Innovative cheese, butter and yoghurt products drive dairy market growth
Despite declining fluid milk sales, refrigerated dairy aisle remains largest category in retail
DENVER — American consumers are drinking less milk each year, but overall dairy sales have been on the rise for several years. Cheese, butter and yogurt are fueling the category’s growth, as are new dairy products designed to capitalize on convenience, health and snacking trends.
Data from market research firm Circana shows that the refrigerated dairy aisle was the largest category in grocery retail last year, with $76 billion in sales. Over the past three years, retail dairy sales have grown 15.4 percent, or $10.1 billion.
According to a New report from CoBank Knowledge ExchangeThe outlook for retail dairy sales remains strong and growth could increase further as consumer preferences and purchasing behaviors evolve. Cheese and butter have even greater growth potential, and dairy products designed to meet consumers’ growing desire for healthy, protein-rich snack products have emerged as a new growth opportunity.
“Dairy products have a diversity of applications and innovative dairy processors are leveraging this to their advantage,” said Corey GeigerChief Dairy Economist at CoBank. “The healthy snacking category is a growing megatrend that dairy can capitalize on with a host of conveniently packaged solutions, from low-fat cheeses and specialty yogurts to functional dairy beverages.”
CHEESE, BUTTER AND YOGURT
Cheese continues to dominate the dairy category, with annual sales increasing. Per capita cheese consumption in the U.S. has doubled over the past 20 years, reaching 40 pounds in 2022. This is still well below per capita consumption in many European countries, indicating significant room for growth. Innovation in the cheese sector is being driven by expanding flavor varieties to reach more consumers as U.S. demographics evolve. Hispanic-style cheese has been the fastest-growing category in recent years.
Butter is experiencing a renaissance in the United States, with per capita consumption increasing 43% over the past 25 years. While American butter brands have traditionally been 80% butterfat, European-style butter, which is 83% butterfat, has been steadily gaining market share globally. American consumers have increased their purchases of 83% butterfat, and domestic manufacturers have retooled their production lines to better serve the U.S. market.
Yogurt has gone from being a morning meal to an anytime snack or healthy dessert. Per capita consumption in the U.S. has increased 142% in 25 years, with Greek yogurt driving the category’s growth. Yogurt brands are also seeing new sales as consumers increase their reliance on weight-loss medications. Danone attributes the surge in demand for its high-protein, low-calorie yogurts, at least in part, to consumers taking medications or simply trying to manage their weight or wellness.
Most U.S. consumers consider dairy products to be staples, which has boosted private label sales. Private label sales outpace premium brands in 10 of the 15 dairy categories tracked by Circana. Store brand options seeing significant growth include yogurt, cream cheese and cream.
Food and Beverage Economist at CoBank Billy Roberts said consumer concerns about highly processed foods and a preference for clean labels are areas where traditional dairy products can resonate, particularly with younger demographics.
“One of the lessons we’ve learned from following the plant-based food sector is that long ingredient labels are a barrier for many younger, health-conscious consumers,” Roberts said. “Dairy is typically perceived as having clean labels with few ingredients. Dairy brands can capitalize on this by getting the product mix right and marketing right.”
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