Editor's note: The addition of flavors has an important role in making optimal foods and beverages. They are an easy way to re-invigorate a product or extend a product line, adding excitement when consumers embrace them. This article focuses on how flavors have revamped the dairy-based beverages category. For more information on new beverages launched in 2003, please see Prepared Foods' March 2004 New Products Annual issue.

In the past several years, dairy-based drinks processors have had to jump to stay ahead in a beverage market where plain old milk is not as enticing anymore. Ask a dairy processor why per-capita milk sales continue to slide, and the answer will be that there simply are a large number of other beverages consumers can choose to drink. With so many choices at the cooler, consumers are opting for those that excite, and new flavors are key.

The milk category has reinvented itself and is a major component of that wide span of choices. Today's products offer better flavors, more flavors, improved packaging and extended shelf stability, all making milk more fun. Another consideration in the drinks category is that many consumers are coming to the beverage aisle with a brand new set of nutritional concerns, including weight control and a desire to drink beverages with specific nutrients.

In the past year, public school administrators have begun to prioritize nutritional concerns over financial considerations and are putting the brakes on soft drink sales to students. Fast food chains, also, are starting to offer more healthful options. McDonald's (Oak Brook, Ill.) offers gable-top cartons of milk with its Happy Meal, while Wendy's (Dublin, Ohio) is offering a small PET bottle of milk with a recloseable top. Going even further, Wendy's will swap the French fries in its children's meal for melon, upon consumer request.

More recently, low-carb dairy beverages, which are milk with less lactose and more protein, have joined the other designer milk offerings that include lactose-free and reduced-lactose milks, fortified milks, milks formulated for specific demographics and even milk with soy protein added.

Redefining Milk

One cannot discuss milk sales trends without mentioning how milk has been reinvented and redefined for the consumer. One example is found in Dr. Pepper's (Cadbury Schweppes—Stamford, Conn.) early 2003 introduction of Raging Cow, a dairy-based beverage that the company claimed was bringing some excitement to the “boring” world of milk. The very idea of a soft drink company taking on flavored milk shows that milk is no longer just a commodity.

Also last year, two dairies introduced products that could be called low-carb milk. HP Hood (Chelsea, Mass.) introduced Carb Countdown, while SouthWest Foods (Tyler, Texas) introduced a line of low-carb milk, ice cream and yogurt under the LeCarb brand. Sold in “milk-ish” packaging in the dairy case, everyone but the government will call this stuff milk. While flavored milk is included in most sales trend reports (including those cited in this article), products like Raging Cow, coffee drinks and other dairy-based beverages are not included.

However, milk has not yet completed its transformation. There is the potential for even more innovation in the category, says Jerry Dryer, a market analyst. “I think the opportunity is there in terms of us developing some nice, high-end products using liquid milk protein concentrate for nutritional supplements like the Ensure beverages, and for making traditional milk products better, too. In effect, you can fortify milk with a liquid milk protein concentrate so that you have higher protein and maybe less lactose.”

One company that has been successful at reinventing and repositioning milk is HP Hood. One of the oldest and most well known processors in the industry, HP Hood does not rest on its laurels. In 1999, Hood introduced Simply Smart, a line of reduced-fat milks. Hood also manufactures and distributes a leading national brand of milk, Lactaid, under a license from McNeil Consumer Healthcare (Fort Washington, Pa.). More recently, Hood has introduced a Lactaid brand product fortified with soy protein. Late last year, the company rolled out nationally a line of Hood brand products, Carb Countdown, aimed at low-carb dieters. Carb Countdown competes with the Le Carb drink line introduced last year by SouthWest Foods. Basically, both are milk with less lactose and more milk solids.

In these examples, processors are adding value to what has traditionally been the commodity side of the business—that is, white and chocolate milk sold in multi-serve packages for in-home consumption. John Kaneb, president of HP Hood, says he sees the industry putting more focus on making fundamental changes and adding value to these kinds of products.

“What you are talking about is using raw cow's milk in more imaginative ways. It certainly is very, very much a primary focus of this company,” he says.

Dryer believes fortifying beverages with the right kinds of dairy ingredients could be a key to selling more milk in the form of nutritious dairy beverages. However, he is having second thoughts about soft drink companies helping the cause of dairy, even if they invent products that are largely made with milk.

“I think the downside is the soft drink guys getting into the business,” he says. “They are selling milk and sugar now instead of water and sugar, and I think some of those products could give (the dairy industry) a black eye.”

Thinking Outside the Home

It has been more than a year since the Los Angeles Unified School District voted to ban on-campus sales of carbonated soft drinks during school hours. Since then, a number of schools across the country have taken the same bold step. With the new vending options now available to dairy processors, this is yet another opportunity for manufacturers to expand their business in an arena where milk traditionally has not sold well—out-of-home, immediate-consumption sales.

