VENDED MILK... IT’S ON EVERYBODY’S LIPS!

FLAVORED MILK SHARE GROWTHMILK’S POPULARITY CONTINUES TO GROW NATIONWIDE.

HERE’S WHY:

• Exciting new flavors

• Innovative products and packaging

• Consumers’ ever-increasing demand for healthier fare

Recent studies show that the sales potential forvended milk is huge. In all channels tested - business& industry, colleges & universities, public venues, andschools – vended milk sales were strong, steady, andconsistent with industry standards. And just in caseyou thought milk was more of a kids drink, in someinstances B&I locations outsold school locations on aper capita basis.

There is also strong evidence that adding milk toyour list of offerings drives incremental sales withvery little cannibalization of other beverages in thevending bank.

VENDED MILK: IT'S ON EVERYBODY'S LIPS

Current national trends show growth in the popularity of flavored milk across all retail channels. While traditionally strongsellers like chocolate and strawberry lead the pack, new, taste-tempting flavors like banana, orange cream and chocolate chipcookie are starting to shake stuff up with consumers of all ages.

FLAVORS: THE SWEET TASTE OF SUCCESS

Single-serves with high-impact branding are making consumers stop andtake notice. And the appeal goes beyond the packaging. Consumers saythey prefer buying milk in single-serves by a wide margin because:

• It tastes better

• It keeps cold longer

• It’s portable

PLASTIC SINGLE-SERVES – YOU CAN TAKE IT WITH YOU

WHY MILK? WHY NOW? VARIETY, INNOVATION, AND NUTRITION

Flavored Milk27%

Eggnog1%

White Milk72%

Almost 1/3 of milk’s growth was due tothe surging popularity of flavors.

THE GROWING POPULARITY OF FLAVORED MILK

0 20 40 60 80 100 120

Total Flavored Milk

Chocolate

Strawberry

Banana

Vanilla

Coffee

All Other Flavors

Percent Growth

New flavors and old favorites are all experiencingremarkable growth!

SOURCE:

IRI 52 weeks ending

10/07/01 and total 2000

SOURCE:

IRI 52 weeks ending 10/07/01

and total 2000

0

0.05

0.10

0.15

0.20

0.25

0.30

0.35

School Test Per Capita Consumption

B&I Per Capita Consumption

Un

its

Per

Con

sum

er P

er W

eek

0.20

0.250.27

0.34

0.18

0.25

All Weeks

Installation Period

(3 Weeks)

Base Line Period

Adults drank more vended milk per capita than kids did!

PER CAPITA CONSUMPTION AT B & I AND SCHOOLS

Milk is the second most popular beveragein America, and #1 in American homes!

NEW FLAVORS AND INNOVATIVE PACKAGING…MILK DELIVERS!

The American consumer is becoming more and more health conscious, turning to nutritious alternatives forthemselves and their families. For many American families, that means turning to milk.

Milk has long been associated with good health, and each year, new studies add to the list of good things that milk provides. It is, by most measures, the body’s best source of calcium, and is a significant provider of other important nutrients. No wonder it’s been called “The Ultimate Beverage!”

Good for you and good-to-go, vended milk is the ideal drink for the new nutrition-on-the-run lifestyle.

TAKING ADVANTAGE OF MILK’S “HEALTH HALO”

With concerns about obesity growing among consumers, health experts andlegislators, food service providers are under increasing pressure to provide farethat doesn’t contribute to the problem. Milk is just what the doctor ordered.

A growing body of scientific research suggests that 3-4 servings of dairy a daycan help promote weight loss. This makes milk a win-win for your customers–a vended drink that tastes good that weight-conscious consumers can feelgood about drinking. It can also help position vending as a positive force inthe ongoing fight against obesity, an important step towards ensuring thelong-term viability of the vending industry.

MILK & THE FIGHT AGAINST OBESITY

A HEALTHY ALTERNATIVE…MILK DELIVERS!

THE ULTIMATE BEVERAGE

10% NIACIN

30% CALCIUM

16% PROTEIN

85% MAGNESIUM

25% VITAMIN D10% VITAMIN A38% PHOSPHORUS

22% RIBOFLAVIN

11% POTASSIUM

Milk is an important source ofnine essential nutrients.

THE TESTS

The Fluid Milk Strategic Thinking Initiative (FMSTI), a

marketing think tank of the National Milk Mustache

got milk? Campaign, recently conducted tests to eval-

uate the opportunity for milk vending in a variety of

settings - business & industry, college & university,

public venues, and schools - in terms of sales poten-

tial, operating dynamics, and optimal product mix.

THE RESULTS

Given the right placement and product mix, vended

milk represents a huge, incremental sales opportunity

across all vending channels!

