2017 Dairy Trends: Dairy Delivers
Key categories embrace new forms, formulas for snacking, health and flavor innovation
You’ve heard of a sneak attack—but how about a snack attack? While so much product development news has focused on allergens, intolerance and plant-based diets, the dairy industry and its many categories are addressing key trends.
Snacking is one of the dominant themes. Besides cheese, yogurt is a snack. Ice cream is a snack, and so are flavored milks consumed after a hard physical workout.
Meanwhile, no less important are dairy processors’ efforts to embrace key flavor and product trends and address consumer health and clean label concerns.
Based on sales and product innovation, consumers are choosing natural cheese over processed versions. The natural cheese category continues to grow, boosted by high household penetration and growing interest in natural cheese, which represents three quarters of total sales, according to a cheese report by Mintel, a Chicago-based research firm. Natural cheese category sales grew 24% from 2010-2015, reaching $23.2 billion in 2015. The processed cheese segment holds on to 18% of the market, although sales remain rather stagnant. From 2010-2015, the segment grew just 3%, reaching $4.2 billion in 2015.
Consumers remain interested in cheese for its wide variety of formats and flavors. Its appeal as a nutritious snack also helps as Americans snack more frequently, said Mintel. It predicts the natural cheese category will grow 19% from 2015-2020 to reach $27.7 billion, at current prices, and expects processed cheese to continue its decline slightly over time.
As consumers seek out more protein, the snacking revolution has taken over the food industry, including cheese. Hybrid products are driving new innovation. Cheese is being paired with nuts, crackers, fresh fruit, dried fruits, lunch meat and pretzels in grab-and-go snack packs. Consumers are looking for bolder, flavorful snack options, said Barbara Gannon, vice president of corporate communications and community relations for Sargento Foods Inc., Plymouth, Wis.
Sargento added two varieties to its innovative Balanced Breaks line of cheese, dried fruit and nut snack packs. The new varieties are Colby-Jack cheese with sea-salted peanuts and blueberry juice-infused dried cranberries and Gouda cheese with honey-roasted peanuts and dried cranberries. The snack packs, which were introduced last in 2015, have been the most successful product launch in the company’s history, said Gannon.
The Laughing Cow, a brand of Chicago-based Bel Brands USA, launched Cheese Dippers, an on-the-go snack that features creamy Swiss cheese paired with crunchy breadsticks. Rochester, Minn.-based Reichel Foods, added four new varieties to its Pro2Snax line, a single-serve snack pack that features fresh produce paired with a healthy protein, like cheese. The new varieties include baby carrots with sriracha Jack Cheese; and sliced apples with mild Cheddar cheese, dried cranberries and cashews.
Processors also have been innovative with forms and flavors. Simply Artisan Reserve, a brand of Litehouse Inc., Sandpoint, Idaho, introduced Simple Seasons, finely crumbled soft cheese in a convenient, shakeable glass jar. The cheese comes in blue cheese and feta varieties and is made with just five ingredients: milk, salt, culture, enzymes and an agent to prevent caking. Cabot Creamery, Waitsfield, Vt., introduced Cheddar Shake — a shelf-stable powdered premium Cheddar cheese in an 8oz plastic bottle. The cheese powder is ideal for pizza, salads and pasta.
Flavor innovation is another way cheesemakers are expanding their audience and driving sales.
“Bold flavors are big in the specialty cheese category,” said Kareen Stephens, brand manager, Schuman Cheese. “Whether the boldness is from the cheese itself or from a spice addition, consumers are seeking out intense flavors.”
Schuman’s Yellow Door Creamery introduced a line of spice-rubbed fontina that includes harissa, Tuscan and habanero and lime spice blends. Saputo Cheese USA also focused on unique flavors with launches in several of its brands. A three-pepper Colby Jack Wisconsin Snacking Cheese was added to the Frigo Cheese Heads line. Three-pepper features a combination of jalapeno, habanero and chipotle peppers. In its Black Creek brand the company added a Cheddar and merlot cold-pack cheese spread in an 8oz container. For its Great Midwest brand it introduced habanero Jack cheese, a semi-soft cheese that combines Monterey Jack cheese flavor and peppery habanero.
While yogurt is certainly still having its day, other cultured dairy products are seeing renewed interest. Consumers’ desires for variety in flavor and texture, clean ingredients and nutrient-dense snacks (emphasizing more protein or probiotics) are shining a spotlight on yogurt, cottage cheese, cream cheese and sour cream-based dips.
Yogurt manufacturers continue to innovate and look to trends. The biggest areas to watch are flavors, use of whole milk and milk from grass-fed cows, and drinkable options. Flavor innovation is huge — consumers can find ethnic influences, savory and sweet combinations, dessert flavors and coffee-infused varieties. Chobani, Stonyfield, Dannon and Smari have introduced whole-milk yogurts.
Yogurt still dominated the cultured category with overall sales of $7.5 billion. And though dollar sales did improve 1.1%, unit sales decreased 2% to 5 billion, as reported by Information Resources Inc. (IRI), Chicago, for the 52 weeks ended Sept. 4, 2016.
Interestingly enough, the yogurt category could have a new star. Drinkable yogurt sales are off the charts. In the shelf-stable yogurt/yogurt drink segment, dollar sales jumped 54.4% to $25.5 million, and unit sales increased 40.8% to 13 million, according to IRI. And though this segment is small by comparison, it’s promising and there is a lot of room to grow. The latest research from Mintel shows that sales of yogurt drinks have grown a healthy 62% from 2011-2016. And sales are expected to grow 11% in 2016, making this the second straight year of double-digit gains.
