda$1.00$1.05$1.00$1.00$1.00 Bottled Water$1.00$1.00$1.00$1.00$0.85 Bottled Juice$1.00$1.25$1.25$1.25$1.25 Canned Juice$0.85$0.85$0.80$0.75$0.75 Isotonics$1.25$1.25$1.25$1.25$1.00 Bottled TeaN/A$1.25$1.25$1.25$1.00 Milk Test$1.00$1.00$1.00$1.00$1.00

17 Test Objectives and Methodology The flavors offered varied by market, depending on processor product line Test parameters required at least three flavors, and each market also offered a variety of fat levels Vend Test Product Variety by Market SKUsOmahaBostonAustinLos AngelesMiami Whole White Low Fat White Skim White Chocolate Whole Chocolate Low Fat Strawberry Low Fat Orange Coffee Total SKUs55464

18 What We Learned from the School Milk Vending Test * Kids will eagerly buy milk from vending machines in schools Vending will be the preferred venue for kids to buy flavored milk, especially products they can’t get on the lunch or a la carte lines The greatest vending sales opportunity comes from large middle and high schools Flavors out-sell white milk nearly 10 to 1 Milk vending can be a profitable business, given the right product mix, pricing and operational components Commissions to schools are usual if vending is not school-operated There is no single approach to school milk vending Not all schools are appropriate for milk vending There may be significant competitive response by the soft drink players There was no significant lunch line cannibalization Spoilage was not a significant issue/expense *See full report at www.idfa.org/mktg/gotmilk.htm Key Learnings/Messages from the Vending Test

19 Test Results – The Data Average weekly sales per machine during the test were $280 for all schools High schools achieved higher velocities, primarily due to the larger school populations compared to middle schools Average Milk Vender Sales Sales Per Machine Per Week Installation Period – 1 st 3 weeksBase Line Period – After 1 st 3 weeksAll Weeks

20 Students were generally satisfied with the milk serving size of 16-ounce – they definitely did not want smaller portions A number of students would have liked more milk per vended serving Students’ Reaction to 16-ounce Serving Size Source: Beverage Marketing Corporation; Student Survey Share of Total Respondents Test Results – Student Reaction

21 Straight From the Students’ Mouths “I think that it’s a very creative idea to influence our students into buying milk” “I like it, I wish it was closer to the cafeteria because I would buy it more” “It’s beautiful and I love it so much; Yea for got milk? ® vending machine” “It’s great and it’s very nutritious for those with calcium deficiencies” “Handy; Don’t have to stand in line” “I like it, especially the Dixie Chicks; it gives us something else to drink” “It’s a great way to call kid’s attention to drinking milk” “I like it; sometimes me and my dad get strawberry milk after school because it’s our favorite” “I like it; it gives us a choice besides soda” “I like it because it gives us more variety and more milk” Overall, students had very good things to say about the got milk? ® vending machines 84% of the comments from both middle school and high school students were positive Test Results – Student Reaction

22  “It costs too much for too little; better deal through lunch line”  “All the milk has too much fat in it”  “I think it’s easy to flip over and get free milk”  “Sometimes there is milk in the machine and after you press the button, it says sold out, even though there’s still milk in there”  “I don’t think many kids are into buying milk from it; also, you can get free milk in the lunch line”  “Milk in the machine for extended period of time scares me”  “It needs a new picture on the side”  “It’s good, but I don’t use it very much because it’s too expensive”  “It’s kinda cool, but dumb too because milk is in lunch line for 50 cents” Negative comments focused on the cost and the machine itself Straight From the Students’ Mouths Test Results – Student Reaction

23 Dairy Vending Test in Iowa/Illinois: Final Report Prepared for: Swiss Valley, Midwest Dairy Association & Dairy Management Inc. Prepared by: Marketecture June 19, 2003

24 Dairy Vending Machine Plan-O-Gram Swiss Valley Whole Chocolate Milk Swiss Valley Strawberry Milk SV/LF Chocolate Milk SV/Skim White Milk SV/2% White Milk SV/Whole White Milk Schreiber String Cheese Yoplait GoGurt Nestle Vanilla NesQuik Nestle Banana NesQuik SV/Whole Chocolate Milk or Yogurt

25 Total Units Sold: 77,951 4.2 Units Sold/Student 60% 24% 16% Total Milk: 46,770 School/Week 109.2 Total Cheese: 18,443 School/Week: 43.1 Total Yogurt: 12,738 School/Week 29.7 4,585 Units Sold/School Chocolate Whole: 42% Chocolate 1%: 19% Strawberry 2%: 23% White FF: 3% White 2%: 4% White Whole: 3% NesQuik Vanilla*: 8% NesQuik Banana*: 3% 100% GoGurt Strawberry: 47% GoGurt Berry Blue: 39% Raspberry Cup*: 7% Strawberry Cup*: 7% 100% Units Sold 182 Units Sold/ School/Week * Products not available in all schools and during all weeks..17 Units/Student/Week

26 Units Per Week Sales volume differed significantly from low to high

27 Vending Machine AMS machines were used because of their ability to dispense a variety of different products – milk, cheese & yogurt

28 School Milk Vending in Kentucky nAt least 49 Machines in place l 3 in Elementary Schools l14 in Middle Schools l32 in High Schools nSchool Food Service – Administration Partnership in at least 3 districts (Barren, Hardin & Muhlenberg) nSchool Food Service – Athletic Dept. Partnership in Monroe Co.

