2016 Annual Report Milk Processor Education Program
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2016 Annual Report
Milk Processor Education Program
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CONTENTS PAGE
Section Page
MilkPEP Board of Directors and Industry Representatives 3
Letter from the Chairman 5
Letter from the CEO 7
The Milk Processor Education Program: Your Dollars at Work 8
Milk Life Key Initiatives: Building Relevance and Trust 10 Milk Life and Team USA: Thinking Bigger 11 My Morning Protein: Giving Consumers more Reasons to Reach for Milk 12 Consumer Confidence: Restoring Trust in Milk 13 Organic: Targeted Outreach Strengthens Connection for At-Risk Consumers 13 Hispanic: Finding Efficient Ways to Protect and Grow Milk Sales among this growing population 14
The Great American Milk Drive: The Million Gallon Movement 15 Built with Chocolate Milk: Year of Sustained Growth Official Recovery Beverage of USA Swimming 16 NBA Player Kevin Love Goes all the Way 17 Kelley O’Hara: Workout like a Pro Soccer Player 17 Keeping Chocolate Milk at the Finish Line 17 Taking the Message to Coaches 18 Social Tactics Drive Engagement 18 Industry Collaboration 19 Looking Forward 20 2016 Financial Report 23 Program Tracking and Measurement 24
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The Milk Processor Education Program (MilkPEP), Washington, D.C., is funded by the nation’s milk
processors, who are committed to increasing fluid milk consumption. MilkPEP activities are led by a 20-
member board, which is monitored by the U.S. Department of Agriculture’s (USDA) Agricultural Marketing
Service.
Region 1 James F. Walsh H.P. Hood LLC Region 2 Lynne Bohan H.P. Hood LLC Region 3 Brian Linney Maryland & Virginia Milk Producer’s Cooperative Region 4 Stephen C. Jones Fairlife L.L.C Region 5 Jeffrey D. Stephens Publix Super Markets, Inc. Region 6 Bradley S. Anderson Dean Foods Company Region 7 Alan J. Bernon Dairy Farmers of America Region 8 Greg Schwarz Dean Foods Company Region 9 Gary L. Aggus Hiland Dairy Region 10 Jeffrey Springer Dean Foods Company Region 11 Edward L. Mullins Prairie Farms Dairy
Region 12 Sandra K. Kelly Shamrock Foods
Region 13 Vacant Region 14 Evan Rainwater Albertsons, Inc. Region 15 John Cox The Kroger Company Member-At-Large Scott W. Shehadey Producers Dairy Foods, Inc. Member-At-Large Brian T. DeFelice Dairy Enterprises Inc. Member-At-Large Paul Corney Saputo Dairy Foods Member-At-Large Lewis Goldstein CROPP Cooperative, Organic Valley Public Member Subriana Pierce Navigator Sales and Marketing L.L.C
INDUSTRY REPRESENTATIVES: Rachel Kyllo Kemps L.L.C Ann Ocaña Shamrock Foods Ralph Hallquist Borden Dairy Ken Jorgensen H-E-B Manufacturing
BOARD MEMBERS:
MILKPEP BOARD OF DIRECTORS AND INDUSTRY REPESENTATIVES
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“In 2017, I invite and challenge every milk
brand to engage with MilkPEP, use their
resources, visit milkpep.org, and activate
against the campaigns.”
Brad Anderson, MilkPEP Board Chairman
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LETTER FROM THE CHAIRMAN
After serving on the MilkPEP Board of Directors for several years, I was elected
Chairman in August. I am excited about my new role, and take the position
very seriously as our industry continues to face challenges. Last year the milk
category saw encouraging signs of rebound: slowing decline of milk sales,
innovation of new products, impressive chocolate milk sales, and optimism
that I have not seen for some time. I too am optimistic about milk’s future, but
the industry must keep pushing forward, and build on last year’s momentum.
I’ve spent the past few months getting to know the MilkPEP staff, my fellow
Board Members, and have established a close working relationship with Julia
Kadison, MilkPEP’s CEO. I am confident in Julia’s leadership and the team behind her - MilkPEP is driven,
creative, and passionate about growing fluid milk sales.
Much of the energy I saw this year surrounded MilkPEP’s five year Team USA partnership that elevated milk’s
relevancy, and drove consumers trust in milk. Importantly, MilkPEP ensured the Team USA partnership was
one that the brands could take advantage of, and many of you did. Last year we saw unprecedented brand
activation around the Olympic partnership and across other programs.
Throughout this report you will notice the continuous theme of how MilkPEP is working to help build brands.
In 2016, MilkPEP put brands at the center of every initiative with the understanding that the category won’t
grow unless the individual milk brands succeed. With every effort MilkPEP executes, from the Olympics to
consumer research, brands are able to leverage assets and tools to strengthen their own local and/or
national marketing programs. MilkPEP knows that each milk company has its own unique objectives and
needs, and has adopted a customized approach to helping brands grow. In 2017, I invite and challenge every
milk brand to engage with MilkPEP, use their resources, visit milkpep.org, and activate your brand with the
campaigns. Processor dollars fund this program, and it is imperative that brands take advantage – milk’s voice
is stronger when we work together.
Finally, while MilkPEP’s consumer marketing programs are stronger than ever, we still need to solve for the
big gap in activation at retail – and especially in the grocery store where sales are off so significantly. In 2017,
MilkPEP will build a robust retail strategy and plan to reenergize the milk case. The plan will provide learning,
insights and tools that milk companies can use to become true business partners with their customers, and
retailers can leverage to grow sales.
