The list is long of what consumers are demanding from their dairy product favorites, including qualities like sugar reduction, value-added ingredients, portability and clean labels. The themes play out across dairy’s four leading categories: cultured products, cheese, milk and ice cream.
According to the National Dairy Council (NDC), nutrition experts agree that it is best to get nutrients, including calcium, from foods rather than supplements.
“That’s because whole foods like calcium-rich milk, cheese and yogurt contain several vitamins, minerals and other components associated with promoting health,” the council says on its website. “Dairy foods, such as milk, yogurt and cheese, are the main food source of calcium for most people in the U.S. In fact, on average, milk is the top food source of calcium, vitamin D and potassium for Americans age two and older.”
But dairy is changing as pricing is highly influenced by both market and weather conditions. Fluid milk, which is the base of all dairy products, is a commodity constantly subjected to fluctuating supply and demand.
According to International Dairy Deli Bakery Association (IDDBA), it has been a tough two years for dairy with declines in overall sales and volume.
Three trends that could potentially contribute to sales and demand growth in 2018 include flavor innovation, especially in a single serving, continued snacking innovation, and a return to marketing the natural benefits of dairy.
Nearly everyone in the U.S. shops in the dairy department at some point, according to IDDBA. Dairy has a household penetration rate of 97.7 percent, and the average household purchases dairy items 44 times per year.
Many factors are impacting milk consumption in the U.S. today, including population growth; branded and checkoff marketing; retail prices; growth in lactose-free and flavored milk products; smoothies that contain dairy; and increasing whole milk consumption. All of these, according to IDDBA’s 2018 “What’s In Store” research book, are contributing to positive sales.
However, the decline in cereal consumption, competition from other beverages, and health and environmental concerns all negatively impact
Shopping trends in the dairy department
The dairy department generates more than 11 percent of total store sales and 20 percent of profit for stores, despite only using 3 percent of store space.
Many of the trends that could boost dairy this year are in the specialty cheese department, especially single serve, snacking and flavor enhancement.
According to IDDBA, flavor innovation has been the driving force for growth in yogurt and cheese, as a single-serve flavored dairy product is a low-cost way for consumers wanting flavor to indulge.
In the fluid milk category, flavored milk has been on the rise, growing 15.8 percent between 2014-16, which accounts for 10 percent of all milk sold.
Flavored milk products account for nearly 5 percent of fluid milk sales. Chocolate leads the category, which accounts for 94 percent of all flavored milk—up 5.4 percent from the previous year, according to IDDBA.
Snacking is here to stay
Snacking is gaining momentum as a normal part of the day for many. More than 14 percent of consumers snack five times or more per day, which is more than a 25 percent increase in just one year.
According to IDDBA, offering dairy in a single-serving/smaller portion size is closely tied with flavor innovation, snacking and the refocus on the positive qualities of dairy foods. Subcategories such as cream cheese and cottage cheese may begin to show growth in single-serving packages.
Dairy and frozen departments are usually the last departments consumers shop prior leaving the store, which means shoppers tend to spend less time in those departments and only grab planned purchases.
IDDBA said package graphics and retail signage can help consumers see the innovation in the dairy department.
Marketing and technology
Identifying opportunities for new merchandising could spur sales, according to IDDBA. The traditional mindset has always been to keep dairy in the back of the store so that consumers have to walk through the entire store to reach it, which will increase impulse purchases along the way.
However, people are looking for ways to make their lives easier. This can be accomplished by allocating space on endcaps or in produce, deli and bakery, where dairy can be joined with complementary categories such as cereal, cookies, fruit and granola.
“Another possibility might be to place milk in your grab-and-go beer section,” the What’s In Store report says. “Retailers and manufacturers need to take the time to call out differentiation with dairy.”
In 2016 IDDBA began collaborating with The Cambridge Group on original research that would benefit both manufacturers and retailers. A three-stage project was planned.
For stage one, IDDBA and Cambridge Group used the Nielsen Homescan database to identify dairy superconsumers. Superconsumers—the name of a book by Cambridge Group Director Eddie Yoon—are not just heavy users of a certain products; they are “characterized by their attitude as well: they are passionate about and highly engaged with—and maybe a little obsessive about—a category.”
Dairy superconsumers, according to the research, are 10 percent of households who drive 22 percent of the total dairy spend.
• Spend 2.2 times more ($634 a year)
• Purchase seven subcategories, and
• Shop at five different stores.
Dairy superconsumers also understand that dairy is healthy, the research found.
Stage one research, which came out last October, indicates that 20 percent of households are potential superconsumers—people who often really like dairy but spend less than a superconsumer (about $311 instead of $634).
“Potentials may need to be taught or given permission to use more of a product. In the case of dairy, it may be as simple as getting back to the basics—pushing the positive qualities of dairy by amplifying the marketing message that dairy is full of calcium, protein and other healthy vitamins,” according to “The Superconsumer Opportunity in Dairy.”
“If emphasizing the marketing message can get potentials to increase their spend index to 165, just halfway to a superconsumer’s spend index, the dairy industry could experience 11 percent growth or $5.2 billion of growth.”