MILK SHAKES IT UP

By Stacy Perman

Mom always said milk was good for you. But Mom hasn't been heeding her own advice. For decades, milk consumption has trickled downward while that of cola has nearly tripled. Among beverages, milk ranks fourth in popularity after soft drinks, coffee and beer.

Now, armed with a frothy $52 million celebrity ad campaign and a cartful of new milk beverages, the $14 billion industry is battling to reverse the tide of fluid milk's 30-year decline, defend itself from the onslaught of iced teas and designer waters and reformulate its homogenous image.

Since the American dairy industry began in 1611 with the arrival of the country's first dairy cows, neither the industry's image nor its product has moved forward much. But what if you could provide the nutritional component of milk, take out the fat, rev up the flavor and give it a catchy name? That's the thinking behind a host of new low-fat milk products aimed at those most in need of calcium--and those most likely to bolt for a cola instead.

Blair Gensamer, a former vice president of marketing and strategy at Nestle S.A., created Smilk (that's "smile" plus "milk"), a nonfat milk in seven fruit flavors targeted at school-age kids. An 8-oz. serving of Grinnin' Grape or VeryVery Strawberry offers the nutritional benefits of regular milk and no fat. The downside: 24 g of sugar, on par with a can of soda. Introduced this summer, Smilk is being sold by 300 Wal-Mart superstores as well as in schools in several districts in Michigan. Says Gensamer: "This could be a billion-dollar business." (No doubt naysayers scoffed at the idea of diet peach iced tea too.) Similar products, such as Moo Kooler, from a dairy cooperative, are hitting supermarket shelves.

That strategy may work fine with kids, but maturity is not kind to milk. Among teenage girls, typically concerned about calories, a drop-off in consumption usually occurs between the ages of 11 and 13; boys stop around age 18. More than half of adults over 35 have also dumped milk from their diet.

One reason is that milk has had run-ins with the health police. An 8-oz. glass of whole milk provides 30% of the daily requirement of calcium, but it contains about 150 calories and 8 g of fat (skim milk: 80 calories and .04 g of fat). The government recommends that adults consume no more than 65 g of fat daily. Now nutritionists are claiming that milk has got a bad rap and that the U.S. has become a calcium-challenged nation.

Pepsi is trying to raise milk's profile by applying the marketing tactics that have spread cola to all parts of the globe. The company is starting smaller, test marketing a beverage called Smooth Moos Smoothies in Texas, Oklahoma and Kansas. It is a 2% fat dairy shake packaged in old-fashioned milk bottles, and it comes in such flavors as double chocolate and banana. The product gives consumers 25% of their daily calcium requirement and keeps retailers happy with a shelf life of nine months. "Here was an opportunity to take something traditionally thought of as a commodity and make it fun and dynamic," says April Thornton, director of new products at Pepsi. Don't look for a Cindy Crawford endorsement: at about 250 calories, Smooth Moos tops a can of Pepsi by 100 calories.

Italy's milk giant Parmalat also has cola on its mind. The company makes a boxed, ultra-heated milk, popular in Italy, that has a shelf life of up to six months. In the U.S. market, Parmalat has introduced boxed and fresh varieties and is spending $25 million on advertising in an effort to make itself "the Coca-Cola of milk."

Indeed, mass advertising is the linchpin of milk's re-emergence. The now ubiquitous milk mustache campaign, with such notables as Christie Brinkley, Jennifer Aniston and Lauren Bacall sporting white upper lips and exclaiming, "Milk, what a surprise!" has been running since last January. The National Fluid Milk Processor Board has also joined forces with its California counterpart to license a quirky, award-winning series of TV spots called "Got Milk?" The theme is that people only think about milk when they haven't got it. "For the first time the industry is focusing on milk as a beverage," says Gordon McDonald, senior vice president at the American Dairy Association. "Using beverage-marketing tactics can work for milk. Milk products, packaging and advertising haven't changed in 25 years, but now we are taking a look at all these things to make milk more competitive."

Is it? The answer may well be yes. Boosted by the campaigns, milk sales have increased for the first time in decades, up .9% over last year. That's not enough to strain the dairy herd, and milk's not going to be replacing Chardonnay at Hollywood parties. But for a product that's been in a 30-year funk, it's not a bad start to a comeback.