In the early 1990s, Safeway and Lucky food stores were the twoleading retailers in California. Fluid milk was one of approximately50,000 products sold at these retailers but extremely profitable.According to the
’s 1992 Supermarket SalesManual, milk was the top-selling supermarket product per shelf foot. The dairy department racked up a total of $61.23 per square footcompared to the average of $22.47 per square foot. In addition, directprofit return on inventory dollars, an important statistic for storemanagers, averaged $84.83 compared to the department average of $5.
Other Distribution Channels
The majority of fluid milk was sold in grocery stores, due in large partto the perishable nature of fluid milk. Convenience stores, schools, andfood service establishments such as McDonald’s accounted for themajority of remaining milk sales. In California, the latest threat to milkconsumption came from the school districts. Prior to 1982, all schoollunches in California included milk. Since then, school children chosefrom five items, including milk, for lunch. The change in school districtpolicy contributed to the 3.8 percent decline in non-commercial foodservice milk volume from 1986 to 1991. The trend was equallytroublesome in commercial food service establishments such asMcDonald’s. Although the percentage of food dollars spent out of home increased to 33 percent in 1991 from 25 percent in 1971, milkdid not enjoy an increase in sales in these types of establishments. Infact, commercial food service milk volume actually dropped 23percent from 1986 to 1991.
California Milk Processor Board (CMPB).
Consumer research revealed that per capita consumption of milk hadbeen on a steady decline for a number of years. So, in 1993, theprocessors joined together and established the CMPB to fundadvertising and public relations programs with the ultimate goal of increasing milk sales and consumption. The processors agreed tosponsor legislation requiring them to contribute $0.03 per gallon of milk sold in the state in the first year, with slightly smallercontributions in the remaining years of an initial three-year charter forthe CMPB. In the first year, the CMPB raised about $23 million, all topromote fluid milk in California. The CMPB hired Jeff Manning,previously a senior vice president with Ketchum, as executive director.Manning had worked with beef, potatoes, bananas, and eggs incommodity marketing and also brought a wealth of branded productmarketing experience.