MILK VENDING SESSION
November 5, 2003
Kathy Belcher, Program Coordinator,
Southeast Dairy Association
AGENDA
I.
Welcome& Samples
II.
Why Vended Milk?
III. Machine Options
IV. National Vended Milk Test Results
V.
Milk, Cheese & Yogurt Test
Results
VI. Local Results
VII. SUDIA Milk Vending Grants
VIII. Questions & Answers
WHY MILK VENDING?
 Milk vending offers students a healthy
and “cool” alternative to soft drinks and
juice drinks
 In the appropriate setting, milk vending
can deliver a profit to schools
Research Has Shown…
 90% of teen girls and 70% of teen boys do
not get enough calcium
 Children who followed a diet rich in dairy foods
had lower body fat than children with lower
calcium intakes
 Each additional serving of sugar-sweetened
beverages such as soft drinks increased the
risk for obesity
Research Has Shown…
 Students prefer plastic, re-sealable containers
to traditional paper cartons of milk
 Secondary students prefer larger servings of milk
 When given flavored milk options, milk and
calcium consumption increased
 Adding a 3rd flavor of milk increased in-school milk
consumption
Setting the Record Straight on
Flavored Milk
 Children who drink flavored milk drink more milk
and have higher calcium intakes than those who
don’t.
 Children who drink flavored milk consume fewer
nutrient- void soft drinks and fruit drinks.
 Children who drink flavored milk do not consume
more fat and sugar than those who drink unflavored
milk.
Johnson ,R.K. et al. The nutritional consequences of flavored milk consumption
in U.S. school –aged children. JADA 2002; 102,2: 853-856.
Ideas for Funding Support?
 Community Health Organizations
 School Health Advisory Committees
 PTA’s or other school organization
 Community Ag-related Businesses
 SUDIA Grants
SUDIA Grant Process
 School Foodservice Director or Principal may
apply for $1000 SUDIA grant (10 still available)
 May be used for purchase or lease of a milk
vending machine
 Up to 2 grants per school district
 Purchase or lease by December 15, 2003
 Submit copy of purchase order or lease agreement
for funds to be released.
Milk Vending Machine Options
Clyde Paschal, The Vending Center
David Pisacane, Shaffer Distributing Co.
Why special milk machines?
 Constant temperature of 37° ensures freshness and
great taste
 Typical soft drink machines chill only the bottom 1/3
of the cabinet
 Health guard renders machine inoperable if the
temperature goes above 40° for 15+ minutes
Machine Features
What to look for…
Front of machine
Capacity
Stocking method
First-in, first-out function
Storage - vertical or horizontal?
Currency mechanism
Ease of adding different size products
Dixie Narco
 360 16 oz bottle capacity
 New, smaller capacity now
available
 Glass front with celebrity
graphics on sides
 Health guard
 Coin, bill or card system
 Warranty
 Anti-theft system
 Price: $3900 / $4500
AMS
Automated Merchandising Systems
 Up to 288 16 oz bottle capacity
 Drawer-like, pull-out trays make
rotating product easy
 Can accommodate yogurt &
string cheese
 Glass front with graphics
 Health guard
 Coin, bill changer system
 Warranty
 Price: $3900
School Milk Vending Test :
Evaluating Opportunities
for School Milk Vending
September 5, 2001
Funded By:
Milk Processor Education Program (MilkPEP)
Dairy Management Inc. (DMI)
Managed By:
Research and Consulting
For the Global Beverage Industry
Test Objectives and Methodology
Primary Test
Objective
• To evaluate the opportunity for milk vending
in schools
• To quantify the profit potential
Supporting
Objective
• To understand the operating dynamics
• To identify optimal products, placement and
merchandising
• To build vending economic models for
schools, processors and vending operators
Test Objectives and Methodology
The five test markets were selected based on processor capabilities/interest,
third-party vend operator capabilities and geographic representation
• Vending machines were placed in middle and high schools,
with dual machine placements in 13 high schools
Omaha, NE
• Roberts Dairy
• Dahl Vending
• 2 Middle/6 High Schools
• 4 Dual Placements
• Avg. School Population: 1,080
Boston, MA
• HP Hood, Inc.