During my short time as Chairman I’ve seen impressive collaboration between agencies, Board Members,
dairy partners, and milk brands. And I hope it continues. MilkPEP is just one piece of the puzzle, and in order
to drive fluid milk sales it is imperative that we work together as an industry. I am honored to serve as
Chairman of the MilkPEP Board of Directors, and I look forward to the year ahead.
Sincerely,
Brad Anderson
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“And now milk is sending American athletes to the
Olympics officially, through this historic partnership.”
Julia Kadison, MilkPEP CEO
“The alignment between milk and Team USA is authentic and
powerful. Milk has been fueling Team USA athletes for
decades… And now milk is sending American athletes to the
Olympics officially, through this historic partnership.”
Julia Kadison, MilkPEP CEO
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FROM THE CEO
In 2016, MilkPEP became a long-term sponsor of Team USA and a proud sponsor
of America’s elite athletes working to compete at the Rio 2016, PyeongChang 2018
and Tokyo 2020 Olympic and Paralympic Games. This partnership puts milk on the
world stage with so many important and beloved American brands, and lends new
consumer relevance that the milk category can benefit from for years to come.
The partnership provides assets that can be leveraged across the milk category in
so many ways – the power of the U.S. Olympic and Paralympic marks, aspirational
athletes with real milk stories, as well their trainers, dieticians and moms - who all
understand the important role milk plays in their lives and their success.
The alignment between milk and Team USA is authentic and powerful. Milk has been fueling Team USA
athletes for decades, helping them excel through training, competitions, wins and celebrations with
unmatched nutrition and satisfaction. And now milk is supporting Team USA athletes journey to the
Olympics and Paralympic Games through this historic partnership. In fact, in a survey of U.S. Olympians
and Paralympians 9 out of 10 U.S. Olympians and Paralympians said they grew up drinking milk. And
most of them still do today. That powerful claim – that 9 out of 10 U.S. Olympians grew up drinking milk
– is a relevant, motivating and emotional truth that served as the foundation for MilkPEP’s 2016 U.S.
Olympic and Paralympic campaign, and will continue to play an important role in the future, as well.
To me, the most exciting aspect of the partnership with Team USA is the ability of the milk companies
and other industry stakeholders to utilize the assets for their own brands and white milk initiatives.
MilkPEP’s national efforts through the Milk Life campaign were just one driver of the great success we
saw in 2016. The real power of the sponsorship was amplified and solidified through the 60+ milk
brands that activated against the partnership. I was overwhelmed and gratified by the participation
across the industry. And as you’ll read later in this report, results from the program in 2016 were very
positive across a number of measures.
2016 was only year one of the partnership. Imagine what we can make happen over the next four years,
as we gain experience, learn what works well and have more time to plan. Most importantly, we’ll
continue to strengthen milk’s relationship with kids and with their moms by engaging them with
inspirational athletes, motivating messages and claims, and a connection with their favorite sporting
events – the Olympic and Paralympic Games.
The Team USA program was just one of MilkPEP’s initiatives in 2016. In the following pages, you’ll read
a lot about the other powerful programs that helped drive the milk business forward… and a little about
where we’ll go from here. Enjoy.
Sincerely,
Julia Kadison
*KRC Research conducted an online survey among retired, current, and hopeful U.S. Olympic and Paralympic athletes on behalf of MilkPEP via the U.S.
Olympic Committee between February 23 and March 7, 2016. The U.S. Olympic Committee and its National Governing Bodies distributed e-mail invitations with a link to the survey to its retired, current, and hopeful athletes inviting them to participate. In total, 1,113 completed the ten-minute survey (675 Olympians, 93 Paralympians, and 345 hopefuls in training).
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THE MILK PROCESSOR EDUCATION PROGRAM: Your Dollars at Work
2016 was a historic year for MilkPEP and the milk industry, with the category’s best performance in 7
years – slowing declines in white milk sales, 24 periods of continuous growth for chocolate milk at retail,
and a first of its kind Team USA Partnership. As budgets remain constrained, MilkPEP is charged with
making every dollar work harder, and finding efficiencies in every program. And with these limitations in
mind, MilkPEP’s objective has been constant and focused throughout the year: drive milk consumption
and sales through increasing consumer relevance and trust in fluid milk. MilkPEP delivered on this goal
consistently through four powerhouse campaigns: Milk Life, BUILT WITH CHOCOLATE MILK, The Great
American Milk Drive, and Get Real. Highlights from the campaigns include: a renewed focus on building
MilkPEP’s B2B effort (helping build milk brands, and working closely with industry partners), launching a
comparative campaign against the milk alternatives, optimizing national partnerships with the United
States Olympic Committee and USA Swimming, and reaching the 1 millionth gallon of milk donated to
families in need.
As Milk Life embarked on its third year in market, MilkPEP signed a first-of-its kind Team USA
sponsorship to bring milk to the world stage, and naturally connect milk with inspiring American
athletes. The Team USA platform fit seamlessly into Milk Life’s emotional campaign as 9 out of 10 U.S.
Olympic athletes grew up drinking milk – building an automatic tie from milk, to athlete, to consumer.
