Four elements of innovation in children’s dairy

Julian Melletin looks at what it takes to be a success in the competitive world of kid’s dairy products.

Most of the new ideas that have been tried over the last decade have failed – or at best resulted in ultra-niche products. What we have learned is just how narrow is the spectrum within which consumers, specifically mothers, will accept innovative dairy products. Also, how long and steep is the hill which you must climb if you want to bring consumers a new concept.

The focus in kids’ markets is on simplicity and naturalness and on simple and credible messages, and anything more complex tends to flop. The brain health benefits of omega-3, for example, were held up by ingredient suppliers as an opportunity to create a point of difference. But in most western markets, companies have withdrawn or – at best – downgraded their omega-3 fortified milk and yogurt brands. Danone is just one of the many dairies to have entirely dropped omega-3 from the formulation of its leading children’s dairy brand.

Healthy image

Dairy, like fruit and vegetables, has the advantage of a strong “naturally healthy” image in the minds of consumers in most countries. And companies are busily reinforcing the natural image. Danone (to use the example of the market leader again) after dropping omega-3 and probiotics from its Danimals and Dan-o-nino kids’ brands, is emphasizing that they contain no artificial colours, flavours or high-fructose corn syrup.

“We talked to moms about why they had been turning away from kids’ yogurt products and what they were looking for, and we found that they wanted healthier products that didn’t have what they called ‘negative’ or ‘bad’ ingredients,” says a Danone spokesperson.

But making your product “all natural”, as every company is now trying to do, and marketing the benefits that mothers readily accept for dairy — calcium and bones, protein and a credible source of vitamin D (rapidly becoming the most fashionable of vitamins) — don’t by themselves provide much opportunity for differentiation.

These virtues are all fast-becoming a dairy “category standard.” They are what every single kids’ dairy brand must communicate in order to be credible and increasingly most do, but they won’t help boost sales unless you can find another angle with which to innovate.

Faced with a challenge to their creativity, product developers’ innovation efforts in kids’ dairy are taking one (or sometimes several simultaneously) of four possible routes:

  1. Creating new categories
  2. Merchandising for competitive advantage
  3. Snacking
  4. Packaging innovation

Creating new categories

Major dairy companies usually shy away from bringing totally new and innovative types of product to market, although there are a few exceptions – Nordic dairy companies like Arla, Valio and Skanemejerier for example. Given the risks in creating a new category and the demands of senior management and shareholders for quick successes, that isn’t surprising.

It is smaller and more entrepreneurial companies, and those with more far-sighted shareholders, that are left holding the torch. In the US market, for example, it wasn’t Yoplait or Danone that created the remarkably successful Greek yogurt business, today worth around $1 billion (€754m) in retail sales, but an entrepreneurial start-up called Chobani, which still dominates the category.

The challenge of bringing new types of product to market is that you have to educate consumers about an unfamiliar product type. The makers of Frumoo, which is a 50% juice, 50% milk blend designed for children, says that one of its biggest challenges has been to get consumers to understand exactly what Frumoo is. When mothers don’t understand your product fully they are reluctant to give it to their children. So clarity of communication – and clarity of product character and benefit – is key to success for new product types.

Consumer education takes time, and while that education is going ahead, your new product will be low volume. One of the biggest challenges is the impatience of top management for rapid growth. All new products are low volume in their early stages – mass-market, high-volume success has become the exception, not the norm, in today’s overcrowded market. Gaining consumer acceptance takes time and money, and it’s the reluctance of senior management to accept this reality that leads to many product concepts being killed off too soon. In effect, senior management is in many companies the enemy of innovation, not its supporter.

Dairy-plus-fruit drinks such as Frumoo may yet become a successful concept. So too could combinations of dairy-plus-cereals. Indeed in Australia, the Up & Go brand has become a major hit with teenage males because of its on-the-go, dairy-plus-filling-cereals image. It’s a success that has not been emulated anywhere else.


Good merchandising is the unglamorous but essential success factor. The product needs to be in the place where the consumer is most likely to find it, where it sends the right signals about its identity and usage and where it can get the best price. Good merchandising can help you differentiate a brand.

In the dairy industry, we are of necessity restricted to the supermarket chiller cabinet. But that does not mean that marketers can simply accept the status quo – a new approach to merchandising might get results.

That is certainly what Kraft is banking on. Like many dairy companies, it is keen to make more of an impact in snacking. Faced with the challenge of how to take dairy into the ambient nutrition bar shelf, Kraft’s response has been instead to take the snacks into the dairy aisle, launching a refrigerated bar called Milk Bites.

Kraft is attempting to leverage the positive image of dairy, coupled with refrigerator-cabinet merchandising, to send a jolt through a nutrition bar category in the US that has grown mind-numbingly prolific and difficult for consumers to fathom.

Milk is “a central foundation of the product”. The front of each package features a photo of a MilkBite bar snapped in two so that the inside is visible, along with a small icon of a drop of milk above the line “the calcium of an 8oz [250ml] glass of milk” and, in the lower right corner of the package, an emblem that says, “store in fridge.”

MilkBite milk bars are slated as one of the company’s biggest new products planned for launch in 2012. Kraft executives are hoping that by merchandising MilkBite in the dairy case where so many Kraft brands and products already reside, instead of in the centre store, they can introduce a game-changer to the bar category similar to White Wave’s introduction almost 15 years ago of its Silk soy milk brand to the refrigerated section – a big move from soy milk’s traditional home in the dry goods aisles. Recently, almond milk makers have adopted the same strategy, putting almond milk in the chilled dairy cabinet, contributing to an explosion of sales from zero to around $160 million (€123 million) within two years.

By merchandising snack bars differently, as a dairy item, it hopes to achieve differentiation. It may not work – innovations are risky – but Kraft to its credit is at least trying something totally new.


“Snackifying dairy” – as PepsiCo’s CEO has referred to it – is on the agenda of every dairy company. Kraft’s new MilkBite milk and granola bars are an example of how companies are trying to put that into practice.

“The bars category is big, but we see a huge opportunity in dairy snacking specifically,” Michelle Lorge, senior brand manager for MilkBite, tells New Nutrition Business. “The dairy market is being fuelled by healthy eaters who want real-food snacks, like cheese and yogurt. Yet consumers love the convenience of bars. But they see the bars that have been available as being slightly processed and not necessarily ‘real’ food.

“And while dairy foods are always fresh and wholesome, they’re not always convenient,” Lorge continues. “We feel we’re creating a new genre [with MilkBite] that combines ‘real’ with convenience.”

Kraft’s move is unusual and high-risk – but at least it shows a company that grasps the importance of trying to create a point of difference.


Packaging design is one of the best ways to catch the consumer’s eye and in both adult and children’s markets, packaging innovation is a proven way to create new business. Sadly, examples in children’s dairy are still rare. One of the first to market and also the most successful was the launch in 2009 of a crushable cup – a yogurt pot that gradually collapses, allowing kids to eat yogurt like ice cream from a cone. The crush-cup now accounts for around 20% of Danone’s US product sales for children.

Dairy is an all-natural, credible carrier of health benefits. It’s also one of the foods that parents most associate with a healthy diet for their children. But making the most of that healthy platform is going to require a willingness by marketers and product developers to innovate much more – and to take more risks – than many are now willing to do.

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