In a small bowl, mix food coloring with milk; add coconut and mix until evenly tinted; set aside.
Melt confectioners' coating over a double boiler or in the microwave, stirring every 15 to 30 seconds until smooth. Mix with coconut mixture and place by spoonfuls on waxed paper. Shape mixture like a bird's nest, making a slight indentation in the center of each one.
Cool completely and decorate by placing candies in the center of each nest.