An astounding 62 milk brands adopted the partnership for their own company, including packaging
changes, social media posts, local events, athlete sponsorships, and brand promotions. Protein also
continued to be a focus this year, and MilkPEP launched My Morning Protein under the Milk Life
Campaign – elevating milk as the go-to protein source for Americans at breakfast.
The Great American Milk Drive reached a significant milestone in
2016, exceeding 1 million gallons donated to families. Additionally,
MilkPEP co-piloted the Milk2MyPlate Program with National Dairy
Council and Feeding America, connecting milk brands directly with
food banks, thereby creating a new channel for milk companies
and a more sustainable supply of nutrient rich milk for families in
need.
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Increase Milk
Brand Activation
Increase Depth of
Activation
The BUILT WITH CHOCOLATE MILK campaign saw tremendous success in
2016 as it continues to ‘punch above its weight’ with limited budget and
reposition chocolate milk as not just a treat for kids, but also a beverage
for exercise recovery after strenuous activity. This year chocolate milk
sales grew 6.6% at retail, surpassing 200 million gallons for the first time
ever, all with the help of the MilkPEP Program. While this program
originally targeted elite athletes, it has evolved to the recovery beverage
of choice of everyday adult exercisers. In 2016, the continued shift in
consumer sentiment was driven through BUILT WITH CHOCOLATE MILK’s powerful partnerships with
USA Swimming, the basketball star Kevin Love, U.S. Women’s soccer star Kelley O’Hara, and another
year of the powerful grassroots program with Rock n’ Roll Marathons.
In 2016 MilkPEP put a renewed focus on B2B efforts, providing assets and resources to help build milk
brands and finding synergies with industry partners, with the belief that the category can’t grow unless
the individual brands thrive. Out of this sentiment came the
Brand Activation Blueprint. The Brand Activation Blueprint is
a long-term strategic guide to inspire and enable milk brands
to better leverage MilkPEP’s programs and assets. The
genesis of the Blueprint is rooted in the complexity of the
fluid milk landscape and an understanding of the different
objectives and business realities across the industry. MilkPEP
developed a portfolio of opportunities to support milk
brands, big or small, in a variety of functions, ranging from:
consumer research, social media content and customized
retail programs. We established goals and quickly exceeded
those. Reached new milk brand activation heights under the Brand Activation Blueprint with an
unprecedented 82 brands activating against MilkPEP Programs.
MilkPEP is working to build consumer relevancy and trust, support brand success and serve in a united
dairy community, and we wanted our logo to reflect that. So, in 2016 MilkPEP released a new company
logo; the color aligns closely with food culture and reflects the
naturalness and simplicity of milk. The cow was chosen as a
nod to milk’s origin, the farm and farmers, and to remind
consumers that dairy milk is real. Finally the Milk Life font was
chosen to connect the logo with the powerful consumer
campaign.
Once again, this was truly historic year for MilkPEP and the fluid milk industry as a whole. None of our
successful campaigns could have been possible without the hard work and contributions from the milk
brands and industry partners. MilkPEP is optimistic for 2017, and we look forward to building a stronger
milk category together.
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MILK LIFE
Key Initiatives: Building Relevance and Trust
After several years of continued sales declines, 2015 was a pivotal year for the milk industry. Although change in milk volume remained negative, the decline was less severe than previous years. To capitalize on that positive momentum, in 2016 MilkPEP redoubled white milk marketing efforts towards driving sales through relevance and trust. In the current ‘culture of choice’, with consumers being more curious and skeptical than ever - milk is no longer an unquestioned good. MilkPEP had to take bold action to reposition milk in break-through relevant ways. We needed to reexamine the highest-opportunity target, attempt to
gain back lost trust, and show consumers why milk is relevant in their lives. The Milk Life campaign, in the market roughly three years, articulates the brand truth that milk helps power potential, with protein and balanced nutrition that help families make the most of each day and the most out of life. Consumer research helped identify ways to optimize that campaign to reengage Moms as the key target and build powerful programs and content that answered questions and deepened milk’s connection to her life. From a game-changing partnership with Team USA to an innovative approach to communicate milk’s protein benefits, the Milk Life program captured the attention of our core consumers, Mom. A 7.9% increase in media spend and a 31.8% reduction in production budget vs. 2015 kept MilkPEP’s tactics strong and lean as we identified the right channels and media methods to successfully reach Mom. Television advertising, still the largest share of spend, continued to be the most effective medium to drive milk sales.
Milk Life and Team USA: Thinking Bigger
How could we get people to look at milk in a new way? With the undeniable appeal of Team USA at the Olympic Games as the top sporting event of interest among females and teens, with 43% of that interest
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stemming from Moms, MilkPEP knew the Mom target was the sweet spot of this fan base. By launching a break-through long-term United States Olympic Committee partnership, MilkPEP was able to put white milk on the world stage in the company of some of the most beloved and respected brands.
MilkPEP conducted a first-of-its-kind Team USA survey which uncovered a unique and powerful claim that affirmed 9 out of 10 U.S. Olympians grew up drinking milk. Clearly, milk has always been part of these elite athletes’ journeys and now with the official partnership, milk cemented this authentic and credible relationship with these inspiring Americans.
