Innovation strategists talk about finding the white space or a gap for opportunities in a particular category. Of course, when you’re talking about the dairy category, there’s a seemingly endless array of opportunities—dairy and non-dairy alike—stretching across the refrigerated dairy case to the freezer case.
In every case, it’s clear product developers are angling to meet consumer interests in snacking and health—combined with adventurous and/or indulgent flavors.
Although its growth at retail has slowed down in recent years, the natural cheese category is still gaining ground. Dollar sales in the total category rose 1% to $12.9 billion during the 52 weeks ending Aug. 12, 2018, data from Chicago-based market research firm IRI show. Unit sales increased 1.5%. Processed cheese, however, continued to fumble at retail. Dollar sales fell 3.1% to $2.9 billion, while unit sales tumbled 4.1%.
But cheese’s future — on both the retail side and the even larger foodservice side — remains bright.
Wielding a huge influence on the cheese segment is consumers’ desire for convenience. In fact, Allison Schuman, senior director of sales for Schuman Cheese, Fairfield, N.J., said convenience appears to be the “most influential trend” her company has seen in 2018.
“Consumers and companies alike want products in a convenient format,” she said. “Ease of use with high-quality cheese is a priority for both consumers and restaurants.”
Jim Dimataris, director of processor relations for the Tracy, Calif.-based California Milk Advisory Board, pointed to the rise of snacking cheeses that align with the convenience trend.
“Snacking cheeses with compartmentalized packages sold in the wall deli, produce department and service deli department, as well as dried cheeses converted into bars and bite-sized packaging for snacking, are among the most exciting and game-changing innovations in the cheese category,” he said. “The cheese in these unique packs serves as a key protein source to get double-digit grams of protein within the 100- to 200-calorie range, while the dried cheese snacks provide true on-the-go convenience — all key selling points for today’s consumer.”
Sargento takes popular snacking line into new breakfast options.
Flavored cheese options also are on trend. Case in point: Cary Frye, senior vice president of regulatory affairs for the Washington, D.C.-based International Dairy Foods Association (IDFA), said she’s been fielding a lot more compliance-related questions from processors in reference to flavored cheeses and cheeses with spices or herbs. She pointed to Sartori, Plymouth, Wis., as a standout here with its BellaVitano brand.
“They started with flavors like merlot, espresso — these aren’t throughout the whole cheese, but they’re on the edges of the cheese to give a touch of delicious flavor,” Frye said. “Now they’re expanding to citrus ginger and chai.”
Although cheddar and mozzarella, sans extra flavors, remain the “headlines of the cheese world” in terms of sales volumes and consistent growth, it’s the specialty cheese flavors such as garlic dill, chipotle and Buffalo sauce that are experiencing the greatest growth now, noted Marshall Reece, senior vice president of sales and marketing for Associated Milk Producers Inc. (AMPI), New Ulm, Minn.
“AMPI’s smoked chipotle cheese is a new offering that’s doing well,” he added. “We continue to see positive growth of Monterey Jack with peppers and spice — the hotter, the better.”
Today’s consumers also are looking for perceived healthier, clean label options.
Applegate Farms, a subsidiary of Austin, Minn.-based Hormel Foods, introduced a line of six natural sliced cheeses and three shredded cheeses under the Applegate Naturals brand. The non-GMO offerings are marketed as containing no added colors or artificial ingredients.
And BelGioioso Cheese, Green Bay, Wis., tapped into the natural trend (and well as the trend toward convenience) with the recent launch of all-natural cheeses in 4oz cups. The cups — available in Parmesan (grated, shredded and shaved varieties); a blend of Asiago, Fontina, Parmesan and provolone (shredded); and a salad blend of Asiago, Parmesan and Romano (shaved) — are marketed as containing only three ingredients: milk, enzymes and salt.
Coming off a sluggish season with near-flat sales across the yogurt, sour cream, cream cheese and cottage cheese categories, cultured dairy product processors are adjusting tactics and new product strategies.
Historically, yogurt has claimed the breakfast division title. However, as consumption patterns have shifted toward grab-and-go breakfasts, multiple other convenient food options ranging from muffins to microwaveable breakfast bowls are offering consumers more choices. A leading cultured dairy contender on this convenience front is yogurt drinks.
Bottom’s Up! More growth forecast for yogurt drinks.
PHOTO COURTESY OF: DANONE NORTH AMERICA (WWW.ACTIVIA.US.COM)
Overall, the US yogurt and yogurt drinks category declined by 4% from 2016 to 2017, but yogurt drink sales are expected to climb 58% by 2022, according to data from global market research firm Mintel. Analysts speculate that yogurt drinks are stealing share from spoonable yogurt, which was down 6.8% from 2016 to 2017, because of the convenience and portability the drinkable subcategory offers.