• A&B Vending Co.
• 5 Middle/12 High Schools
• 1 Dual Placement
• Avg. School Population: 1,180
Southern California
• Alta Dena Dairy
• Venders Service - Orange Cty.
• Roosevelt Milk Vending - LA
• 6 Middle/9 High Schools
• 4 Dual Placements
• Avg. School Population: 1,785
Austin, TX
• Oak Farms Dairy
• Accent Food Service
• 11 Middle/10 High Schools
• Avg. School Population:
1,190
Miami, FL
• Velda Farms Dairy
• Great American Vending
• 0 Middle/12 High Schools
• 4 Dual Placements
• Average School Pop: 3,060
Test Objectives and Methodology
The vended milk was priced at $1.00 across all test markets, which was in line
with competitive vended products in similar serving sizes
Typical Beverage Vending Prices in Schools
Item
Omaha
Boston
Austin
20-oz. Plastic Soda
$1.00
$1.05
$1.00
$1.00
$1.00
Bottled Water
$1.00
$1.00
$1.00
$1.00
$0.85
Bottled Juice
$1.00
$1.25
$1.25
$1.25
$1.25
Canned Juice
$0.85
$0.85
$0.80
$0.75
$0.75
Isotonics
$1.25
$1.25
$1.25
$1.25
$1.00
N/A
$1.25
$1.25
$1.25
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
Bottled Tea
Milk Test
Los Angeles
Miami
Test Objectives and Methodology
The flavors offered varied by market, depending on processor product line
• Test parameters required at least three flavors, and each market also offered a variety of fat levels
Vend Test Product Variety
by Market
SKUs
Omaha
Boston
Austin
Los Angeles
Miami
Whole White
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Low Fat White
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Skim White
Chocolate Whole


Chocolate Low Fat


Strawberry Low Fat

Orange

Coffee
Total SKUs
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4
6
4
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5
5
Key Learnings/Messages from the Vending Test
What We Learned from the School Milk Vending Test *
 Kids will eagerly buy milk from vending machines in schools
 Vending will be the preferred venue for kids to buy flavored milk, especially products
they can’t get on the lunch or a la carte lines
 The greatest vending sales opportunity comes from large middle and high schools
 Flavors out-sell white milk nearly 10 to 1
 Milk vending can be a profitable business, given the right product mix, pricing and
operational components
 Commissions to schools are usual if vending is not school-operated
 There is no single approach to school milk vending
 Not all schools are appropriate for milk vending
 There may be significant competitive response by the soft drink players
 There was no significant lunch line cannibalization
 Spoilage was not a significant issue/expense
*See full report at www.idfa.org/mktg/gotmilk.htm
Test Results – The Data
Average weekly sales per machine during the test were $280 for all schools
• High schools achieved higher velocities, primarily due to the larger school populations compared to
middle schools
$450
Average Milk Vender Sales
Sales Per Machine Per Week
$415
$388
$400
$350
$300
$307
$321
$280
$263
$238
$250
$213
$174
$200
$150
$100
$50
$0
High School
Installation Period – 1st 3 weeks
Middle School
Total
Base Line Period – After 1st 3 weeks
All Weeks
Test Results – Student Reaction
Students were generally satisfied with the milk serving size of 16-ounce – they
definitely did not want smaller portions
• A number of students would have liked more milk per vended serving
Students’ Reaction to 16-ounce Serving Size
Share of Total Respondents
73%
High School
60%
Middle School
24%
23%
7%
Just Right
Would Like More
Per Serving
Source: Beverage Marketing Corporation; Student Survey
3%
Would Like Less
Per Serving
Test Results – Student Reaction
Overall, students had very good things to say about the got milk?® vending
machines
• 84% of the comments from both middle school and high school students were positive
Straight From the Students’ Mouths
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“I think that it’s a very creative idea to influence our students into buying milk”
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“I like it; it gives us a choice besides soda”
“I like it, I wish it was closer to the cafeteria because I would buy it more”
“It’s beautiful and I love it so much; Yea for got milk?® vending machine”
“It’s great and it’s very nutritious for those with calcium deficiencies”
“Handy; Don’t have to stand in line”
“I like it, especially the Dixie Chicks; it gives us something else to drink”
“It’s a great way to call kid’s attention to drinking milk”
“I like it; sometimes me and my dad get strawberry milk after school because it’s
our favorite”
“I like it because it gives us more variety and more milk”
Test Results – Student Reaction
Negative comments focused on the cost and the machine itself
Straight From the Students’ Mouths
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“It costs too much for too little; better deal through lunch line”
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“I don’t think many kids are into buying milk from it; also, you can get
free milk in the lunch line”
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“Milk in the machine for extended period of time scares me”
“All the milk has too much fat in it”
“I think it’s easy to flip over and get free milk”
“Sometimes there is milk in the machine and after you press the button,
it says sold out, even though there’s still milk in there”
“It needs a new picture on the side”
“It’s good, but I don’t use it very much because it’s too expensive”
“It’s kinda cool, but dumb too because milk is in lunch line for 50 cents”
Dairy Vending Test
in
Iowa/Illinois:
Final Report
Prepared for:
Swiss Valley, Midwest Dairy Association & Dairy Management Inc.