Communications around Team USA delivered both rational reasons to believe to our key consumers, such as protein and nutrient package, as well as the more emotional benefits like helping people reach their full potential. Moms were looking for a way to enjoy Team USA at the Olympics Games for themselves, but also use it as an inspiration for their kids – so milk fueling potential naturally fit within this narrative. The inspirational Built, Not Born videos, which showcased how even the most gifted athletes must overcome challenges on their road to success, generated the highest
view counts in MilkPEP history. And this, along with our other Team USA initiatives, engaged consumers like never before, improved awareness of milk’s benefits and led to significant improvements in general milk attitudes and encouragement of milk for kids among Moms. MilkPEP put together team Milk, a hand selected group of U.S. Olympic hopefuls to represent Milk. These athletes were featured in Social, Youtube, Digital, Print ads and more. The U.S. Olympic and MilkPEP television ad, which featured swimmer Caitlin Leverenz and her real mom, was highly effective in delivering both the emotional punch of how milk can help power success as well as milk’s powerful functional benefits of protein and balanced nutrition. The ad did an even better job of increasing past day milk volume than prior Milk Life ads had, and encouraged more moms to be milk advocates for their children. In total, the Milk Life Team USA program garnered over 3.5 billion impressions. Milk Life ranked among top four brands highlighted for “most shared and retweeted content across all platforms” for Team USA related brand efforts. Clearly, these efforts made milk relevant. Beyond the national program executed by MilkPEP, there was unprecedented participation from more than 60 brands around the Olympic Games Rio 2016. The industry activated this powerful partnership with Team USA in a variety of ways, including leveraging USOC assets on pack, customizing social content, building brand-specific marketing programs, creating consumer promotions, and engaging Team USA athletes. Processors were key contributors to this effort and helped the industry reach an outstanding 3.5 billion impressions.
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My Morning Protein: Giving Consumers More Reasons to Reach for Milk Protein is one of the most sought after items in the grocery aisles today, and few consumers know that milk is a good source of high quality, naturally occurring protein. In fact, most consumers don’t know that it is important to get plenty of protein in the morning, rather than backload it in the evening. My Morning Protein is an integrated 360-degree program that touts milk’s protein benefits as a morning “pairing” with other high-protein foods, to drive demand for milk. This first phase in 2016 included national advertising, retail messaging, milk brand tools, digital and social content, key partnerships (including the Incredible Egg) and content from over 70 food, nutrition, fitness and Mom influencers. Through these channels, the campaign delivered a powerful message promoting milk’s protein, highlighting how milk pairs perfectly with other protein-rich foods to fuel a successful day. One of the ways this campaign came to life was through an interactive, search-optimized page on MilkLife.com that was informed by search insights, providing consumers with an immersive experience that answered key protein questions: why do you need 25-30g of protein before noon, and how to get there with the help of milk. MilkPEP helped connect the industry to this bigger idea of My Morning Protein. In identifying protein as common ground and through offering our tools and resources, the campaign was widely adopted. More than 35 processors and industry partners shared 200 plus pieces of content across their social channels. MilkPEP provided custom content, branded product photo shoots and packaging opportunities along the way.
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Consumer Confidence: Restoring Trust in Milk In addition to building relevance, gaining back consumer trust was critical in 2016 for the restoration of growth and building milk sales. As Mom is bombarded with conflicting information and the array of alternative milk products, MilkPEP worked to combat the competition by reinforcing milk’s benefits and reminding consumers of milk’s wholesome simplicity. Increased pressure from innovative, well marketed milk alternatives led MilkPEP to strengthen competitive efforts with new, direct, comparative messaging in TV, digital and social channels. The Great American Milk Drive effort, dedicated to delivering nutrient-rich gallons of milk to families in need, further bolstered trust by providing a platform for social responsibility. The new Feed a Childhood creative allowed for a more emotional and powerful connection with consumers, especially with Moms, who were inspired to donate milk to the Drive, and also reminded of its importance for her own family. In 2016, the Milk Life campaign has remained at the forefront of the industry by using consumer search engine data and insights to inform content. In effort to be the first to answer Mom’s questions instead of our competitors, the Milk Truth website featured articles related to moms’ concerns -- from hormones, antibiotics, sugar, to animal care. MilkPEP continues to optimize our “always on” publishing approach to produce a steady drumbeat of positive news from highly regarded third-party influencers and conversations about milk to keep milk’s goodness top of mind for consumers. And we leverage content from our industry partners, DMI, to bolster our efforts and strengthen the industry voice.
Organic: Targeted Outreach Strengthens Connection for At-Risk Consumers With a focus on overall category growth, organic milk offers a unique opportunity—it is a growing segment that helps address competitive threats to the milk industry. Organic milk offers a milk answer to protect the “at risk” group of consumers who often drink less milk as they become increasingly concerned over issues ranging from animal treatment to hormones and antibiotics. How does an organic milk program benefit all milk? The portfolio approach reinforces the idea that there is a wide variety of milk choices for consumers: organic, conventional, traditional value added as well as innovative new products.
Through the Organic program, MilkPEP was able to extend key messaging to organic milk drinkers in a highly targeted and relevant way, by highlighting key benefits of all milk (protein, nutrient rich) and outlining the organic-specific messages (farm practices) as communicated through the USDA checklist.
