Market View: Coca-Cola Invents Milk!

March 18, 2015
We'll soon see if America's iconic marketer can make 'nature's perfect food' into more than a commodity.
I'm not sure whether anyone noticed Coca-Cola is rolling out a new product: milk. It came as no surprise to me that a marketing company would recognize the value in branding milk.

I'm not surprised, because milk is being sold as a commodity yet it has numerous positive attributes that have been neglected by the dairy companies. Additionally there is very little competition for branded milk. Coke has demonstrated the ability to make brands out of commodities, for example water. I fully expect Coke will be successful in this venture.

As the adage goes, there's no such thing as commodity products only commodity marketers, and the dairy industry in general has not demonstrated it understands marketing. (My apologies to the milk marketers that do understand branding.) Putting milk mustaches on celebrities appears to be a massive failure, unless you think a multi-year decline in fluid milk sales is not so bad.

In all fairness the dairy industry now has focused on attributes the consumer seems to really care about: protein. This is at least a positive step forward for the milk industry.

The exciting part of the Coca-Cola milk project is the company says it has absolutely no intention of trying to compete on price with commodity milk. It seems that it is the mantra of the commodity marketers, that they should lower the price as much as possible, while the mantra of the branding companies is to ask how much more they can charge.

Coca-Cola milk will highlight all the positive attributes of milk. The labels will be attractive and informative unlike commodity milk labels. In many cases commodity milk labels have absolutely no attributes or benefits on their labels except for the word milk and the fat content.

I have often wondered what people in the dairy industry think when they create labels that are unattractive and uninformative except to say that the product is milk. Do they think that consumers walk up to the dairy case and ask themselves, “I wonder what all those white gallon containers are?” And finally as they read the label they say, “Oh, it's milk. I would never have known that if it wasn't for the label.”

This foray of Coca-Cola into the milk market also will be interesting because Coca-Cola is noted for making sugary beverages, which some people believe are unhealthy. However, by entering into the milk market, Coca-Cola is offering a healthy beverage that has been the beverage of choice for millions of Americans in the past.

The critics already are demonizing this new venture. Ironically it is the nutritionists who are raising the most criticism. A typical claim is that the Coca-Cola milk will be “overly processed.” These are the people who are demanding that fast food restaurants offer milk as an alternative to soft drinks! It has already been referred to as “Frankenmilk” because the milk flows through soft filters so that it can concentrate the good stuff – like protein and calcium – and filter out the fat and sugars. That allows Coke to bottle only delicious, nutrient-rich milk – with no added protein powders or synthetic junk. I'm getting old and may be losing some of my cognitive abilities, but isn't this exactly what the nutritionists have been asking for?

However I believe there is a lesson here for all of us in the food marketing business, and that is to clearly understand the difference between a product and a brand. There is so much written about branding and products that I could never do justice to the topic here. However when the company focuses primarily on the product rather than on the consumer or customer, it is often distracted by what the market really wants.

Commodity marketers often are obsessed with keeping costs down with the belief that lower prices will lead to higher sales. However, a brand is a statement or sign of trust between the consumer and the manufacturer. A brand is not just putting the name of your company on a label. A brand is developing in the minds of consumers the advantage that your products have over the competitors in satisfying their desires. A brand provides the difference between all the competitors in the market and the promise to deliver that time after time after time.

We will find out shortly whether consumers will pay more money for milk that has more protein, more calcium and more of what consumers desire than plain old, good old, milk.

Coca-Cola knows as much as anyone in the food industry about branding. I believe they saw this incredible product that very few companies were willing to brand. They understood that you have to make a promise to consumers that Coca-Cola milk is going to deliver everything they're looking for every time they buy it. It will be interesting to see if America's iconic beverage, milk, will be successfully marketed by America's iconic beverage company.

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