Milk … a commodity? It doesn’t have to be. The nearly $1 billion flavored milk-based drinks category – according to industry reports – proves flavored milk is a beverage category worth grabbing some market share. Bravo! Foods International Corp., North Palm Beach, Fla., knows firsthand the growth the category can achieve.

While the company’s mission could be to sell a lot of milk, it’s not. “Our mission is to ignite brand passion,” says Stan Harris, chief marketing officer for Bravo! Foods. “We are the first company that I’m aware of that is selling milk as a brand and not as a commodity. We’re selling milk with the same disciplines that a soda company sells soda.”

In fact, the company teamed with a soda giant last year. Through its exclusive distribution agreement with Coca-Cola Enterprises, Bravo! Foods has seen sales of its top four sellers – Milky Way Slammers, 3 Musketeers Slammers, Slim Slammers and Pro Slammers – climb exponentially, and expects CCE to grow it to $70 million to $80 million in sales in 2006.

Distribution has been key to its success, but Bravo! Foods’ strategy of co-branding with Masterfoods USA, a division of Mars Inc., allowed the company to secure licensing agreements for Milky Way Slammers, 3 Musketeers Slammers and Starburst Slammers and fine-tune creations to specific demographics. And at the end of last month, Bravo! Foods and Masterfoods extended their U.S. licensing agreement for five additional years to the end of 2012. The extension allows Bravo! Foods to continue providing consumers with Slammers versions of the popular candies.

“Bravo! brought a tremendous technical advantage with their milk stabilized drinks,” says Michele Brown, vice president of licensing for Masterfoods USA. “It enabled us to enter a good- for-you segment with our brands and have this be a very innovative breakthrough in the category.”

Bravo! Foods also has expanded into other food groups by entering into a licensing agreement with General Mills Inc. for its Trix, Coco Puffs and Wheaties cereal brands.

“We’re finally treating milk like a beverage,” says Roy Warren, a founder and chief executive officer of Bravo! Foods. “We have the brands to do it, we have the distribution to do it, and we have the technology to support those two things, both from a shelf-stable processing point of view and from a packaging point of view.”

Beginning as a milk company, it took Bravo! Foods nine years to turn into the brand development company that it is today. The business actually finds its origins in China. Warren, who enjoyed a 17-year career in the securities brokerage industry, was approached by a previous client to help raise funds for the client’s joint venture with the Ministry of Agriculture in China to bring pasteurized-milk products to the country.

He soon realized that pasteurized milk was a huge challenge for China, which had little refrigeration for the products and few funds to spend on Western technology. However, in the process, Bravo! Foods developed a single-serve flavored milk specifically for kids. Bravo! Foods partnered with Warner Bros. to introduce five Looney Tunes single-serve flavored milks in 200-ml. gable-top cartons in China.

“We were able to compete with a branded product with different flavors targeted at kids,” Warren says. “We were able to double the price of our flavored milk, and we outsold our No. 1 competitor.”

But even though branding worked, Bravo! Foods still had the wrong technology in a difficult environment. “I came back to the board and said, ‘We have a good idea, but we’re on the wrong continent,’” Warren explains.

In 1999, Bravo! Foods began distributing the same five flavors of Looney Tunes gable-top milks through five regional U.S. dairies. The company quickly converted the packaging to a 12-ounce bottle with a 21-day shelf life.

While Bravo! Foods was able to compete with market leaders, increasing distribution became a problem because the company’s regional dairy processors were unable to go beyond a 200-mile radius, and the milk had a short shelf life.

In order to increase shelf life, Bravo! Foods teamed with Jasper Products, Joplin, Mo., a manufacturer that could develop beverages with extended shelf life (ESL) technology, and began exclusively producing its beverages there in 2002. ESL technology would sterilize the milk, rather than just pasteurizing it. The product still required refrigeration, but shelf life was increased from 21 days to six months. That allowed the company to use a refrigerated distribution system to deal with mass retailers and convenience stores that have proprietary chilled distribution systems.

