Higher retail milk prices have cut into flavored milk and single-serve milk sales — but only temporarily.

According to Information Resources, year-to-date sales ending June 27 show total flavored-milk sales are down 6 percent versus the same time period last year. In comparison, total fluid-milk sales are off 3.7 percent year-to-date.

The steep decline in flavored-milk sales is a temporary response to higher flavored-milk retail prices, which began to creep up in late 2003, says Madlyn Daley, marketing researcher for Dairy Management Inc.

Prior to the recent price hike, flavored-milk sales were showing double-digit gains in food, drug and mass-merchandising outlets. In fact, flavored milk’s share of the total fluid-milk retail category grew to a high of 3.6 percent in the third quarter of 2003 — up from 2.9 percent in late 2001. Flavored milk has been a key volume contributor to the fluid-milk category at the retail level, Daley says.

“We would expect that flavored-milk sales will come back once pricing levels drop, and that flavored milk will once again be an important driver of fluid-milk volume,” she adds.

Retail sales of single-serve milk in 32-ounce or smaller plastic containers also have slipped. However, the decline has been relatively small. Year-to-date sales ending June 27 show single-serve retail milk sales are down 2.7 percent.

Like flavored milk, single-serve milk in plastic bottles also experienced strong sales growth prior to the price hike. And despite the temporary setback at the retail level, single-serve milk is enjoying very strong sales growth in the fast-food sector, thanks to the introduction of “Milk Jugs” at McDonald’s during June. The recent introduction of single-serve, bottled milk at Wendy’s restaurants nationwide also should expedite sales of milk in the fast-food category.

Dairy Management Inc.