Among these convenient offerings are Dannon Activia Dailies from White Plains, N.Y.-based Danone North America. The low-fat yogurt drinks feature billions of live and active probiotics in a portable 3.1oz bottle. Available in five flavors, Activia Dailies are a convenient way for consumers to add good bacteria to their diets and promote gut health, the company said.
Even more challenging for the food industry is the slide from traditional mealtimes to snack times around the clock.
“According to The NPD Group, only about 14% of consumers are eating just breakfast, lunch and dinner,” said Don Stohrer Jr., head of Arla Foods Inc. USA, Basking Ridge, N.J. “The rest snack between meals and are increasingly eating snacks as a meal. As the line between meals and snacks continues to blend, people are eating anything and everything as a snack.”
Cream cheese also is leading off in this direction. Philadelphia launched a two-compartment snack pack, Philadelphia Bagel Chips & Cream Cheese dips, which pair bagel chips with a variety of flavors of cream cheese. The brand expanded the product lineup this year with the release of Philadelphia Pretzel & Cream Cheese Dips, which pair pretzels with either jalapeño-flavored or chocolate-flavored cream cheese.
Last fall, the brand also launched Philadelphia dips as an alternative to homemade dips that busy consumers do not have time to make themselves. Targeted at the pre-dinner and group snacking occasions, the line feature three flavors—Jalapeño Cheddar, Southwest Style Black Bean & Corn, and Buffalo Style with Celery—which all can be served hot or cold.
Dean Foods released DairyPure Mix-ins as a convenient, better-for-you snack option. The cottage cheese snacks mix DairyPure cottage cheese with fruits and nuts.
Although consumers are embracing yogurt as a mealtime side or main course and as a snack, Chobani LLC also began yogurt as a staple cooking ingredient, similar to how it is used in Europe, the Middle East, Russia and India, explained Niel Sandfort, vice president of product innovation for the Norwich, N.Y.-based company.
In August, the company launched Chobani Savor, a squeezable multi-serve offering of low-fat or whole-milk plain Greek yogurt. The packaging shift turns yogurt into a condiment for potatoes, tacos, vegetables, pancakes, crepes and soups, as well as an ingredient for sauces and marinades, Sandfort said.
Along the same lines, New York-based Icelandic Provisions released 24oz multi-serve packages of its vanilla and plain skyr for use as cooking ingredients.
Other brands and businesses also are focusing on health. Late last summer, Chobani rolled out its “Hint Of” offering nationwide. The new yogurt line is made with 2% milk and natural sweeteners, which results in a product that contains half the sugar of other yogurts, Sandfort said. Chobani Hint Of is available in the “slightly sweet” flavors of Madagascar Vanilla Cinnamon, Wild Blueberry, Monterey Strawberry, Gili Cherry and Alphonso Mango.
And makers of cottage cheese, which naturally is high in protein and low in sugar, are repositioning the cultured dairy product as a desirable, interesting snack that boasts an impressive health batting average. The new fruit-on-the-bottom cottage cheese products from Princeton, N.J.-based Muuna Inc. also are enriched with the probiotic Bifidobacterium lactis, which supports digestive health. In addition, the cottage cheese snacks provide calcium, potassium and vitamins A and C.
“Halo” Effect in Ice Cream
I scream. You scream. We all scream—for ice cream. Consumers have indeed warmed up to this frozen category. Ice cream category dollar sales rose 1.2% to $6.2 billion during the 52 weeks ending Aug. 12, 2018, while unit sales increased 1.8% during the same time, according to data from Chicago-based market research firm IRI. On the frozen novelties side, dollar and unit sales made a recovery from the not-so-hot previous year, jumping 3.5% (to $4.7 billion) and 1.8%, respectively.
IDFA’s Cary Frye calls it the “Halo phenomenon.”
These consumers definitely have warmed up to higher-protein, lower-sugar, reduced-calorie Halo Top ice cream, which was up 31.9% in dollar sales and 54.8% in unit sales for the 52 weeks ending Aug. 12, 2018, IRI data show. And many other brands have introduced their own versions of the popular frozen treat, Frye noted.
“I think what really triggered that was the high protein—it’s not just taking things away,” Frye says.
Doug Bouton, president and chief operating officer of Los Angeles-based Halo Top Creamery, said his company has definitely seen growing demand for better-for-you offerings in the “Halo Top” category over the past year, particularly for products boasting high protein and low sugar.