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Hispanic: Finding Efficient Ways to Protect and Grow Milk Sales among This Growing Population
As the Hispanic population and its cultural impact continue to grow in America, it is critical that the MilkPEP programs reach them in a culturally relevant way. While Hispanic Moms’ awareness of the Milk
Life campaign remained strong in 2015, milk-related attitudes and consumption was eroding. , MilkPEP set out to improve the efficiency and effectiveness of the Lo Que Nos Hace Fuertes program. Taking a critical look at media plans and production processes, MilkPEP isolated opportunities for improvement. 97% of Hispanics tune into radio each week, so we added radio to our media mix in Q1 to increase reach and become more efficient. The inclusion of radio as well as value added television integrations prompted an overall increased efficiency of 24% in the first half of 2016 as compared to 2015.
In 2016, Milk Life’s general market campaign and Hispanic campaign reached a point of intersection with our primary target: Mom. An even more tangible area of intersection came with the
integration of our Hispanic and General Market agencies, which gave us a fresh approach to reaching Hispanic consumers across the acculturation spectrum and finding new ways to strengthen total market efforts while reducing the overall investment.
The U.S. Olympic and Paralympic partnership is a shining example of integrating general market and Hispanic efforts like never before. Team Milk member, Danell Leyva, embodied the essence of Milk Life with hard work, persistence and reaching his full potential. He connected with our target audience in a way that was both powerful and authentic. And his involvement in both the general market and Hispanic programs generated great enthusiasm leading up to, during and after the Olympic Games Rio 2016. As we look forward to 2017, we will continue to use this coalesced lens to identify areas where our campaigns can work together for increased effectiveness and efficiency.
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THE GREAT AMERICAN MILK DRIVE: The Million Gallon Moment
The Great American Milk Drive, the first-ever
national program to deliver nutrient-rich gallons
of milk to families in need, was born in 2014 in
response to a great deficit in our nation.
According to Feeding America, milk is one of the
most requested yet least donated items at Feeding America’s food banks. Sadly, Feeding America clients
receive on average the equivalent of one gallon of just milk per person per year. Two years ago, we
made a commitment as an industry to change that, and have been making good on our promise.
Thanks to the support of America’s milk brands and dairy farmers and the generosity of donors across
the country, The Great American Milk Drive celebrated a milestone in 2016 – delivering its 1 MILLIONTH
GALLON of milk to Feeding America. Generating nearly one billion media impressions to date, the
partnership is succeeding in raising awareness of the nutrition gap and milk’s unique capability to fill it.
This year, the Feed a Childhood platform, infused more emotion into our call to action, and connected
with consumers on a deeper level and motivated them to support this worthy case. The message was
brought closer to home in more stores than ever before (14,358 stores– a 68% increase over 2015),
giving primed shoppers the opportunity to become part of the solution in their local community via
donations at check out or in conjunction with the purchase of partner product.
In 2016, the Great American Milk Drive forged relationships with CPG partners in adjacent categories
that garnered incremental impressions and made the cause even more relevant to consumers. The
national packaging of Entenmann’s rich frosted donuts featured the Great American Milk Drive during
the Back to School timeframe and the program was beneficiary of donations of charitable cookie baskets
on Cheryl’s website all year. “Build a Better Breakfast” in partnership with Del Monte and Lender’s
launched in September and the “Bake in the Fun” campaign was repeated in 2016 during the holiday
season with MARS and Pillsbury at Walmart.
The Great American Milk Drive is a powerful platform to strengthen MilkPEP’s relationships with retail
partners, growing not only in the grocery channel but expanding presence in the convenience channel as
well. With 118 activations to date, we have learned quite a bit – becoming more efficient with spend,
doing more activations for less money, that we will continue in 2017 to support the growth of this
program. In addition, participating retailers have seen strong outcomes with the Great American Milk
Drive’s performance – not only are they garnering good will and supporting their local communities, but
they are experiencing category lifts and generating incremental milk sales. We are confident that the
relationships we have built through this program will open the doors with these retailers for additional
Milk Life programs next year and beyond – helping real milk to take back the dairy case and reach more
shoppers at the moment of decision.
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BUILT WITH CHOCOLATE MILK: Year two of Sustained Growth
With 24 periods of consecutive growth through 2016, the BUILT WITH CHOCOLATE MILK program was a force to be reckoned with. The campaign continues to change consumers’ attitudes about chocolate milk and drive sales, thanks to the program’s ‘hijack strategy’, breakthrough creative featuring relevant athletes and its ability to deliver relevant messages to receptive audiences. The program’s efficiency continued to improve across all tactics in 2016 including TV, digital advertising, in-store media, PR and grassroots, print and radio despite a decrease in spend. Throughout the year, chocolate milk’s consumption as a recovery beverage continued to reach record high levels. After years of decline, chocolate milk’s penetration has strengthened among tweens, and teens, reaching a new high point in 2016. The program will continue to explore opportunities to build this momentum. This year, MilkPEP’s chocolate milk activations were centered around three key athletic pillars: swimming, basketball and soccer. The program also continued its successful partnership with the Rock ‘n’ Roll Marathon series to provide a powerful third party endorsement of the message and engage runners with product samples at the point of sweat – the finish line.
