BUSINESS

Got Coke? Soda maker starts selling 'premium milk'

Associated Press

Coca-Cola is coming out with premium milk that has more protein and less sugar than regular milk. And it's betting people will pay twice as much for it.

The national rollout of Fairlife over the next several weeks marks Coke's entry into the milk case in the U.S. and is one way that the world's biggest beverage maker is diversifying its offerings as Americans continue turning away from soft drinks.

It also comes as people increasingly seek out some type of functional boost from their foods and drinks, whether it's more fiber, antioxidants or protein. That has left the door open for Coke to step into the milk category, where the differences between options remain relatively minimal and consumption has been declining for decades.

"It's basically the premiumization of milk," Sandy Douglas, president of Coca-Cola North America, said at an analyst conference in November. If developed properly, Douglas said, it is the type of product that "rains money."

Fairlife, which Coca-Cola formed in partnership with dairy cooperative Select Milk Producers in 2012, says its milk goes through a filtration process that's akin to the way that skim milk is made. Filters are used to separate the various components in milk. Then more of the favorable components are added, while the less desirable ones are kept out.

The result is a drink that Fairlife says is lactose free and has 50% more protein, 30% more calcium and 50% less sugar than regular milk.

The same process is used make Fairlife's Core Power, a drink marketed to athletes that has even more protein and calcium than Fairlife milk.

Sue McCloskey, who developed the system used to make Fairlife with her husband, Mike McCloskey, said Fairlife will be marketed more broadly to women who are the "gatekeepers" for their families' nutritional needs.

Even while touting its nutritional advantages, however, Fairlife will need to be careful about communicating how its drink is made. Jonas Feliciano, senior beverage analyst for market researcher Euromonitor, noted that people want drinks that "do something for me," but that Fairlife's juiced-up nutritional stats may make people hesitant about how natural it is.

"They have to explain that this is not an abomination of nature," Feliciano said.

Already, Fairlife has been subject to some teasing. After Coke's analyst presentation, comedian Stephen Colbert referred to the drink as "extra expensive science milk" and made fun of the elaborate way it's made.

"It's like they got Frankenstein to lactate," he said.

Colbert also took a dig at the wholesome image that Fairlife is trying to project, noting that it's made by the "nature-loving health nuts at Coca-Cola." That may explain why Coca-Cola is distancing itself from the product; a representative for the Atlanta company referred questions to Fairlife's outside representative.

Former Coke executive Steve Jones, Fairlife's chief executive, said he thinks that his company can help reverse the ongoing decline in milk consumption by offering a superior product. Major retailers including Wal-Mart, Target, Kroger and Safeway have agreed to carry it and Coca-Cola's Minute Maid team plans to make it available wherever milk is sold.

The drink, which comes in a sleek plastic bottle reminiscent of milk cartons, has already started appearing on shelves and is expected to continue rolling out nationally over the next several weeks.

At a supermarket in Indianapolis, a 52-ounce bottle of Fairlife was being sold for $4.59. By comparison, the national average cost for a half-gallon of milk, which is 64 ounces, is $2.18, according to the U.S. Department of Agriculture. For organic milk, the average is $3.99.

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