Wells Enterprises Inc., Le Mars, Iowa, also tapped into the better-for-you trend with the 2018 launch of Chilly Cow light ice cream. Mark Meyer, senior vice president, demand for the company, said the product is the first “protein-packed light ice cream” that uses ultra-filtered milk. The result? A creamier product that boasts a more concentrated protein content.
Last year also saw Burlington, Vt.-based Ben & Jerry’s entering the better-for-you market with Moo-Phoria, a pint line with seven varieties. All flavors contain less fat and fewer calories (140 to 160 calories) per serving.
Gelato is getting healthed-up, too. New here is Revelé whipped gelato from the Huntington Beach, Calif.-based company bearing the same name. Available in White Chocolate Raspberry, Belgian Chocolate and eight other flavors, the line is made with cane sugar. The Belgian Chocolate variety has only 90 calories and 5g of sugar per 1/2-cup serving.
Better-for-you ice cream and frozen novelties aren’t the only standouts on the rink, however. Premium, more indulgent offerings are still in high demand.
“There is an interesting dichotomy in the ice cream category,” Meyer noted. “There are definitely consumers looking for high-protein, low-calorie and low-sugar products, around 20%, but there continues to be consumers looking for indulgent experiences. Bringing relevant innovation here is key as well.”
Sara Schramm, marketing brand manager for Blue Bell Creameries LP, Brenham, Texas, echoed that sentiment.
“Our focus is to continue to introduce indulgent ice cream flavors in the traditional half-gallon package size and always be on the lookout for the next new and exciting product line,” she said.
New indulgent flavors were the focus last year for Blue Bell Creameries. Its new offerings included Chocolate Peanut Butter Cookie Dough and a Key Lime Mango Tart, which features sweet and tangy key lime ice cream, graham cracker crust pieces and a mango sauce swirl.
Utica, Ohio-based Velvet Ice Cream added six premium flavors to its 1.75-quart ice cream lineup: Banana Cream Pie, Chocolate Chip, Kentucky Praline Pecan, Strawberry Cheesecake, Campfire S’mores and Salty Caramel.
It’s been another challenging year for the milk segment. Dollar sales in the overall category fell 3.9% to $15.3 billion during the 52 weeks ending Aug. 12, 2018, data from Chicago-based market research firm IRI show. Unit sales dropped 1.4%. And in line with a multi-year trend, the refrigerated skim/low-fat milk subcategory — still the largest subcategory — found itself stuck as dollar sales tumbled 8.4%, while unit sales took a 5.0% dive during the same tracking period.
Processors could help turn things around by focusing on the evolving wants and needs of today’s consumers.
“Consumers no longer look to milk to just fill the cereal bowl,” said Erin Massey, product development manager for Prairie Farms Dairy Inc., Edwardsville, Ill. “Consumers want the foods they consume to be functional, and dairy certainly has that appeal naturally.”
And augmenting milk’s natural functionality to address current consumer needs could help grow the category. One area of increased consumer awareness and interest is digestive health.
“This has put the spotlight not only on probiotics, but also on lactose-free dairy products,” Massey said. Both categories have seen tremendous growth.”
Some consumers also are gravitating toward A1 protein-free milk in the name of digestive health. As Blake Waltrip, CEO of The a2 Milk Co.’s Boulder, Colo.-based US region, explained, “ordinary” cow’s milk has both A1 and A2 beta-casein proteins. But the company’s a2 milk is sourced from cows that produce only A2 protein.
In 2018, the company doubled its US distribution, expanding into more than 6,000 retailers, including Walmart and Costco, he added.
Another area of consumer interest is flavored milk. Chris Keyes, vice president of sales strategy for Kansas City, Kan.-based Dairy Farmers of America (DFA), said the trend is being spurred by athletes and their understanding “of the replenishment value of 3g of carbs to 1g of protein after exercise.”
Marissa Jarratt, senior vice president, marketing, innovation and R&D for Dallas-based Dean Foods Co., agreed, adding that chocolate milk now enjoys a broader fan base that isn’t limited to children. And today’s options go well beyond chocolate.
“TruMoo has enjoyed great success harnessing the power of chocolate milk’s delicious history,” she said. “But it has also leveraged a new story, with a variety of flavor options and protein levels that can be enjoyed by everyone from families to elite athletes.”
Speaking of flavor options, dairy processors still have a lot of opportunity here, said Paul Ziemnisky, executive vice president of global innovation partnerships for Dairy Management Inc. (DMI), Rosemont, Ill. He noted that the flavored milk segment is still 98% chocolate.
“How come we’re not doing more vanilla work? … And the industry is going to need the capacity to do flavor blends,” he said. “If you look at the global front, you’re seeing a lot of milk plus fruit, milk plus grains, matcha milk.”