Official Recovery Beverage of USA Swimming In 2016, BUILT WITH CHOCOLATE MILK renewed its partnership with USA Swimming as the “Official Recovery Beverage of USA Swimming”. The fully integrated campaign featured Olympic medalists, Tyler Clary and Jessica Hardy in various TV, print, in-store and digital advertising. The campaign highlighted the important role that chocolate milk plays in the post-workout ritual of competitive swimmers centered on how elite athletes recover with chocolate milk. By partnering with USA Swimming, the campaign made a strategic and natural connection to the Olympic Games without the investment of an official Team USA sponsorship. The campaign tapped into Olympic excitement as athletes were in the peak of their training schedules ahead of Trials. Tyler Clary and Jessica Hardy both hold world records, and both have authentic chocolate milk stories, making them
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excellent spokespersons for the recovery benefits of chocolate milk. Partnering with Olympians was an effective way to tie chocolate milk to the Olympics, and capitalize on the relevancy of the Games in 2016. This partnership garnered over 3.3 million impressions which contributed to 32% of overall program impressions for the year. A total of 20 milk brands took advantage of this partnership and activated through social posts, providing milk deliveries, consumer promotions, assets on-pack, website updates and events for USA Swimming.
NBA Player Kevin Love Goes All the Way BUILT WITH CHOCOLATE MILK continued its successful relationship with NBA player Kevin Love of the Cleveland Cavaliers, centered on how elite athletes recover with chocolate milk. The campaign included real-time conversation around regular season basketball games as well as surround conversation on social media around NBA Playoffs and Championship games – which Love and the Cavaliers dominated. The campaign generated a total of 3.5million impressions, contributing 34% of total impressions for the year.
Kelley O’Hara: Workout Like a Pro Soccer Player This year, Built With Chocolate Milk continued its partnership with professional soccer player Kelley O’Hara. She continued to be a valuable asset to the program with her strong performance on SkyBlue, the U.S. National Women’s Team and at the Summer Olympics. This partnership with Kelley allowed the program to surround conversation around key soccer games in real-time and take advantage of her large and engaged social media following. Additionally, we launched a four part workout video where Kelley showed fans how to get toned as well as how to recover with chocolate milk. The four videos received 423,813 video views and over 2 million impressions across Built With Chocolate Milk and Kelley’s channels, which also helped amplify the videos. Overall the campaign generated 1.5 million impressions which contributed to 14% of total impressions for the year.
Keeping Chocolate Milk at the Finish line The BUILT WITH CHOCOLATE MILK campaign celebrated its fifth year with the Rock ‘n’ Roll Marathon
series. This successful partnership provides a powerful third party endorsement of the recovery message and engages runners with product samples at the point of sweat. In 2016, the grassroots program was more streamlined than ever. With the budget decreased of nearly 50%, there was still an increase in program
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efficiency as well as milk brand engagement. The grassroots team activated on-site at 20 Rock ‘n’ Roll marathon events, generating over 8.2 million impressions and 880 mentions across chocolate milk owned and third party channels, surpassing last year’s generated impressions of 6.9 million. A record 16 different milk brands participated in Rock ‘n’ Roll events last year, contributing almost all samples of low-fat chocolate milk that were handed out to nearly 220,000 athletes as they crossed the finish line. Team Chocolate Milk continued to support milk for recovery throughout the year, wearing their branded gear and engaging with social media at race around the country. And the Get Chocolate Milk to the Finish Line initiative encouraged racers to express their demand for Chocolate Milk at the end of races through Social Media.
Taking the Message to Coaches
To continue driving awareness of the benefits of chocolate milk among older teen athletes, BUILT WITH CHOCOLATE MILK targeted athletic directors. These leaders are viewed by athletes as authority figures on nutrition, and their engagement drove awareness of the post-workout recovery benefits of chocolate milk for the coaches as well as their student athletes. MilkPEP partnered with relevant sport organizations to host sessions at conferences where chocolate milk was sampled and other educational collateral distributed on-site. Webinars were hosted with both USA Rugby and USA Swimming to further reach coaches and drive excitement.
Social Tactics Drive Engagement In 2016, Built With Chocolate Milk’s social efforts drove strong engagement. Overall priority channels, Twitter and Instagram, grew by 4,531 followers. Due to strong results behind Olympics, Kelley O’Hara, Rinny Carfrae, Jessica Hardy and grassroots efforts, the program exceeded all target goals (including impressions, engagement, shares/retweets, and Team Chocolate Milk driven mentions), which included two rounds of goal revisions during the year. New tactics that drove engagement and helped the brand
attract new followers included social channel takeovers, Snapchat filters and scavenger hunts. Throughout the year, multiple Instagram takeovers with Built With Chocolate Milk athletes were hosted including Kelley O’Hara, Jessica Hardy and Rinny Carfrae where they took over the BWCM Instagram page for a day. These Instagram takeovers provided fans with a look at the day in the life an elite athlete and proved to be a great opportunity for chocolate milk to be engaging and relevant with not only our followers but the followers
of our athletes. Instagram takeovers resulted in 17,000 engagements, 4,183 video views and allowed us the chance to gain new followers interested in the programs elite athletes.
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INDUSTRY COLLABORATION
The milk category is large and complex, and the milk industry has many stakeholders across the
value chain. As milk sales stagnate, and budgets remain tight, MilkPEP is working closely with industry
partners against common objectives to find areas of synergies that will drive efficiencies and allow
budgets to go further, while amplifying the good work of all the organizations. No single group or entity
will be able to single-handedly restore milk sales to growth, but through smart and strategic
collaboration, the industry has a much greater opportunity to succeed.
In 2016, MilkPEP continued to leverage its partnership with Dairy Management Inc. (DMI), the
dairy producer checkoff program, working together to strengthen the efforts around building trust with
the consumer through our continued partnership in the Great American Milk Drive and Milk to My Plate.
