No easy ride for protein dairy drinks
Coca-Cola faces challenges when marketing its Fairlife product, Julian Mellentin says.
Coca-Cola is making a bold bid to create a mass-market, premium, low-sugar, high-protein milk. If the company’s marketing communications are to be believed, Coca-Cola thinks it can reinvent milk. The big question, however, is whether the product has enough of a point of difference to justify a 100% price premium in the consumer’s mind.
Fairlife ultra-filtered milk is aimed at families and went into national distribution in January 2015, priced at a 100% premium to regular milk. As a result of being ultra-filtered the milk has a higher protein content (13g per 240ml compared to 8g for ordinary milk), more calcium (40% of the RDA), it has 120 kcal per 240ml (25% fewer than regular milk) and it is also lactose-free. And as a result of being lactose-free it also has half the sugars of regular milk (6g compared to 12g).
As for the future, Fairlife plans to add other products to the line that will give people better choices for nutrition on the go in every part of their day, Porter adds. “We are looking at meal replacement and breakfast drinks, and also nutritionally rich products for the elderly. We believe we can do it better with products that are simple and better tasting. This is just the beginning of the pipeline.”
The big drop
Sales are falling in America’s $14.5 billion (€12.6bn) drinking milk market and have been for decades. As a result America’s conservative dairy industry has woken up, long after its peers in Europe, Asia and South America, to the potential of value-added products like cheese, yogurt, and higher protein dairy.
Tens, perhaps even hundreds, of high protein dairy drinks have already been launched by dairies large and small, making Coca-Cola a late arrival at the protein drink party.
However, most products on the market target sports recovery, weight managers and teenage males and deliver hefty doses of protein – typically 20g-25g per 250ml, compared to Fairlife’s 13g. Clearly, Coca-Cola is trying to attract new consumers to protein. The most health-active consumers will be very aware of protein in relation to maintaining a healthy weight and body shape and they may be drawn to Fairlife.
But does it have enough of a point of difference to become the transformative success that Coca-Cola’s comments seem to suggest they are aiming for?
We think not, and we are not alone. Here are a few of the challenges Fairlife faces:
1. Focus too much on the technology. Ultra-filtered milk, it says prominently on Fairlife website – and in the press communications for the brand. Consumers don’t know or care about technology – and when they do pay an interest it’s usually to tell industry that they want something less processed. The consumer wants health benefits they can understand and taste. Majoring on telling the consumer about the production technology is something brands don’t do, simply because it creates no value in the mind of the consumer.
2. The technology is not an advantage and the product is easy to copy. So many of Fairlife’s communications have mentioned ultra filtration that it even got a mention in the Wall Street Journal. The only problem is that ultra-filtration has been around in the dairy industry for a long time and Fairlife could quickly and easily be copied by a host of dairy producers (and any patent Fairlife has on its filtration technology is unlikely to provide any protection). In fact, an almost identical product to Fairlife, called Sun Latte, produced by ultra-filtration, has been on the market in New Zealand since 1995. It has the same nutritional profile and benefits.
3. Premium price for liquid milk = niche sales. Consumers will happily pay premiums for value-added dairy products of all kinds, but when it comes to selling them a liquid milk you pour on your cereal or add to your coffee, they think twice. Value-added milks failure rate is about 95% and when they survive rarely do they have more than a 3%-4% share in most markets. Even the predecessor to Fairlife, the New Zealand brand Sun Latte, probably has only a 1% market share, despite excellent marketing and 20 years on the market. Family users with average incomes and high usage of milk not only don’t pay premium prices for pouring milk, they actively seek the lowest price.
A marketing guru also thinks Coca-Cola has a problem. If you haven’t hear of Al Ries, then you should read his books (all in print and easy to find on Amazon). If you’ve ever talked about positioning a brand or a product, then you are using a concept invented by Ries back in 1972.
Now in his eighties, companies still seek his advice. Writing in Business Week, Ries was critical of the positioning of Fairlife, pointing out that Coca-Cola hadn’t thought through how to define its new category for the consumer, variously referring to it as:
• purely nutritious milk
• ultra-filtered milk
• value-added milk
Ries’ article asks:
“Will milk drinkers use Fairlife’s category names? I think not.
• Get me some ‘purely-nutritious milk.’
• Or, Get me some ‘ultra-filtered milk.’
“So how should you decide what category name to use? The best approach is to first decide what the position the new brand should own in the mind.
“As far as Fairlife is concerned, there are four possibilities: (1) No lactose. (2) 30% less sugar. (3) 50% more calcium. (4) 50% more protein. If history is any guide, Coca-Cola will decide to promote all four.
“Not a good idea.”
Fairlife has said it has the potential to “take milk where it’s never gone before.” We think that at best it can take it to a niche – a big niche admittedly, worth perhaps $150 million in sales (€131m, or 1% of America’s milk market). Most companies would be very happy with that result. Whether Coca-Cola’s volume-obsessed management would feel the same, however, is another question.