For full results on all vending tests go to

www.milkdelivers.org

Leverage the power of “got milk?” – one of the best-loved ad campaigns in history – to get your customers thinking milk.

Contact your milk supplier to see how the campaign can help your business.

POINT-OF-SALE MATERIALSA catalogue of fun, exciting merchandising material is available to help promote milk.

NATIONAL PROMOTIONSParticipate in national “got milk?” promotions.

GREAT PROMOTIONAL MATERIALS…MILK DELIVERS!

© 2004 America’s Dairy Farmers and Milk Processors

For more information go to www.milkdelivers.org

THE MILK MUSTACHE got milk? CAMPAIGN CAN HELP YOU PROMOTE MILK.

Milk rules.Grow Moore.

A good call.

Everybody knows kids love milk. What they probably don’t know is that adultsalso go for vended milk in a big way. Test results from a new FMSTI multi-channelvending study show that the demand for vended milk among adult populations issurprisingly strong, with sales consistent with industry standards.

Milk in single-serve packagingprovides the kind of variety that helpsdrive sales, offering customers a widerange of flavors, local and nationalbrands, and fat content levels.

The test results show that takingadvantage of milk’s new, expandedproduct mix makes all the differencein vended sales.

VENDED MILK — A SOLID HIT WITH ALL AGES

Post installation salesretention levels werehigh – nearly 80% acrossall venders – better thanthe industry average of50%-60%.

POST INSTALLATION SALES WERE BETTER THAN INDUSTRY AVERAGE

VARIETY DRIVES SALES: MILK’S NEW PRODUCT MIX

Installation period equals 3 weeks

0

30

60

90

120

150

B&I Public

All Venders

Excluding PoorPerforming Venders

C&U

95.6

125.7

75.9

116.6

104.5

85.0

Average Weekly Unit Sales Per Vender Excluding Poor Performing Machines(1)

Un

its

Per

Wee

k Per

Ven

der

(1) Venders with sales lower than the estimated requirement for

profitability (14 of 22 public, 10 of 29 C&U, 14 of 22 B&I) Glass front venders only.

All Weeks Installation Period(3 Weeks)

Baseline Period

B&I Per Capita Consumption

Un

its

Per

Em

plye

e Per

Wee

k

0.27

0.34

0.25

Baseline per capita consumption at B&I locations was a healthy .25 units per week - higher than per caps in the school milk vending test.

Venders that carried more SKUs (7+) soldalmost twice as much as those that carried

only limited (4) milk products!

0% 20%10% 30% 40% 50% 60% 70% 80% 90%

Multi-Channel Test

Estimated Industry Average

Full Product (7+ varieties)

Limited Product (4 varieties)

.32

.18

SALES RETENTION FOLLOWING INSTALLATION PERIOD

AVERAGE WEEKLY PER CAPITA CONSUMPTIONFULL VS. LIMITED PRODUCT LINE

MULTI-CHANNEL VENDING TEST

VARIETY THAT DRIVES SALES…MILK DELIVERS!

SALES WERECONSISTENT WITHBEVERAGE INDUSTRYSTANDARDS!

MILK SALES WERE STRONG THROUGHOUT THE TEST PERIOD

A big part of milk’s growth storynationwide is flavors. An explosion ofnew, exciting flavors like orange cream,banana, and mocha cappuccino aregenerating new interest alongsidefavorites like chocolate and strawberry.

The test results show that flavor varietyworks for adults, with flavors sellingsurprisingly well across all channelstested. And it’s no surprise that whitemilk also sold well, posting significantlyhigher sales numbers than those inschools.

• Full variety of milk product offerings

• Place next to snack and/or food machines

• Milk and healthy beverage products in same vender

FLAVORS — A WHOLE NEW PRODUCT UNIVERSE

BEST PRACTICE FOR MAXIMIZING SALES

• Public locations with extended

hours of access/operation (e.g.

retail, transportation, healthcare)

• B&I with 300+ population

• C&U locations with

heavy foot traffic

OPTIMAL LOCATIONS FORMAXIMIZING SALES

BOTH WHITE MILK AND FLAVORS SOLD WELL

Flavored milk sales were surprisingly strong, while whitemilk sold three times as well as it did in the school test.

The FMSTI Multi-Channel Vending Test included150 venders in 4 markets – 2 in the Southwest,and one each in the Midwest and Southeast.Three different types of venders were used: live-display, closed-front, and glass front. Productofferings ranged from full variety (7+) to limitedvariety (4).

For full results on all vending tests go towww.milkdelivers.org

THE FMSTI MULTI-CHANNEL VENDING TEST

NEW PRODUCTS ADULTS CAN’T GET ENOUGH OF…MILK DELIVERS!

