Wednesday, 30 July 2014

The Battle Over a Milk Jug

Mac's Convenience Stores to sell 3 litre milk jugs as part of pilot project.

The dairy industry, like many agribusinesses, is a highly regulated one. Many consumers would be surprised to learn that their choices of milk containers are regulated by the Ontario Farm Products Marketing Commission. In Ontario the Milk Act regulates “the types and sizes of containers that shall be used for fluid milk products,” which currently does not allow for a 3 litre container.

Milk is typically sold in cartons of between 1-2 litres, or in bags totalling 4 litres per package. The Ontario Dairy Council is petitioning to open the field to a 3 litre middle option, but has encountered stiff resistance from dairy farmers. The producers fear that a 3 litre size will spur consumers to downsize.

Mac's Convenience Stores received the green light from the Ontario Farm Products Marketing Commission to sell 3 litre plastic milk jugs as part of a one year trial. While retailers argue the move is about increasing consumer choice, another motive may be at play. Many large grocery and convenience stores rely on milk as a loss leader, selling it at little to no profit in order to get customers through their doors and sell them more profitable items. Providing a smaller milk format would allow retailers to market a lower priced item, but not necessarily sell more milk.