Glug, glug, chug-a-lug. Plastic packaging is downing the single-serve milk market — in big gulps.
Dean Foods Co. led the revolution last year with Milk Chugs. Milk producers credit the Chugs, which still are being introduced in some parts of the country, with giving life to a stagnant industry.
The chocolate-flavor Chugs added 40 percent to Dean Foods' $10.4 million in annual sales of single-serve chocolate milk. Skim, 2 percent and whole milk Chugs have seen double-digit growth as well, despite a healthy increase in the retail price compared to paperboard cartons, said Sylvia Oriatti, Dean's director of marketing.
``It varies by market,'' Oriatti explained in a telephone interview. ``On average it costs 10-12 cents more per unit to move away from paper to plastic. However, it also varies state by state, where retail prices are regulated.''
The white Chugs bottle is high density polyethylene, the cap polypropylene and the colored wraparound label is PVC. Chugs are available in quarts, pints and 8-ounce multipacks. Franklin Park, Ill.-based Dean Foods does not disclose its packaging suppliers.
The bottles already are facing competition. Other dairies are turning to plastic containers for single-serve milk packaging, and many are finding PET to be a viable alternative to HDPE.
QDC Plastic Container Co. has been molding single-serve PET milk bottles since 1995 for its parent company, Quality Dairy Co. in Lansing, Mich. Now QDC serves dairies around the country.
``This is the hottest thing in the industry,'' said QDC General Manager Ken David. ``People eat with their eyes. Most national-brand beverages are packaged in a round, clear container — Snapple, iced tea, carbonated soft drinks, water. When something is in paper, consumers can't see it, it's not resealable and it won't fit in car cup holders.
``Customers are very excited and sales have increased. This is a great change in the industry. I see nothing but growth. It's a unique time for the dairy industry,'' he said.
Some of the other dairies selling milk in QDC's single-serve PET bottle have seen sales growth of as much as 100 percent, David added. One of those dairies, Jilbert Dairy in Marquette, Mich., went from averaging 16 pints of chocolate to 60 pints for each delivery.
``Dairies never looked at packaging as a sales tool,'' David said. ``Clear PET is a powerful marketing tool.''
QDC's single-serve PET bottles have the same-size closure as HDPE milk gallons, so dairies can run all sizes of dairy containers on one filling line, he said.
Packaging consultant Peter Weggeman thinks the trend will be toward PET.
``It has better clarity and oxygen barrier,'' said Weggeman, president of Directions 21 Inc. in Sarasota, Fla. ``If companies use cryogenic PET blowing, the oxygen barrier increases and 30 percent of the visible-light spectrum is screened. The cryo-bottle is made to order for milk.''
Despite that, Dean Foods has no plans to use PET.
``The HDPE container works well and blocks out the light, which can cause an off-flavor,'' Oriatti said.
Within the first year of market tests, Milk Chugs accounted for a 96 percent increase in sales of chocolate pints and 77 percent in overall pints at Dean Foods. Total sales have grown 25 percent for quarts and 60 percent for pints.
Oriatti said Dean Foods hopes that once the Chugs are distributed throughout the company's system they will make up 10 percent of its sales. Last year Dean reported sales of $3.29 billion.
``The dairy-farm product market is the most attractive food industry category in packaging,'' said Doug Groh, first vice president of securities research and economics at Merrill Lynch in New York. ``It is likely to have the highest growth in the food-container sector, growing 8 percent between now and 2001. There is clearly room for innovation and I think plastic is the fastest-growing area.''
Oriatti said Dean Foods had two reasons for trying single-serve plastic bottles.
``The first was operational,'' Oriatti said. ``We were having difficulty with paperboard packaging. The second was based on consumer research.''
Dean Foods sought to understand why milk consumption had declined during the past 20 years. The company determined that it was image related; milk was not a fashionable drink and the container lacked convenience and availability.
``We wanted to create a product that would change the way consumers think about and drink milk,'' said Dean's Chairman and Chief Executive Officer Harold Dean.
Regardless of the resin, David believes the plastic milk bottle will broaden the horizon and continue growth in packaging for dairy products. Sizes, shapes and labeling will change faster and in more directions, much like they have in the carbonated soft drink and water industries, he said.
The proof is in the profit. According to David, plastic bottles cost twice as much as paper containers. But people are willing to pay for the benefits, boosting sales volume and profit margins.
Also, dairies are banking on different flavors attracting consumers. One of QDC's customers offers orange-cream milk and plans to introduce a cappuccino flavor. Dean Foods just introduced strawberry-flavored Chugs in June.
``Right now we're concentrating on getting our products throughout the distribution area,'' Oriatti said. ``Dean's has been on the acquisition trail, adding dairies and territory.''
Like single-serve carbonated soft drinks and water, Milk Chugs are sold mainly in convenience stores. On-the-go consumers purchase the bottles for their portability but may not have access to a recycling bin when the bottles are thrown away.
Some recyclers have talked to Dean Foods about the package, specifically the PVC label.
KW Plastics Recycling Division in Troy, Ala., the largest HDPE recycler in North America, has received several truckloads of single-serve HDPE milk bottles and has been adding them to its recycling stream. Most have been Dean's Chugs, said President Arthur Ferguson.
``Most of the time the label comes off and sinks [during cleaning]. But if it gets through and goes to our extruder, it causes problems [with the pellets],'' Ferguson said. ``It's our understanding that [Dean Foods] is trying to change the label.''
``We are re-evaluating using PVC,'' Oriatti added. ``We have taken three actions as a result. We have become more educated about the issues surrounding plastic labels, we added a consumer statement on the label to remove it before recycling and we are constantly evaluating alternatives.''
Weggeman said single-serve milk bottles are here to stay.
``There's an evolution, a revolution that is ongoing,'' he said. ``I think you'll see a dramatic uptake in per-capita milk consumption. This is permanent, not a novelty.''
This is good news to an industry where per-capita milk consumption has declined. In 1994, the average American consumed 585.8 pounds of dairy products a year. In 1996, that figure dropped to 575.6 pounds, according to the U.S. Department of Agriculture.
For now, Dean's Milk Chugs won't completely replace single-serve paperboard milk cartons. Dean's school-bid contracts are still in paper, as well as some niche products.