EVERY VEND OPERATOR

WHO PARTICIPATED IN THE

TEST SAYS MILK WILL LIKELY

BECOME A PROFITABLE

COMPONENT OF THEIR

VENDING BUSINESS!

VENDED MILK PROJECTED ANNUAL PER CAPITA CONSUMPTION

AVERAGE WEEKLY UNIT SALESKids love milk, so it’s nosurprise that vended milk is a big hit in schools. Testresults show that sales ofvended milk were strong and steady throughout thetesting period, and wereconsistent with industrystandards. The best part —sales of milk were incremen-tal, and didn’t cannibalize the sales of other products in the vending bank!

Over two-thirds of students bought milkfrom a vender during the test period, andalmost a third purchased vended milk atleast once a week. The test showed thatkids gladly buy vended milk because:

VENDED MILK PASSES THE TEST IN SCHOOLS

THE MARKET FOR VENDED MILK INSCHOOLS IS HUGE

New, exciting flavors like banana and cookies-n-creamare really shaking stuff up with kids, and have helpeddrive milk consumption among teenagers up two yearsin a row. While new flavors are generating new interest,favorites like chocolate milk still dominate, outsellingwhite milk by a nine-to-one margin.

*Flavors beyond chocolate and strawberry sold well where they wereoffered. During the test, Coffee made up 29% of all flavors sold atBoston schools. In Omaha, Orange made up 10% of all flavors sold.

FLAVORS — PASSING THE TEST

WITH KIDS

The potential market in schools is estimated at 130 million sixteen-ounce plastic

single-serves per year!

SCHOOL VENDING TEST

High School Middle School Total

Almost 1/3 of students purchased milk once a week!

FLAVOR VARIETY IS THE KEY TO SUCCESS

*

In schools, flavored milk outsold white milk 9 to 1!

Per capita consumption during the test indicates thatwith the availability of vended milk kids would consumean average of eight vended milks over a 36-week schoolyear. That's an incremental one gallon of milk per year!

• They like having an alternative to other vended fare

• It is available throughout the school day

• It offers a wide variety of flavors0

2.0

4.0

6.0

8.0

10.0

MiddleSchool

HighSchool

Total

Uni

ts C

onsu

med

Dur

ing

Scho

ol Y

ear

7.9-8.6

7.2-7.9 7.2-7.9

Un

its

Con

sum

ed D

uri

ng

Test

Per

iod

VENDED PRODUCTS THAT KIDS GO FOR…MILK DELIVERS!

SALES WERECONSISTENT WITHBEVERAGE INDUSTRYSTANDARDS!

It isn’t just parents who think that milk is a greatidea for improving children’s health. 87% percentof pediatricians would recommend chocolate milkas a nutritious beverage for kids. Here’s why:

As concerns about child nutrition and obesity mount nationwide, parental opposition to the vendingof unhealthy foods and beverages to kids is growing. In response to pressure from voters andincreasingly negative coverage in the media, several states arenow considering legislation that would restrict the sale of somevended products in schools or ban them altogether.

Milk is one vended beverage that parents want their kids to enjoy. According to a recent survey, 72% of moms with kids 2-14 said they encourage their children to drink milk.

PARENTS WANT HEALTHIER VENDED FARE IN SCHOOLS

WHAT THE EXPERTS SAYMILK IS NATURE’S BEST SOURCE OF CALCIUM

% Daily Calcium Requirement

The FMSTI School Vending Test included 86 vending machinesplaced in middle schools and high schools across the country infive diverse markets and featuring a variety of products andvending formats.

For full results on all vending tests go to www.milkdelivers.org

THE FMSTI SCHOOL VENDING TEST

• Milk provides a powerful package of nine

essential nutrients

• Research suggests that 3-4 servings of

dairy a day can help promote weight loss

• Milk is the best natural source of calcium

in the diet

72% of mothers with kids 2-14 said theyencourage their children to drink milk.

Source: 4Q 2002 Knowledge Networks MilkConsumption & Attitude Tracker

VENDED MILK PASSES THE HEALTH TEST

Milk’s role as a powerful source of calciummakes it particularly important at a time whenmost experts agree that American kids aren’tgetting enough calcium in their diet, seriouslythreatening their future health.

VENDED PRODUCTS KIDS AND PARENTS FEEL GOOD ABOUT…MILK DELIVERS!

PROVIDING MILK AS A

HEALTHY ALTERNATIVE TO OTHER

VENDED FARE WILL HELP ENSURE

THE LONG-TERM VIABILITY OF

SCHOOL VENDING.

% of daily values is based on a 2,000-calorie diet. The dailyrequirement is based on an 8 oz. Serving.

SOURCE: US Dept. of Agriculture Nutrient Analysis