ESL technology helped the company stay alive while it honed its branding strategy, Warren says. Bravo! Foods realized it was renting the Looney Tunes brand name with no branding of its own, so the company developed Slammers as the edgy brand name that was also “slammed” full of nutrition. “The Slammers name we thought would carry us into a marketing position that was unique,” Warren says.

Hoping to broaden its demographic base, Bravo! Foods also released Pro Slammers, a protein-enriched drink, and Slim Slammers, a no-sugar added, low-fat milk.

The company also discovered that the Looney Tunes brand reached a demographic of kids aged three to six, but wanted to expand its reach to kids five to 12 years old. So it entered into a licensing agreement with Marvel Comics in early 2004. “We thought Marvel gave us an opportunity to go with an older and broader demographic,” Warren explains.

Late in 2004, technology and branding started to progress for Bravo! Foods. Technologically speaking, Jasper Products, which already had taken the company from fresh to ESL, now offered Bravo! Foods the technology to produce a 14-ounce, single-serve, shelf-stable milk in a plastic bottle that could be stored at ambient temperature for up to six months. This technology took the company out of the realm of just cold-chain distribution.  

“Technology and advancements in processor capabilities allowed us to enjoy a first-to-market advantage with the launch of a shelf-stable bottle that appears to consumers to be a traditional milk container, but enables a distributor like Coca-Cola Enterprises to deliver it ambient on the back of their 54,000 trucks and then be chilled in all channels,” says Benjamin Patipa, chief operating officer.

It was Chief Revenue Officer Michael Edwards who got the company in the mindset that if it wanted to start competing with the major players in the dairy drinks category, like Hershey and Nestlé, then the company would need to co-brand with a candy company. Bravo! Foods developed a relationship with Masterfoods USA, and by the end of 2004 had a licensing agreement for the 3 Musketeers, Milky Way, and Starburst brands.

The company further developed its own brand name, Slammers, and instituted a co-branding strategy using Masterfoods intellectual properties. During this time, the company realized that in co-branding for beverages, appetite appeal is even more important than intellectually property awareness.

“[Marvel’s] Spiderman on our chocolate milk certainly brought attention to our chocolate milk, but it didn’t communicate anything about the chocolate milk,” Edwards explains. “There was no appetite appeal certainly, and there was no real bridge between the intellectual property and the milk. On the other hand, you look at Milky Way chocolate and you get it. You understand exactly why it’s on a milk product, and you also understand the brand positioning.”

While the dairy case traditionally has been viewed as commodity products, Bravo! Foods wants to bring excitement to the aisle, and offers beverages that target consumers from six to 54 years old under the Slammers and newly developed Bravo! brands. The Slammers brand includes edgy and fun products, while Bravo! branded products are indulgent and inspirational, Harris says.  

With the new General Mills licensing agreement, Bravo! Foods has Trix Slammers and Coco Puffs Slammers in the works. Aimed at children ages six to 11, the products will be formulated to be suitable for elementary schools, and will be launched in the fall for back to school. Pro Slammers, aimed at middle school kids – specifically 12- to 16-year-old boys – are fortified with a double shot of whey protein, and feature skateboarders on the packaging.

“At 12 to 13 years old, kids stop drinking milk and start moving to other types of beverages,” Edwards says. “…With these brands and the benefits of milk and what we’ve added to it, it is making kids want to drink milk again.”

For high schoolers, Bravo! Foods targets Starburst Slammers. While almost every product the company produces is 100 percent milk, Starburst Slammers is a juice and milk combination that contains 2 percent juice. “It’s the first time we’ve walked outside the immediate milk arena,” Patipa says.

After the high school-aged group, Bravo! Foods offers Milky Way Slammers targeted to men and woman ages 18 to 29, and 3 Musketeers targeted to women ages 25 to 39. Because Masterfoods’ Milky Way brand is more decadent, the beverage product contains 2 percent milk and sugar. 3 Musketeers, on the other hand, is Masterfoods’ lower-fat, guilt-free indulgence, so the Slammers beverage is 1 percent milkfat, with one-third the calories and carbs of normal Slammers and no-sugar added. Additionally, General Mills’ Wheaties cereal will appear as Wheaties Slammers, aimed at men 39 to 54.