29 Barren County Schools Sarah Vincent, SFS Director Barren County High School – 1200 students, 2 machines Barren County Middle School – 600 students, 2 machines (1 st machine paid for in less than 2 months) nWhere: Commons area, just outside cafeteria nWhat: Milk nPrice: $1.00 Processor milk; $1.50 Nesquik nStocking Time: 15-60 minutes a day nMilk Sales:150-430 units per day nMilk Variety:Strawberry, chocolate, banana, vanilla, white

30 Warren County Schools Doris Pruitt, SFS Director 5 machines in middle and high schools, 1 in elementary (1 st machine paid for itself in 2-1/2 months) nWhere: Cafeteria – access before, during and after school (In elem., is in hallway outside cafeteria) nWhat: Milk, water (w/ school logo) and 100% juice nPrice: $1 for local product; $1.50 for NesQuik products nSales: From 100 to 350 units per week, per machine Elem. school includes daily “milk break” opportunity nVariety: 1% chocolate and 1% strawberry from local dairy FF choc, RF banana, NesQuik nStocking Time: 10-15 minutes per day *Note from Doris: Be sure to set up dual control for money collection

31 Ohio County High School Shirley Dockery nStudent population: 1100 nWhere: Lobby of HS....available at all times nWhat: Milk products only nCost: $1 nSales: 350-375 units per week nVariety: Chocolate, Strawberry, white nStocking time: Zero....milk vendor stocks

32 Hart County High School Martha Taylor, SFS Director nStudent Population: 800 nWhere: Cafeteria, access anytime nWhat: Milk only nPrice: $1.00 for local product, $1.50 for Nesquik p nSales: 175 per week nMilk Variety: 1% Chocolate, local dairy; 4 flavors Nesquik nStocking Time:Approx. 10-15 minutes per day

33 Mercer County High School Sylvia Moore, SFS Director nStudent Population: 650 nWhere: Foyer, access anytime nWhat: Milk, Water & Juice nPrice: $1.00 for processor milk, $1.50 for Nesquik; $1.00 Juice; $.75 water nSales: 420 units per week (ave. of 16 weeks) nMilk Variety: White & Chocolate + 4 flavors Nesquik nStocking Time:Approx. 10-15 minutes per day

34 Butler County High School Jane Smith, SFS Director nStudent Population: 600 nWhere: Access all day nWhat: Milk, Water and Juice nPrice: $1.00 and $1.50 for Nesquik products nSales: 150 per week average, more sales the beginning of the year and when weather is warm. nMilk Variety: 1% choc.;1% strawberry; Whole Choc.; Orange Juice; Water; 5 Nesquik flavors. nStocking Time: Approx 1 hr per week.

35 Two Examples of School Milk Vending Operation School Self Operation Pros School retains all revenue Full control over contents and quality control Control over vend price Fund raising mechanism Availability of on-site labor Leasing allows for immediate operating profitability If purchasing the vender, the payback is short Cons Machine purchase price Added responsibilities for staff Maintenance infrastructure Costs for product spoilage Machine service costs Vending Operator Pros School can have vending program for little or no money Machine filling, maintenance and service provided by vend-op Benefit from expertise and experience of vend-op School receives percentage of profits Cons School shares profit with vend op School forfeits some control over what goes into the venders School depends on operator for quality control Not viable for smaller schools School forfeits control over vend price

36 Considerations nLocation lHigh traffic area with all day access is key uConsider location outside cafeteria to capitalize on before & after school and weekend events lBe flexible & willing to change location if needed nTraining l“learning curve” to become proficient in operation

37 Considerations nOperation lInsure continuous source of power uNot shut off at night or on weekends uUse tag or lock to insure plug is never disconnected lPlan for stocking & rotation lRoutine maintenance of machine lTry a variety of products uDifferent flavors & fat levels uString cheese & yogurt

38 Considerations nPartnerships lFood Service, Administration, Athletics, Student groups, PTA lDairy Processor lVend Operator nSUDIA grants still available

39 Increase Sales With Vending Promotion nSampling nIntroduce new flavors nRotate products for variety lFlavor-of-the-Month nVending-specific promotions lSUDIA materials uposter, floor decals, banner, mobile, tip sheets, public address announcements nMark products for free merchandise (posters, hats, t-shirts, key chains) nTry new products lString cheese lYogurt

40 Promotions Ideas nPress Your Luck l“Got Milk?” stickers were placed on bottom of select milk bottles in machine. Student who got a sticker won a prize. nLotto – Free Vend lMachine was set to dispense a free product every 25th purchase. Student received the product plus his money back.

41 Vended Milk Delivers a Healthy Alternative! Questions? Thank you for coming!


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