Coffee is hot in the milk category, too. Milk and coffee combos ranging from coffee milk to cold brew coffees with added milk are resonating with today’s consumers, Frye noted.
“It’s perfect, coffee and milk together in a chilled product,” she said. “So I think that’s a trend that we’ll be seeing more.”
The past year saw a number of new milk offerings in line with the aforementioned trends. On the digestive health side, DFA’s Kemps team introduced a probiotic milk to the Minnesota and Wisconsin markets, Keyes noted.
And Clover Sonoma, Petaluma, Calif., launched a Non-GMO Project Verified lactose-free milk line. The line is available in whole-milk, 2% reduced-fat, 1% low-fat, fat-free and chocolate whole-milk varieties.
In its new report titled “Plant-based Beverages Market: Global Industry Analysis 2013-2017 and Opportunity Assessment 2018-2028,” Future Market Insights, Valley Cottage, N.Y., forecasts the global plant-based beverage market to reach US$474.7 billion by 2028. The growth reflects a compound annual growth rate (CAGR) of 6.7%, revised from the company’s previously estimated CAGR of 5.2%.
Drivers behind the anticipated growth include increasing health and wellness consciousness among the population, the growing vegan/vegetarian/flexitarian trend, and dietary restrictions such as lactose intolerance and food-related allergies. The segment includes dairy alternatives, ready-to-drink beverages and plant-based juices.
Organic plant-based beverages are anticipated to overtake conventional plant-based beverages, with an expected CAGR of 7.2% by 2028, the company said, owing to the increasing awareness of consumers in developed regions about the quality and health benefits of organic food products, and increasing per-capita disposable income of consumers.
But consumers are more selective here than ever before.
Non-dairy options growing across all sub-categories.
PHOTO COURTESY OF: BLUE DIAMOND GROWERS (WWW.BLUEDIAMOND.COM)
“With more choices than ever before in plant-based, consumers are not willing to accept compromises in taste or nutrition,” Irina Gerry, brand manager for Danone North America’s Silk brand, told BNP Media’s Dairy Foods. “Continuous taste improvements in plant-based beverages have brought broader taste appeal, expanding consumer acceptance and growing household penetration for the category to over 35% in the last three years.”
Gerry noted that Silk Soy underwent a major improvement in taste and nutrition back in 2014, with Silk Almond following in 2017. And in 2016, Silk Protein Nutmilk — featuring pea protein blended with the brands almond and cashew milks — made its debut in original and vanilla flavors; a chocolate flavor was added in 2017. The line delivers 10g of plant-based protein per serving.
Meanwhile more new non-dairy options seemingly are arriving every day. This year’s new product news includes many new products across other dairy categories including:
After introducing its first non-dairy vegan frozen desserts in 2016, Ben & Jerry’s since has expanded the line to encompass 11 flavors. Joining the line this year were Chocolate Chip Cookie Dough and Chocolate Caramel Cluster.
Daiya introduced a four-item line of non-dairy, frozen coconut Dessert Bars.
Magnum Ice Cream launched two new vegan Magnum Non-Dairy frozen dessert bars Classic and Almond flavors.
Halo Top introduced three non-dairy and vegan-friendly flavors: Mint Fudge Cookie, Chocolate Hazelnut and Peanut Butter & Jelly.
So Delicious introduced seven flavors of So Delicious Dairy Free Frozen Mousse.
Init Foods Inc., Santa Barbara, Calif., introduced Reveri plant-based frozen desserts. Varieties are Vanilla Almond Blossom, Chocolate Forest, Purple Chip Mint, and Strawberry Patch.
Chobani LLC kicked off 2019 by introducing nine new Non-Dairy Chobani items including five single-serve cups and four single-serve drink options. All offerings use a coconut milk base.
This June saw Blue Diamond introduce Almond Breeze Almondmilk Yogurt Alternatives of two types: a line of 5.3oz. single-serve cups with toppings; and larger 24oz containers in Original and Vanilla flavors.
Cheeses & Spreads:
Wildbrine Plant Based Creamery used Natural Products Expo West to introduce plant-based cheeses and butter. Three new vegan, cashew-based Brie cheeses are Shiitake Shakeup, Beet Blush and Neo-Classical Cashew Brie.
Extra Ordinary Foods, Byron Bay, Australia, used Natural Products Expo West to introduce used Pimp My Salad Cashew Parmesan. It’s made from cashews and is dairy, vegan, soy free and Paleo.
Overviews excerpted from BNP Media’s Dairy Foods and its November 2018 State of the Industry Report. Visit www.dairyfoods.com for more information.
Originally appeared in the July, 2019 issue of Prepared Foods as Mind the Gap.