Going back to the invention of the Chug (registered to Dean Foods—Dallas), new flavors, better labels and new bottle shapes have flowed continuously for more than a decade. Single-serve milk now is sold in attractive packaging, in eye-catching, high-tech vending machines. Single-serve, aseptic packaging options include HDPE bottles, as well as the traditional brick and the flashier Prisma packages. National brands of chocolate milk are offered in more convenience stores, drugstores and foodservice locations than ever before.

When discussing single-serve presentations and immediate consumption, much of the attention focuses on flavored milk. Dairy industry groups have worked hard to promote the residual nutritional value in the flavored milk, while downplaying concerns about excessive sugar or artificial colors. Of course, some processors have introduced products that are more healthful, without artificial colors or sweeteners, and with limited amounts of sugar. But recently, ordinary flavored milk, sugar and all, received a healthy dose of positive media attention

A study funded by the Northeast Dairy Foods Research Center (Cornell University—Ithaca, N.Y.), published last year in the Journal of Adolescent Health, concluded that consumption of sweetened dairy foods and beverages and pre-sweetened cereals has had a positive impact on the diet quality of U.S. children and adolescents, whereas sugar-sweetened beverages, sugars and sweets, and sweetened grains had a negative impact on their diet quality. At the same time, the American Academy of Pediatrics (Elk Grove Village, Ill.) published a policy statement recommending that pediatricians work to eliminate sweetened drinks in schools and encourage alternative offerings such as low-fat white or flavored milk.

If all the efforts of the industry and individual processors in the flavored milk/single-serve/out-of-home arena have not yet paid full dividends, they likely will in the near future. Tom Nagle, vice president of marketing at the International Dairy Foods Association (IDFA—Washington), says flavored single-serve milk will continue to grow from these efforts. “For several years in a row, flavored milk has been disproportionately responsible for milk's growth. For the two years prior to 2003, flavored milk was 30%-40% of the total category growth.

“With all the different approaches that are being taken, if each one adds just a little, it will eventually result in a 1% increase in the (compound annual growth rate), and for milk, that would be pretty substantial,” he explains.

Most sources say flavored milk accounts for 7.4% of all milk sales. Throw in value-added milk, specialty dairy products, and dairy-based beverages, and that number could be close to 10%. And it may be higher than that in a couple of years.

“Just as milk's decline has been slow over a long period, its rejuvenation may be similar,” observes Clay Boatright, vice president of trade marketing with the Dean's Dairy Group. “I think flavored and value-added items will continue to grow.”

More Growth in New Areas

As manufacturers of milk-based products continue to innovate, new segments of growth will appear. An area taking off in several categories is organic foods and beverages. Dean Foods recently increased its investment in the organic milk market by completing a full acquisition of Horizon Organic, a company it has owned a stake in for several years.

Experts say the weight-control category will continue to grow, and new scientific information could reverse some of the commonly held beliefs about milk contributing to weight gain. Milk's position as a good source of protein could help win over some of those consumers who have vaguely embraced the concept of high-protein/low-carb eating.

Anecdotes of processors offering home delivery, organic milk, stronger brands, more marketing support behind their products and better packaging show that milk-based products have come a long way and have a lot more potential. Many in the dairy industry say all the efforts to increase milk sales eventually will show a result.

Showcase: Tropical and Fantasy Flavors

An exotic line of tropical flavors is inspired by foreign cuisine and growing Asian and Hispanic populations in the U.S. WILD Flavors Inc. offers a broad range of great-tasting flavors from the latest exotic fruit discoveries internationally. Flavors such as Feijoa, White Sapote, Dragonfruit and Prickley Pear are just a few of the many the company offers. Let WILD's long-standing know-how, proven technology and service help increase your product's success with superior taste and quality. WILD Flavors Inc., Donna Hansee, 859-342-3526, dhansee@wildflavors.com

Today's taste preferences for a host of confectionery and bakery applications are being addressed with new flavors. Virginia Dare has expanded its line of Superfex[r] brand confectionery flavors, and has developed a line of tropical flavors for the SUPERFEX product line. TROPICAL SUPERFEX flavors include Carambola, Chirimoya, Coconut, Guanabana, Guava, Jackfruit, Mango, Passion Fruit and Pineapple, to name a few. The starting use rate for Superfex products is 0.10% in hard candies, 0.05% in pectin or starch cast confections, (e.g., nougat, caramels, jelly or soft-centered candies) and 0.05%-0.075% for bakery fillings, icings, frostings and toppings. Virginia Dare, Paulette Kerner, 718-788-1776, ext. 242, Virginiadare.com

Peaconut, Pinana, Cherrngo, Grapericot and Raspaya are a few examples of this ingredient company's imaginative line of flavors. “Flavor Fusion” is a line of flavors that brings together a delicate balance of flavor sensations. In addition to a complete line of tropical selections, flavors such as Mango, Papaya, Guava, Hibiscus, Mamey and Lychee also are available. The company offers a wide range of unique flavors for beverages. Call for samples. Gold Coast Ingredients, 800-352-8673, Goldcoastinc.com

