As milk falls out of favor with consumers, Dean Foods is determined to make the white beverage sexy again.
Milk consumption has been falling for decades as other beverages gain favor, especially outside of breakfast. Milk substitutes, however, are doing well. Almond milk in particular has seen sales grow, as plant-based proteins gain favor.
Now, Dean Foods—the largest milk producer in the country—is taking a huge gamble on reversing the current trend. In a CNBC exclusive, the company revealed it is pouring resources into creating a single national brand for so-called "white milk."
Starting Monday, a national ad campaign will launch in print and TV for DairyPure, which places all of the milk produced at Dean's 30-plus regional dairies under one label. DairyPure will automatically become a $2.5 billion brand, making it one of the top consumer packaged goods lines in the U.S.
"This is a category that really needs innovation and news," said Dean Foods' Chief Commercial Officer Ralph Scozzafava.
Standing inside a massive milk plant for the Alta Dena brand the company owns in California, Scozzafava explained Dean Foods doesn't want to lose the brand equity in its local brands. In a unique branding experiment, it will combine the DairyPure name with the local name on all labels and regional advertising.
"It's the best of both worlds," he adds.
The company has done similar co-branding in the past when it created TruMoo chocolate milk. Scozzafava said chocolate milk sales have since grown "exponentially." The executive added: "Right now that brand is a $700 million business for us, and it's on its way to $1 billion."
Given current tastes, Dean may have a tough road ahead. For a number of reasons, many associated with health and weight control, cow's milk is becoming less of a dietary staple.
Yet DairyPure hopes to convince consumers that cow's milk is a good source of protein and Vitamin D. The company will highlight that its milk is antibiotic free, and highlight its farmers pledge not to use artificial growth hormones.
The national commercial centers around a group of teenage talking cows and combines humor with a message about health and quality. "Starts pure, stays pure, DairyPure," the ad says, before one cow replies, "Like, moo."
So will it work? A pilot program in Boston showed promise, but the USDA predicts global milk prices will fall 27 percent this year due to a milk glut. Meanwhile, weak demand in the U.S. has driven average retail prices down 5 percent so far this year to $3.62 a gallon.
Those factors make Dean all the more determined. Scozzafava said DairyPure is the biggest branding initiative in Dean's history. "This will be category leading spending, probably the most that's been spent in fresh white milk in many, many years, if not ever." He would only reveal the ad spend is in the seven figures.
The company thinks having one national brand is a win for grocery stores running ads for milk.
"We give you one brand to run, one UPC code to run, and you can now partner with other categories," said Scozzafava. He said such categories could include cookies or cereals.
"I think cookies and milk is a natural, pick your favorite brand." When asked if consumers might see that "favorite brand" (such as Oreos) team up with DairyPure in the way Taco Bell and Doritos teamed up for the wildly popular Doritos Locos Tacos, Scozzafava replied coyly. "More to come, we're very excited."