It’s always good to start a dairy report with a tall glass of milk. While it’s safe to say reports of dairy milk’s demise in the face of the plant-based boom are premature, unit sales slipped again in 2022 by 3.3%. Luckily for the industry, dollar sales increased by more than twice that percentage (7%) due to price-per-unit increases of 11 cents.
Total milk category dollar sales in the US surpassed $15.3 billion for the 52-week period ending Sept. 4, based on research by Information Resources Inc. (IRI). Moreover, dairy milk still is purchased by 90% of US households, according to Dairy Farmers of America.
Balancing the drop in plain fluid dairy milk consumption is a steady rise in premium, specialty, and flavored milk products, specifically products with reduced or removed lactose and those lacking certain milk proteins that might also trigger digestive issues. Adding flavors, especially chocolate, to such products doubles the attraction for consumers. These products already make up $3-4 billion of the total fluid milk category, and their sales percentages are rising at two-to three-times the rate of the overall category.
Cheese to climb to greater heights of popularity. Always a comfort favorite, the expansion of the consumer palate to aged and artisanal cheeses and the increasing recognition of its position as a health food delivering high protein and generous satiety contributed to cheese’s continued growth.
Cheese-plus—that is, cheese plus flavors—is another booming part of the premium cheese experience. Chad Vincent, CEO of Dairy Farmers of Wisconsin, cites a boom in flavors ranging from aged cheddars to spicy cheeses and sweet and savory combinations. “Some frequent flyers include jalapeño, hot pepper, smoked, herb; and fastest growing flavors are buffalo, ghost pepper, Hatch chili, maple/sugar, garlic, and pesto,” As choices in the premium artisanal cheese space continue to expand, the premium segment is providing plenty of growth opportunity.
With natural cheese—shredded, chunks, slices, string/stick, crumbled, ricotta, and cubed—stacking up some $16.4 billion in sales in 2022 (IRI), it seems US consumers enjoy cheese most in formulations, as shredded cheese was most prominent, making up nearly a third of those sales. Giving shredded cheese a run for its money, however, was cubed cheese, with a nearly 10% rise in unit sales versus shredded cheese’s relatively unit plateaued sales.
According to John Crawford, IRI’s vice president of client insights-dairy, “Consumers made some changes during the pandemic that have stuck: [Increased] at-home entertainment and cooking, online shopping, [and a] reduction in dining out, and [a] focus on immunity and holistic health.” He further noted that consumers “continue to look for products that have health benefits, and dairy can capitalize by touting those inherent benefits.”
In addition to its intrinsic benefits, IRI’s Crawford and other experts are seeing a positive gain from added health halos such as clean-label, reduced-sugar, zero-added-sugar, and organic products. “Clean label—humanely raised, Non-GMO, etc.—low sugar, lactose-free, low sodium, pre- and probiotic, and immune defense claims are seeing strong growth across the Dairy15, outpacing total category growth.”
A lot of culture
According to the NPF Group’s recent study of in-home consumption trends in dairy products, yogurt is experiencing an upsurge after a leveling of sales, largely due to the pandemic and the renewed emphasis on immune health via digestive health. As well, yogurt was seen by work-from-home consumers as a convenient and healthful snack
Statistics from Data Bridge Market Research valued the yogurt market at more than $107 billion in 2021 and forecasts it to grow to $162 billion in sales by 2029, at a CAGR of 5.3%. Refrigerated drinkable yogurt—kefir—saw dollar sales increase 11% and unit sales 3%. In breaking those figures down, data from SPINS, LLC revealed that refrigerated dairy yogurt rang up $7.33 billion in sales and refrigerated drinkable yogurt sales hit more than $1.2 billion.
These figures reflected CAGR increases of 7.6% and 19.4%, respectively. Interestingly, even shelf-stable yogurt and yogurt drinks saw a strong rise, according to IRI: Data for the 52 weeks ending Sept. 4 revealed that sales of shelf-stable yogurt and yogurt drinks were up by nearly 50%, at $77 million, on a unit-sales increase of nearly 4%.
SPINS identified the best-selling refrigerated dairy yogurt flavors as Vanilla at No. 1, with sales rising 13.6% to $1.25 billion, followed by: Plain/Unflavored ($881 million in sales on a 4.8% increase), Strawberry ($775 million in sales, a 12.3% increase), berry blends ($412 million in sales, a 16.6% jump), and Peach, at $315 million in sales on an increase of 4.8%.
IRI also reported that other cultured dairy products experienced impressive growth in the same year period, with cottage cheese sales increasing more than 5% to $1.1 billion, cream cheese and cream cheese spreads sales jumping 8% to $2.3 billion, and sour cream marking $1.4 billion in sales due to an 8.4% increase.
After a down year in 2021, the ice cream (including sherbet) category heated up a bit, with growth of about 1% to edge closer to the $8 billion mark in sales for the year ending Sept. 4, according to IRI. Conversely, and in spite of the solid growth in the refrigerated channel, In terms of dollar sales, frozen yogurt experienced sales declines of 5.5% percent during the past year, dropping to $333 million, per IRI data.