Our chemists and applications teams have extensive experience in the creation of flavors and finished juice beverage applications. Passionfruit Mango, Pineapple Lime Coconut and Papaya Orange are just a few of the tropical and fantasy flavors that Maxens[r] Flavors can provide. Maxens is the flavor division of Degussa Food Ingredients. We go beyond taste to provide extraordinary flavors for your finished beverage. Maxens Flavors, customer service dept., 888-771-6573, Maxensflavor.com

A variety of tropical and fantasy flavors are available from this company, and only a small listing follows. Bell Flavors and Fragrances' prickly pear flavor, combined with lemon-lime flavor, provides a unique margarita application as well as non-alcoholic applications. The tropical punch flavor provides a pleasant fruit punch with pineapple, rum, orange, almond and cranberry. The blend can be used for non-alcoholic and alcoholic applications. The pomegranate is a very trendy fruit at the moment. Bell is screening its collection of pomegranate flavors to accommodate this need. Bell Flavors and Fragrances, Steve Carlin, 847-291-8300, scarlin@bellff.com

Take a five-minute vacation with tropical fruit flavors such as passion fruit, mango, kiwi, coconut and guava, or a fantasy blend like Jungle Fruit. The flavors are available as natural or artificial, and in liquid or dry form for ease of use in your specific application. Chr. Hansen flavorists are ready to help dream up your own flavor, be it a copy of one of nature's wonderful flavors or an exciting new combination. Chr. Hansen Inc., Karen Wood, 800-558-0802, KWood@chr-hansen-us.com, Chr-hansen.com

A taste of the tropics was evident at the 2003 Innovation Roadshow[tm]. The show was sponsored by David Michael & Co., and the company itself exhibited Jamaican ices and refreshing frozen desserts inspired by the tropics. Yellow Guava, June Plum, Otaheite Apple and Tamarind were available, but the company's tropical flavors don't stop there. It also offers mamey, sugar cane, carambola and many more. Delicious and refreshing, the tropical fruit flavors are available in natural or artificial forms and can be used in a variety of applications, so that you can Hit Your Flavor Target Faster[r]. David Michael & Co., Total Customer Satisfaction Dept., 215-632-3100, dmflavor@dmflavors.com, Dmflavors.com

Using only the finest ingredients, create outstanding products that go beyond taste, appearance and texture to delight your customers with every mouthful. Frutarom's Flavors Division already has a line of tropical flavors, featuring delicious flavors that make you dream of balmy breezes, white sand, blue skies and waters. Now, the company offers two new flavors for beverages: Natural Pacific Muu Muu Punch, created from papaya, mango and kiwi; and Natural Starfruit (Carambola), created from the company's own Starfruit distillate. Frutarom USA, Sharone Liberman, 201-861-9500, usa@frutarom.com

Vanilla's versatile flavor complements almost any type of fruit or fruit blend, adding mellow character and a touch of sweetness without the need for additional sugar. Using only the finest ingredients and an exclusive cold extraction process, Nielsen-Massey Pure Vanillas contain no artificial colors, flavors or preservatives. The purity of the vanillas makes them the ideal flavoring for good-for-you beverages such as smoothies, shakes and sodas. Nielsen-Massey, Dan Fox, 800-525-7873 (PURE)

One of the world's oldest, most edible fruits, the pomegranate has small, edible seeds, called arils, that are filled with a sweet, tangy, tart and refreshing juice. A host of new pomegranate beverage concepts is being developed by Symrise Flavors North America. They serve as an excellent source of antioxidants. Main applications include juice products with 10%-15% real juice, low-alcohol beverages, flavored water and water-based products. Symrise Flavors North America, Tom Sutherland, 201-462-2265, tom.sutherland@symrise.com

This natural cream flavor can be used alone to impart a wonderful sweet cream flavor to any beverage, or it can be added with other flavors to complement your tasty beverage. Commercial Creamery Co.'s strong natural cream flavor, code 8001, is water-soluble and can be used in numerous food applications, as well as in beverages. Call for samples. Commercial Creamery Co., 800-541-0850

Savor a true taste of the tropics with this alluring mango flavor. Mangos instantly add a dash of island paradise to a variety of foods. Robertet's Mango Flavor has an unmistakably rich flavor profile combining notes of peach, pineapple and spice with a flowery aroma. Applications include beverages, yogurts, syrups, ice cream, sorbets and more. Robertet Flavors, Gretchen Schleck, 732-981-8300

An extensive line of tropical flavors for use in both carbonated and non-carbonated beverages recently has been introduced. The flavors, by Wynn Starr Flavors, can be combined with subtle mint notes to provide a cooling sensation without menthol notes. So whether it is a ripe, luscious mango smoothie, a revitalizing tropical paradise vitamin water, or a refreshing sparkling citrus punch, Wynn Starr has the flavors for your beverage needs. Wynn Starr Flavors, Roland Abate, 800-996-7827