Coke bets on 'premium milk' to boost declining category

Coke is coming out with premium milk that has more protein and less sugar than regular. And it's betting people will pay twice as much for it.

The national rollout of Fairlife over the next several weeks marks Coca-Cola's entry into the milk case in the US and is one way the world's biggest beverage maker is diversifying its offerings as Americans continue turning away from soft drinks.

It also comes as people increasingly seek out some type of functional boost from their foods and drinks, whether it's more fiber, antioxidants or protein. That has left the door open for Coke step into the milk category, where the differences between options remain relatively minimal and consumption has been declining for decades.

"It's basically the premiumization of milk," Sandy Douglas, president of Coca-Cola North America, said at an analyst conference in November. If developed properly, Douglas said it is the type of product that "rains money."

Fairlife, which Coca-Cola formed in partnership with dairy cooperative Select Milk Producers in 2012, says its milk goes through a filtration process that's akin the way skim milk is made.

Filters are used to separate the various components in milk. Then, more of the favorable components are added, while the less desirable ones are kept out.

The result is a drink that Fairlife says is lactose free and has 50 per cent more protein, 30 per cent more calcium and 50 per cent less sugar than regular milk.

The same process is used make Fairlife's Core Power, a drink marketed to athletes that has even more protein and calcium than Fairlife milk.