Prepared by: Marketecture
June 19, 2003
Dairy Vending Machine
Plan-O-Gram
Yoplait
GoGurt
Schreiber
String Cheese
Nestle Vanilla
NesQuik
Nestle Banana
NesQuik
Swiss Valley
Whole Chocolate Milk
SV/Whole
Chocolate
Milk or Yogurt
Swiss Valley
Strawberry
Milk
SV/Skim
White
Milk
SV/LF
Chocolate
Milk
SV/2%
White
Milk
SV/Whole
White Milk
SV/LF
Chocolate
Milk
Units Sold
Total Yogurt:
12,738
School/Week
29.7
Total Units Sold:
77,951
Total Cheese:
18,443
School/Week:
16%
GoGurt Strawberry: 47%
GoGurt Berry Blue: 39%
Raspberry Cup*: 7%
Strawberry Cup*: 7%
100%
24%
43.1
4,585 Units Sold/School
4.2 Units Sold/Student
182 Units Sold/
School/Week
.17 Units/Student/Week
* Products not available in all
schools and during all weeks.
Chocolate Whole: 42%
Chocolate 1%: 19%
Total Milk:
46,770
School/Week
109.2
Strawberry 2%: 23%
60%
White FF: 3%
White 2%: 4%
White Whole: 3%
NesQuik Vanilla*: 8%
NesQuik Banana*: 3%
100%
Units Per Week
• Sales volume differed significantly from low to
high
Low Volume Schools
100 Units Per Week
5 Schools
(3 High School, 2 Junior High)
(73 Units – 123 Units)
Medium Volume Schools
171 Units Per Week
7 Schools
(4 High School, 3 Junior High)
(151 Units – 185 Units)
High Volume Schools
270 Units Per Week
5 Schools
(3 High School, 2 Junior High)
(221 Units – 320 Units)
Vending Machine
• AMS machines were
used because of their
ability to dispense a
variety of different
products –
milk, cheese & yogurt
School Milk Vending in Kentucky
 At least 49 Machines in place
 3 in Elementary Schools
 14 in Middle Schools
 32 in High Schools
 School Food Service – Administration Partnership
in at least 3 districts (Barren, Hardin & Muhlenberg)
 School Food Service – Athletic Dept. Partnership in
Monroe Co.