Like 3 Musketeers, Bravo! Foods’ Slim Slammers is targeted to women ages 25 to 39, but it’s the company’s diet offering. “Slim Slammers have pretty much the same calories as 3 Musketeers, but a very different positioning,” Harris says. “We’ve aimed this product at women who say, ‘I’m on a diet. What can I drink?’ as opposed to women saying, ‘I want to be sensible, but I want something that tastes like candy.’”

Adding another dimension to products targeted toward women, Bravo! Foods recently launched Bravo! Blenders, under the Bravo! brand name, that are aimed at working moms on the go. Originally called Breakfast Blenders, Bravo! is taking “breakfast” off the label, because the beverage is suitable as a total meal replacement at any time of day.

All of Bravo! Foods’ products are “better for you” and none are just “health neutral,” Harris emphasizes. While all products contain milk and are vitamin-fortified, regardless of the indulgence factor, the company offers products that are also no-sugar-added, low-sugar, protein-fortified, low-fat and lactose-free.

Even with technology and branding, distribution may be the most critical part of growing a beverage product.

“The beverage industry saw single-serve, ready-to-drink milk drinks as a half-billion-dollar category,” Warren says. “[They thought] ‘It’s not worth our time.’”

The company had begun distributing through regional beverage distributors, when Coca-Cola Enterprises entered the picture. In August of 2005, Bravo! Foods signed an exclusive 10-year distribution agreement for Coca-Cola Enterprises to distribute Bravo! Foods’ Slim Slammers, Pro Slammers, 3 Musketeers Slammers, Starburst Slammers and Milky Way Slammers nationwide. The agreement covers convenience retail, education channels, vending and small independent stores. While the companies dropped discussions about CCE acquiring a majority stake of Bravo! Foods, part of the distribution deal includes 30 million warrants that have been granted to CCE, which if exercised within three years, would give the bottler a minority share of approximately 10 percent of the company.

While Bravo! Foods is a little more than 90 days into the agreement, the company’s marketplace penetration is up to more than 5 percent. “The growth is just phenomenal, and the gates are just opening up,” Edwards says.

With CCE’s six business units across the country, Bravo! Foods expanded its sales staff to eight regional sales mangers administering to CCE’s sales centers and growing the brand. The region that has embraced Bravo! Foods the most since the CCE agreement is Florida, where the company now is at 25 percent market share. Before CCE, wherever Bravo! Foods was strong in grocery stores was the company’s strongest region, which happened to be the Northeast, Chicago and California.

The agreement with CCE also is opening up new opportunities in vending. While the company’s bottles previously were vended in glass-front drop machines, its bottles didn’t have the stability needed for most stack vending machines, which are used by the soft drink industry.

“What we have done is gone back to the drawing board and designed a ribbed bottle that has the stability to vend successfully in all those machines,” Patipa says. “It opens up vast new opportunities for us.”

Set to launch in July, all of Bravo! Foods’ lines will appear in the ribbed bottles.

Instead of traditional advertising avenues, Bravo! Foods utilizes grassroots marketing. For 2006, the company is the sponsor of Erica Enders from Cagnazzi Racing’s National Hot Rod Association (NHRA) Pro Stock Team. The 22-year-old Enders will drive the Slammers Ultimate Milk Chevy Cobalt in 23 races, and make appearances across the country representing Slammers.

Additionally, Bravo! Foods renewed and expanded its sponsorship as the Official Milk of U.S. Club Soccer for youth soccer players in 47 states. Samples of Slammers products will be handed out at U.S. Club Soccer events, and the company will launch a “Slammin’ Goal Contest.”

Moving forward, Bravo! Foods wants to market products in other “good-for-you” and “better-for-you” categories such as water, tea and juice, because those are the type of products in which it sees growth. “It’s easy to get caught up in 48 different SKUs and not look at the big picture,” Warren says. “The big picture we’ve been looking at is platforms. Whether it’s tea or juice or what we’ve done with milk, wherever we can come up with a super-premium version of those ‘good-for-you’ and ‘better-for-you’ products, we think that’s the wave of the future in the beverage business.” BI