The two organizations also coordinated continuously on consumer confidence initiatives and
communications. MilkPEP’s CEO, Julia Kadison, capitalized on the opportunity to sit on the Innovation
Center for Dairy’s Executive Committee to provide our perspective on Innovation Center strategic plan
and communications initiatives. Julia’s seat on the Innovation Center Board is a vital point of
collaboration and is just one of the ways MilkPEP has benefitted from the great work of The Innovation
Center. MilkPEP staff also participates in a number of cross-stakeholder working groups, including the
Sustainable Nutrition and Dietary Guidelines committees, led by Dairy Management Inc. (DMI) in
collaboration with International Dairy Foods Association (IDFA), National Milk Producers Federation
(NMPF) and National Dairy Council (NDC), where strategies around the 2020 Dietary Guidelines were
developed and implemented to ensure dairy’s place in the American diet.
MilkPEP continuously looks for opportunities to partner with and communicate to the milk
producer groups – not just DMI, but also the State and Regional organizations. In-depth understanding
of the milk processors’ objectives and milk-driving initiatives – and vice-versa - is generating a closer
connection between the producers and processors and giving the industry a stronger unified voice to
more effectively take on milk category challenges. MilkPEP will continue to build on the momentum to
further strengthen these partnerships in 2017 and beyond.
20
LOOKING FORWARD
2016 was an exciting year for fluid milk, and the industry is at a pivot point. Milk sales
performance was better than any of the previous six years, and MilkPEP plans will build on this
momentum. We created a strategic plan to strengthen our campaigns, build consumer relevance and
trust, and drive milk sales. Through category insights, marketplace research and in-depth consumer
understanding, we have identified four strategic imperatives to drive category growth.
1. Win With Kids: The milk category simply cannot win it we don’t win with kids. Fortunately it is a winnable
battle. Children consume nearly half of all milk volume but have driven the largest volume loss for fluid
milk over the last five years – over 500 Million gallons between 2011 and 2015 for kids between 2 -17
years old. Thankfully, kids love milk. In fact, 41% of kids said they would drink more if they had the
opportunity, according to a recent MilkPEP study of 2,400 moms and 1,500 kids. Kids are the largest
volume opportunity today, and the key to future milk consumption.
Armed with a rich understanding of kids and their moms, MilkPEP will execute a dual approach
to impact volume through our campaigns. The Milk Life program will continue to talk to moms to
reinforce the value of milk in their young kid’s lives, and we will also talk directly to kids. MilkPEP is
building a robust kids plan, and reminding kids of their love of milk, and how it helps them reach their
potential every day.
21
2. Align Milk with Food Culture: Consumers today have an emotional connection to their food choices, and it has become an
integral part of our lives, and identities. It’s not only beautiful photos of trendy food on Instagram, but a
connection to fresh, wholesome, real food, it’s farm to table, it’s nostalgia of connecting with foods we
loved as children, it’s heritage respecting brands that have been trusted for years. We believe milk can
and should play beautifully in all of these areas and we will connect with consumers more deeply by
integrating “food culture” into everything MilkPEP does – and inspire the milk brands to do the same.
Across our programs, MilkPEP will encourage consumers to take a new look at milk and
reinforce its place in food culture. And we’re already doing that through our program, whether it’s farm
to table digital content that highlights that 97% of farms are family owned, or taking US Olympic
medalists on farm tours to share their connection with milk. We’re showcasing milk in beautiful
relevant ways to encourage moms to serve milk more often to their kids. And no matter what we’re
creating, we focus on appetite appeal, making sure milk looks cold, fresh, frothy and delicious. We’re
working with partners like Food Network at the epicenter of U.S. food culture and extending our reach
with influencers who showcase milk in their own unique and authentic ways.
In 2017, we plan on sharing milk’s story on how it goes from farm to glass to further elevate it to
the original farm to table food. MilkPEP is launching a brand new tool kit with extensive assets for the
community to use – point of sale materials, recipe cards and giveaways for local events at fairs or
farmers’ markets, digital and social assets all designed to help strengthen milk’s place in food culture.
And we’re working closely with the DMI team on the Reintroduction of Dairy and bringing the key
messages to life. We will help ensure the entire industry is engaged with food culture.
22
3. Maximize the Team USA Partnership: The partnership between white milk and Team USA spans five years, providing a platform for
long-term planning, learning and optimization. Given the scope of the commitment, it is critical that
MilkPEP and the milk community leverage the partnership not just during the Olympic and Paralympic
Games, but in off-years, as well. This will be a natural and authentic extension because of the
aspirational power of the athletes, the broad reach of the U.S. Olympic Committee, and the fact that
future U.S. Olympic and Paralympic hopefuls need to fuel with milk every day of every year. In 2017,
MilkPEP is introducing Team Milk, a program that directly connects milk brands with local U.S. Olympic
and Paralympic hopefuls. Brands have the opportunity to tailor the use of the athletes to address their
unique goals and add power to their brand programs for the near and longer term. At a national level,
MilkPEP will convene the vast nation-wide team of hopefuls to connect with moms and kids in a relevant
way.
4. Help Build Brands:
The milk category will not grow unless milk brands grow – so it is crucial that milk companies have the
assets they need to succeed. Last year MilkPEP saw unprecedented brand activation driven by the
Olympic Partnership. Our goal this year is to increase meaningful activations by milk brands, and
retailers by building programs that have brand activation at the center. We will do this by providing
numerous assets – from turnkey social media, in-depth consumer research, useful and actionable
toolkits, to custom retail activation assistance.