Barren County Schools
Sarah Vincent, SFS Director
Barren County High School – 1200 students, 2 machines
Barren County Middle School – 600 students, 2 machines
(1st machine paid for in less than 2 months)
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Where: Commons area, just outside cafeteria
What: Milk
Price: $1.00 Processor milk; $1.50 Nesquik
Stocking Time: 15-60 minutes a day
Milk Sales:
150-430 units per day
Milk Variety:
Strawberry, chocolate, banana,
vanilla, white
Warren County Schools
Doris Pruitt, SFS Director
5 machines in middle and high schools, 1 in elementary
(1st machine paid for itself in 2-1/2 months)
 Where: Cafeteria – access before, during and after school
(In elem., is in hallway outside cafeteria)
 What:
Milk, water (w/ school logo) and 100% juice
 Price:
$1 for local product; $1.50 for NesQuik products
 Sales:
From 100 to 350 units per week, per machine
Elem. school includes daily “milk break” opportunity
 Variety: 1% chocolate and 1% strawberry from local dairy
FF choc, RF banana, NesQuik
 Stocking Time: 10-15 minutes per day
*Note from Doris: Be sure to set up dual control for money collection
Ohio County High School
Shirley Dockery
 Student population: 1100
 Where: Lobby of HS....available at all times
 What: Milk products only
 Cost: $1
 Sales: 350-375 units per week
 Variety: Chocolate, Strawberry, white
 Stocking time: Zero....milk vendor stocks
Hart County High School
Martha Taylor, SFS Director
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Student Population: 800
Where: Cafeteria, access anytime
What: Milk only
Price: $1.00 for local product, $1.50 for Nesquik p
Sales: 175 per week
Milk Variety: 1% Chocolate, local dairy; 4 flavors
Nesquik
 Stocking Time: Approx. 10-15 minutes per day
Mercer County High School
Sylvia Moore, SFS Director
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Student Population: 650
Where: Foyer, access anytime
What: Milk, Water & Juice
Price: $1.00 for processor milk, $1.50 for
Nesquik; $1.00 Juice; $.75 water
 Sales: 420 units per week (ave. of 16 weeks)
 Milk Variety: White & Chocolate + 4 flavors
Nesquik
 Stocking Time: Approx. 10-15 minutes per day
Butler County High School
Jane Smith, SFS Director
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Student Population: 600
Where: Access all day
What: Milk, Water and Juice
Price: $1.00 and $1.50 for Nesquik products
Sales: 150 per week average, more sales the
beginning of the year and when weather is warm.
 Milk Variety: 1% choc.;1% strawberry; Whole
Choc.; Orange Juice; Water; 5 Nesquik flavors.
 Stocking Time: Approx 1 hr per week.
Two Examples of School Milk Vending Operation
School Self Operation
Pros
 School retains all revenue
 Full control over contents and
quality control
 Control over vend price
 Fund raising mechanism
 Availability of on-site labor
 Leasing allows for immediate
operating profitability
 If purchasing the vender, the
payback is short
Cons
 Machine purchase price
 Added responsibilities for staff
 Maintenance infrastructure
 Costs for product spoilage
 Machine service costs
Vending Operator
Pros
 School can have vending program for
little or no money
 Machine filling, maintenance and service
provided by vend-op
 Benefit from expertise and experience of
vend-op
 School receives percentage of profits
Cons
 School shares profit with vend op
 School forfeits some control over what
goes into the venders
 School depends on operator for quality
control
 Not viable for smaller schools
 School forfeits control over vend price
Considerations
 Location
 High traffic area with all day access is key
Consider location outside cafeteria to
capitalize on before & after school and
weekend events
 Be flexible & willing to change location if
needed
 Training
 “learning curve” to become proficient in
operation
Considerations
 Operation
 Insure continuous source of power
Not shut off at night or on weekends
Use tag or lock to insure plug is never
disconnected
 Plan for stocking & rotation
 Routine maintenance of machine
 Try a variety of products
Different flavors & fat levels
String cheese & yogurt
Considerations
 Partnerships
 Food Service, Administration, Athletics,
Student groups, PTA
 Dairy Processor
 Vend Operator
 SUDIA grants still available
Increase Sales With
Vending Promotion
 Sampling
 Introduce new flavors
 Rotate products for variety
 Flavor-of-the-Month
 Vending-specific promotions
 SUDIA materials
poster, floor decals, banner, mobile, tip sheets, public
address announcements
 Mark products for free merchandise (posters, hats, t-shirts, key
chains)
 Try new products
 String cheese
 Yogurt
Promotions Ideas
 Press Your Luck
 “Got Milk?” stickers were placed on bottom of select
milk bottles in machine. Student who got a sticker
won a prize.
 Lotto – Free Vend
 Machine was set to dispense a free product every
25th purchase. Student received the product plus his
money back.
Vended Milk Delivers a
Healthy Alternative!
Questions?
Thank you for coming!