While consumers might not be diving into the pints with unrestrained gusto, frozen novelties did quite well. Ice milk and other frozen dairy dessert product sales rose 8% during the past year to $312 million. The sherbet/sorbet/ices category saw double-digit growth at 10% over the previous year to $232 million. As a whole, the entire frozen novelties category climbed 9% to an impressive $7.5 billion, all for the year ending Sept. 4, according to IRI.
As with all food and beverage categories in a waning Pandemic world, consumers are continuing to seek healthier ice cream and frozen novelties. Sugar-free, keto, and protein-rich offerings are key innovations at the forefront of the frozen novelty category. Snacking behavior, too, has been a big driver of consumer behavior in frozen novelties, as reported to sister publication Dairy Foods by Ty Holden, assistant category growth manager of Tillamook County Creamery Association.
“There have been several ‘mini’ or ‘bite-sized’ launches in the novelties segment that take advantage of this trend, and I would expect that to continue in the future,” Holden says. “Snack-based products have the benefit of increased occasions and can be positioned as a better-for-you, portion-controlled indulgence.”
Commenting on the plant-based ice cream analog trend, Holden noted that while the biggest trend in scoopable ice cream over the past few years had been the proliferation of plant-based offerings, “we have really seen a pullback of those type of products and see consumers are returning to their dairy-based favorites.” Holden points out that he also expects to see brands “leaning into indulgence” and trying to “deliver new eating experiences with unique flavors and textures.”
David Feder, RDN, has been a food, nutrition, and health journalist for more than 30 years. A professional chef during the 1970s and 1980s, helping pioneer haute-health and fusion cuisines, in the 1990s he became a registered dietitian and completed research and coursework toward a Ph.D. in nutrition biochemistry while teaching food science and nutrition. He can be reached at email@example.com.
Editor’s Note: We wish to thank the editors of our sister publication, Dairy Foods for their generous contribution of material and information to this article. Access the full report on the State of the Dairy Industry.
Convenience and food safety concerns are triggering big growth in UHT (ultra-high temperature) pasteurized milk products. Recent disruptions in the transportation chain is likely to drive sales of UHT milk products even further.
Refrigerated whipped toppings generated dollar sales of $1.5 billion and more than 7% CAGR growth in the last fiscal year.
John Crawford, vice president of client insights-dairy for research group Information Resources Inc. (IRI) recently described the positive impact that clean-label, reduced-sugar, zero-added-sugar, and organic is having on products within the dairy industry. “Clean label (humanely raised, Non-GMO, etc.), low sugar, lactose-free, low sodium, pre [and] probiotic and immune defense claims are seeing strong growth across the Dairy15 outpacing total category growth,” he says. “Organic growth is much slower at 1.7%, with higher inflation impacting higher priced products. Organic is a 36% premium in price per unit across the Dairy15. The premium is higher in price per volume at 70%.” Products label organic, however, are eclipsing products without sugar. “Products labeled organic are experiencing 5.6% growth and $921.9 million in revenue,” he adds. “The top growing subcategory is RFG Yogurt drinkable with 15.6% growth and $109.6 million in total revenue.”
Butter makes things better
Although other dairy products have had their ups and downs (mostly up) for the past decade, butter and cheese remain “old reliables,” with neither seeing consumption declines over the past decade, according to the National Milk Producers Federation. Noting that the dairy industry is in constant evolution, from advances in science to innovations in sustainability, the “bring on the butter” refrain continues to resonate. From 2011-2021, USDA data reveal that the number of pounds of butter consumed per person continued to grow. Although gradually at first, from 1.6 pounds in 2011 to 1.7 pounds in 2016, the next half of a decade saw an increase to more than 2 pounds per person annually by 2021. According to SPINS, LLC, sales of refrigerated butter in for the 52 weeks ending Sept. 4 were nearly $3.8 billion, a 6.7% increase over 2021’s $3.5 billion.
While plant-based milk analogs keep carving away shares of dairy milk, other dairy analogs, such as dairy-free yogurt, ice cream, cottage cheese, and sour cream. Now, with new innovations from Daiya Foods, Inc. and Good Planet Foods, LLC; Miyoko’s Creamery, Inc.; and Life is Life, LLC’s Parmela Creamery dairy-free cheese is gaining at double-digit paces.
According to Research and Markets, Ltd., the global vegan cheese market size was expected to reach $4.4 billion with a compound annual growth rate (CAGR) of 13.1% during the next five years. Growth also is booming for the cultured dairy analogs, too. The vegan yogurt market size is expected to grow from more than $2.5 billion in 2022 to nearly $10 billion by the end of the decade, at a CAGR of more than 20%, according to Fortune Business Insights Pvt. Ltd.
The global market research group notes that the proliferating growth is owed to the rise in vegan culture and the plant-based trend, as well as an expanding population of persons with lactose sensitivity and intolerance. This means there’s plenty of business for pioneers such as Kite hill, Inc. as well as for start-ups like AYO Foods, LLC.
IRI’s Top 15 Dairy Categories- Milk
- Natural Cheese
- Ice Cream/Sherbet
- Frozen Novelties
- Butter/Butter Blends
- Processed Cheese
- Cream Cheese
- Refrigerated Dips
- Refrigerated Whipped Toppings
- Sour Cream
- Cottage Cheese
- Refrigerated Desserts
Information Resources, Inc., 2022