2017 RETAIL STRATEGY
The dairy case has seen dramatic changes in recent years with the proliferation of new product
segments competing with milk for space. Not only are recent changes to the dairy case resulting in
losses for processors, but they’re also limiting retailers’ potential for profit. Simultaneously, shopper
behavior has changed and the retail landscape evolved, including and largely driven by the emergence
of e-commerce, as shoppers take more control of the customer journey.
Despite the shifting landscape, milk remains a top profit performer and continues to drive shopper trips
for retailers. There’s an opportunity for the milk industry to take back the dairy case, and make changes
to optimize both sales and profit. MilkPEP is developing a 3-year vision and strategy, and eventually a
plan for milk to win at retail. The project will roll out during the second half of 2017 and impact
programs and brand-building initiatives going forward.
MilkPEP is excited about the powerful year ahead. Our powerhouse campaigns – Milk Life, Built with
Chocolate Milk, Get Real, and the Great American Milk Drive continue to build consumer relevance and
trust. The four strategic imperatives – winning with kids, maximizing the Team USA partnership, aligning
milk with food culture, and helping build brands – this, along with a clear plan for the industry to win at
retail to ultimately drive milk sales.
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$105 $103 $100 $97 $97 $95
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$120
2011 2012 2013 2014 2015 2016
Mill
ion
s
$0$10$20$30$40$50$60$70$80$90
$100$110
2011 2012 2013 2014 2015 2016
Mill
ion
s Adminstrative
California Grant
Programs
2016 FINANCIAL REPORT
The Board’s financial management firm, Bridgewater Wealth & Financial Management, LLC reports
$94.7 million, net of adjustments, was collected from processors through the 20 cent-per-
hundredweight assessment during the fiscal year January 1, 2016 through December 31, 2016. The
assessments represented a $2.0 million decline compared to the previous year. The primary reason for
the decline was due to the organic exemption rule that became effective on February 29, 2016.
Other revenue, including interest
income, late fees assessed, and a co-
fund retail partnership amounted to
$191,572 which was $118,312 more
than other revenue in 2015. This was
primarily due to the retail partnership
with the Egg Board.
The total spending for 2016 on
advertising, promotion and education
for fluid milk products and other
expenses totaled an estimated $94.8
million which is an increase of $1.0
million from 2015. Cash flow remained solid throughout the year with the lowest average monthly
balance in December of $9.6 million.
The 2016 California Grant represented $8.7 million of the total expenses resulting in total net expenses
toward estimated programs and administration of $86.2 million. The California Grant was down
$349,000 from 2015 which aligns to the overall decline in assessments on a national level. Under the
Fluid Milk Promotion Order (Section1160.210), the Board provides 80% of collections to California
processors in Regions 14 and 15 as grant to the California Milk Processors Board (CMPB) to coordinate
and conduct an advertising program in the California market.
Total MilkPEP Spending by Year, 2011 – 2016
Total MilkPEP Assessments, 2011 – 2016
24
0%
10%
20%
30%
40%
50%
60%
70%
80%
Meals atHome
Built withChocolate
Milk
Strategy &Market
Research
Adminstrative& USDA
Oversight
71%
14%
3%
12%
75%
11%
3%
12%
2015
2016
The percentage of spending devoted to program costs, net of the California grant, remained at 97%.
Continuing with the three to five-year program planning approach MilkPEP adopted in 2012, the budget
for program costs focuses primarily on Milk Life and Built with Chocolate Milk, and the remainder spent
on market research and program tracking and measurement. The total program spending in 2016 was
$1.2 million more than 2015. 94% of the 2016 total spending net of the California Grant was for Milk
Life and Built with Chocolate Milk. Milk Life spending increased an estimated $3.9 million to $70.8
million. An estimated $10.3 million
was spent on Built with Chocolate
Milk which is a decline of $2.7
million. The remainder of the
decrease came from administrative
and USDA oversight spending, which
was down an estimated $684,539
compared to 2015.
The Board’s financial statements for
the year ended December 31, 2016
will be audited by the independent
accounting firm Snyder Cohn, PC.
They will be presented to the
MilkPEP Board for review at the May
2017 Board Meeting. The MilkPEP
Board is confident that we continue to direct the program in the most effective and efficient manner
possible.
PROGRAM TRACKING AND MEASUREMENT
MilkPEP employs a number of tracking and measurement tools to evaluate the effectiveness and
efficiency of the programs. This includes continuous advertising and consumption trackers and quarterly
marketing mix analytics (MMX). Program measurement and tracking against program goals are shared
with the MilkPEP Board on a regular basis, and the MMX results are reported annually.
The marketing mix year-end analysis quantifies the MilkPEP programs’ direct and incremental impact on
fluid milk sales at retail, utilizing weekly IRI sales data, weekly MilkPEP spend and program activity (e.g.
impressions). The MMX also identifies the impact of other market factors on milk sales, such as price,
economic factors, distribution, and promotion changes.
The trackers and MMX are useful tools for measurement, but also for goal setting and program
optimization. MilkPEP uses the findings on an ongoing basis to inform messaging, consumer target and
media decisions. Over time, this has resulted in stronger programs, more efficient use of media and
more impact on fluid milk sales.
Percentage of
Spending Net of
California Grant,
2015-2016