MILK VENDING MACHINES - DETAILED CONSIDERATION
Released On 28th Mar 2022
Are you a dairy farm looking for an extension of your own business rather than a completely diversified enterprise? Are you considering direct sales? Still the sale of milk but to a completely new customer base- the consumer. Although in many senses it is turning the clock back to supplying milk directly from the farm to the local community this time it is using technology to offer fresh milk, direct to the consumer 24/7 with the provenance many desire today.
A milk vending machine can help you connect more with your local community and create some positive PR for the dairy industry which has taken a bit of a hammering over recent years.
This article will look at how to approach a diversification, considering research, business plan, returns and ongoing commitments. Although we are focusing on Milk Vending Machines these titles can be used when considering any type of diversification.
Research
Research is incredibly valuable - positive and negative feedback should be considered.
Your milk contract is crystal clear what your customer wants - the conditions are listed, and you are rewarded or penalised when marked against the desired criteria, whether it be on constituents, volume, temperature, contamination levels etc. However, you now need to gain an understanding of what your new potential customer wants.
Just as it is important to meet the criteria of your milk contract it is important to meet the desire of your consumers from the vending machine to ensure you retain that customer.
As this is unlikely to be your main revenue stream it is important to check your contract and contact your milk buyer to ensure that such private sales are not prohibited. Your core business is likely to remain unchanged and therefore maximising your milk price here is still likely to provide you with the best returns. It is important that, despite investing in the vending machine, you do not lose focus of your main contract.
Knocking on doors, running Facebook campaigns, or asking local community groups can all be great ways of understanding the demand a little more. It is at this point that you should consider what your offering will look like. The milk, is it raw milk or pasteurised milk? Although raw milk certainly offers a unique selling point (USP) and will save the investment that pasteurising requires, you may be restricted depending upon your TB status and the potential location of your vending machine. Also, are you hoping to offer milk, milkshakes, and coffee? Are there going to be other products on sale as well? Where would be a suitable location?
Plan
Often the ideal of putting plans down on paper is dismissed by many farmers unless it is the back of an old envelope. Writing up your plans can be helpful, allowing everyone to see your vision and help it become a shared vision. It also, ensures you are focused on the goals, and it may be required if you require external funding for capital. Similar to funding any other on farm development you will also need planning permission from your local council and support of your local Environmental Health Department.
Although plans should remain flexible, and able to evolve, when considering the critical factors such as location of the machine, customer parking and your milk handling facilities, ensure you plan for future growth - always allowing more space for capacity should it be needed. The location ideally needs to be convenient for both you and the end consumer, with good access, electricity, water and potential security. For some, this is not possible, and they will be required to locate it further away from the farm creating less efficiency but this may be a good compromise if it leads to a much greater customer base resolve, such as near retail sites, commuter routes, public spaces, pubs etc.
In order to develop a good relationship, you need to do as you say you will and problems quickly. Communications need to be clear, whether this be opening times, instructions for use or communicating shortcomings. You need to be a reliable source of milk, including some cows being in milk all year round. For example, an autumn block calving, without planning, is unlikely to be able to supply milk to the machine for school summer holidays which is a fabulous time to lock in your customer base.
Finally, who is going to be responsible for it? This will help determine the business structure. Although it is an extension of the current farming business it may be sensible to have it trading as a separate entity. Again, check with your milk contact, and your insurance provider, but a separate structure ensures that the finances are clear cut and may empower the person responsible.
Return
Although such diversification may increase your connection with the local community most will be considering it to improve overall farm profitability by selling milk for £1+/litre rather than 33ppl on your milks contract. The research should provide you with a rough ceiling price remembering that this is the freshest, high quality and provenance milk available so don’t undersell yourself. Experience should also be factored in. To calculate your possible return, you should consider the potential upfront costs remembering the vending machine is not the only investment. Assuming you are not selling raw milk then the pasteuriser and cooling tank can be a similar investment.