“Yogurt drinks are becoming increasingly popular among US consumers, and as adoption of the yogurt drinks segment grows, so too does innovation,” says Beth Bloom, senior analyst, U.S. Food & Drink at Mintel. “It’s one of the few food and drink spaces where launch activity sees brand new products outpacing simple variations on form.”
According to Mintel, yogurt is among America’s top five breakfast items with just under half (45%) of US consumers purchasing yogurt at retail for breakfast. Ninety-three percent of yogurt/yogurt drink consumers eat it for breakfast.
Lala, a brand of Dallas-based Borden Dairy, diversified its drinkable yogurt smoothies line with several new functional formats this year. It added Healthies Curb, which combines yogurt with grains, proteins and fiber for what it calls a more satiating product; 100-calorie yogurt smoothies; and new flavor varieties to its non-Greek line, including cherry vanilla. The company also launched a line called Craveables that features dessert-style flavors, like Lemon Bar and Vanilla Cupcake.
Chobani, Norwich, N.Y., delved into drinkable yogurts with its Drink line, available in four varieties, including Strawberry Banana, Mixed Berry and Apple Vegetable. The Dannon Co., White Plains, N.Y., added Oikos nonfat yogurt drinks, sold in 7oz bottles. A serving contains 110 calories, 10g of protein and 11g of sugar. It’s sold in four flavors: Strawberry, Mixed Berry, Banana Creme and Vanilla.
Manufacturers of cottage cheese, cream cheese and sour cream also are rising to the challenge with flavor and packaging innovation. Companies are tapping into consumers’ desire for more high-quality protein and snack options. Consumers now find more unique flavors and smaller sizes of cottage cheese, interesting cream cheese flavor combos, and high-protein dips made with Greek yogurt, to name a few.
Ice cream is back. Retail sales in the last year rose 6% and production rose 3.7% in 2015 from 2014 levels (the latest years available). The comeback is welcome news to dairy processors after 2014, production tumbled 3.5% to 865.7 million gallons, according to the US Department of Agriculture. But with 897.7 million gallons churned in 2015, ice cream production was at its highest level in five years. Even consumers had reason to be happy: prices were falling.
IRI values the ice cream and sherbet category at $11.4 billion. Ice cream and frozen novelties are the two largest segments, accounting for $10.8 billion in sales. Frozen yogurt/tofu, ice milk, ices and other products make up the rest of the category. Another research firm, Chicago-based Mintel, pegs the market at $12.6 billion and describes ice cream sales growth as “tepid.” From 2011 to 2015, Mintel figures dollar sales increased 6% but volume sales decreased 5%.
Though IRI statistics show unit sales of ice cream at retail are rising, research from Mintel found that 22% of consumers are buying less ice cream, 22% are buying premium ice cream and 34% say they would pay more for a premium ice cream than for a conventional product.
Another of Mintel’s findings that ice cream manufacturers should pay attention to is that consumers are eating ice cream as a snack almost as often as they eat it for dessert (49% compared to 55%, respectively). Sales of novelties actually grew faster than ice cream products, — 7% compared to 6.4% — according to IRI.
That plays in favor of Mars Ice Cream North America, Hackettstown, N.J. In December 2016, it released its M&M’s brand ice cream bars. The candies are embedded in reduced-fat vanilla ice cream and enrobed in milk chocolate. A box of six 1.63oz bars has a suggested retail price of $3.99. A single 2.64 oz bar has a suggested price of $1.79.
Meanwhile, there is no shortage of flavor ideas. Cleveland-based Pierre’s Ice Cream created three flavors for the summer: Campfire Toasted S’Mores (with marshmallows and graham cracker swirl), Strawberry Cheesecake and Sundae at the Museum. The latter is vanilla ice cream, pecans, salted caramel and fudge swirl. As fluid milk processors have discovered coffee, so have ice cream manufacturers. Hiland Dairy, Springfield, Mo., developed Sea Salt Caramel Espresso and Caramel Coffee products. Umpqua Ice Cream, Roseburg, Ore., offers Java Thunder with chocolate espresso bean pieces.
Manufacturers also are cleaning up the labels. Perhaps the most notable example involves Nestlé. Last April, the company said it will remove artificial colors and flavors, high-fructose corn syrup and GMO ingredients from six brands, including Dreyer’s, Häagen-Dazs and Drumstick. It further pledged to use fresh milk from cows not treated with rBST, add real fruit or fruit juice and reduce sugar by an average of 11% on selected products.
Beginning in April, Nestlé rebranded nine of Dreyer’s Slow Churned flavors as Slow Churned Simple Recipes. The improved recipes feature a label with seven or eight ingredients, reduced from an average of 22. Nestlé replaced carrageenan and xanthan gum with ingredients such as pectin.
Although ice cream and frozen desserts will never be considered health foods, there are more interesting better-for-you options. For example, Thrive Frozen Nutrition, a five-year-old company, makes a high-protein ice cream with 24 vitamins and minerals, natural soluble fiber and four strains of live and active probiotic cultures. In addition to selling pints to grocers, the company sells to health care institutions, collegiate athletic programs and U.S. military commissaries. The Orlando, Fla.-based company terms its premium ice cream “nutritious” not “healthy.”
Dairy category reviews excerpted from BNP Media’s Dairy Foods (www.dairyfoods.com) November 2016 “State of the Industry” issue. Articles were written by Jim Carper, editor in chief, and Sarah Kennedy, managing editor.
Originally appeared in the March, 2017 issue of Prepared Foods as Dairy Delivers.