Business | INDUSTRY TRENDS

MILKMAN MAKING A COMEBACK

Got milk delivery? Doorstep service doubles in last 10 years

by Taiga Uranaka

Although once destined to share the same road to oblivion as black and white TVs and rotary telephones, doorstep milk deliveries have been staging a solid comeback.

Industry officials said their fortunes have turned around in the past 10 years, a period termed by many others as the lost decade.

While milk companies say there was no single miracle that saved the time-honored practice from extinction, its recovery may provide a valuable lesson for many businesses struggling amid the prolonged slump.

“Home deliveries have been growing every year since 1993,” said Masao Hino, manager of Meiji Dairies Corp.’s home delivery section.

The country’s largest dairy firm said 2.6 million households received its milk delivery service last year, more than double the figure 10 years ago, when the business hit bottom. The firm aims to deliver to 3 million homes in the next two years, rivaling the peak logged nearly three decades ago.

Hino said the comeback resulted from a string of small efforts designed to persuade consumers to pay a little extra to have their milk delivered to their doorsteps. Delivery products usually are priced slightly higher than those sold in stores.

Early morning deliveries, with the clinking glass bottles, had long been a fixture in Japan. But the emergence of supermarkets in the mid-1960s quickly found consumers switching to cheaper cartons.

To lure back the defectors, Meiji Dairies began offering delivery-only items in the mid-1980s that were touted as being healthier than products sold at stores, including milk featuring enriched calcium and iron.

“Delivery is inevitably more expensive, and it’s hard to attract consumers as long as we sell the same products as stores,” Hino said.

Today, the firm’s delivery-only lineup has grown to more than a dozen products, including yogurt and nondairy drinks.

Responding to consumer demand for fresh milk, the traditional wooden boxes on doorsteps were replaced by plastic boxes with Styrofoam insulation. And many milk shops have started to include a recyclable coolant pack with each delivery.

Meiji Dairies also began using tamper-resistant plastic caps on its glass bottles instead of paper lids, to ease consumer anxieties over food safety.

These and other efforts did not pay off overnight, but home deliveries have gradually come back.

The uptrend has also been boosted by delivery outlets’ promotional activities as the shops find it easier to pitch new products.

“We are seeing solid growth in the client base,” said Yukinobu Masuda, manager of Meiji Milk Station, a delivery shop that opened only a month ago in Arakawa Ward, Tokyo.

Currently, the outlet serves some 500 households in the area. Delivery clients are meanwhile expected to increase four-fold by the end of the year, Masuda said.

“Clients vary in age, but many start taking deliveries for health reasons, and many elderly people living in high-rise apartment buildings find it too physically taxing to bring home milk cartons from stores.”

Another firm enjoying a resurgence in milk deliveries is Morinaga Milk Industry Co., which reported that its delivery households stood at 1.95 million as of the end of April, from a low of 1.15 million in 1991.

“The milk delivery business has grown during the lost decade,” said Kazuhiro Ukita, a Morinaga official in charge of home deliveries.

The company has seen a return of customers since 1991, when it debuted Caldus, a calcium-rich milk developed only for delivery. The product proved popular amid a calcium boom among middle-aged women concerned about osteoporosis. Even now, it delivers some 1 million bottles daily.

“There were voices within the company that we should also sell the product at stores,” Ukita said. “But it is important that health products like this be taken every day, so we concluded that home delivery was the best way.”

The company hopes to further expand the delivery business with the recent launch of Lactoferrin Plus, a milk drink featuring a protein said to bolster the immune system.

Revenues from the home delivery routes account for only a small part of the firms’ entire milk business.

Morinaga’s 30 billion yen in annual sales from delivery-only products represents only 14 percent of its milk operations.

But Ukita said that compared with supermarkets and other retailers, the delivery channels provide highly predictable and stable demand, and the company does not have to keep inventories, a welcome concept for makers of perishable products.

The delivery business is also cash-flow friendly because the company can collect receivables in relatively shorter periods compared with other retail channels, he added.

Currently, Morinaga is trying to boost its sales promotions, upgrading training seminars for delivery shop owners and their employees since April to better pitch its healthy milk products.

“This market can expect further growth in sales and profits as the population ages,” Ukita said.