Dairy sales are up in the first couple of months of 2024, according to the International Dairy Deli Bakery Association (IDDBA), and there are several new buzzwords and trends contributing to growth in the category.
This is good news, considering overall dairy sales were floundering in the latter part of 2023.
Chad Galer, vice president of product innovation and food safety at Dairy Management Inc., a checkoff organization funded by American dairy farmers, said dairy now has the largest food aisle presence at retail with the largest growth, and this year things are very strong.
“People continue to be drawn to dairy due to its delicious taste, nutritional value, easy accessibility and versatility, making it a staple in diets despite economic challenges,” he said. “The U.S. Department of Agriculture reported an increase in dairy consumption, with Americans consuming 655 pounds of dairy products per person, demonstrating a resilient and growing love for dairy.”
Let’s face it, it would be difficult for most consumers to go through a day without including some dairy products in their diet. Whether it’s plant-based milk, Greek yogurt, specialty cheese, or creamer, dairy touches almost every daily eating occasion.
One significant factor is consumers’ focus on healthier eating habits. A recent Circana study indicated that 39% of consumers are prioritizing healthier food choices in 2024.
“We see consumers drawn to dairy because one of the main ingredients in our products is milk, a good source of nutrients,” said Elena Umanskaya, vice president of marketing for Lactalis Heritage Dairy. “Dairy aligns with this trend, offering key nutrients like protein and calcium.”
Gut health continues to be critical to the dairy category, in particular yogurt. In addition to that, supermarkets are seeing continued influence of added/high-protein functionality to satisfy high-protein diets, according to Rich Gillmore, vice president of center store for Encino, Calif.-based Gelson’s Markets.
“Regenerative agricultural practices is a big trend we are following in the dairy category,” he said. “Several brands are producing claims around this, and some have certifications now. This applies to traditional dairy as well as plant-based options.”
Becoming ‘whole’ again
A number of grocers agreed that cottage cheese is the most significant trend over the last few months, with sales up by double digits over the same time last year. With a high protein content, it reflects consumer preference for wholesome, nourishing dairy products.
Data from a recent Circana study revealed that dairy products with higher protein content are growing by 8% year over year.
“There have been some high visibility social media influences toting the benefits of cottage cheese, and it is really surging,” Gillmore said. “This is interesting, considering I would have described it as a dying category a few years ago. Some cleaner, organic, non-GMO brands are doing exceptionally well, but the old-fashioned brands are also resonating.”
Another rising trend is an increased interest in whole fat milk with several studies debunking negative narratives surrounding full-fat milk and more consumers choosing full-fat dairy over low-fat alternatives.
Whole milk sales in the U.S. rose by 8 million gallons in 2023, now making up more than 45% of all milk, and the numbers continue to be strong in 2024, according to IDDBA. Legislation passed by the House of Representatives also looks to return whole milk into American school cafeterias in 2024, following a 13-year ban.
Plus, milk production is expected to increase in 2024, leading to lower prices at the supermarket, so sales are expected to rise in the months ahead. In fact, the USDA projects prices to decrease to under $20 per hundredweight, its lowest in several years.
Whipped cream is another dairy product doing well, and that’s continuing over from 2023, when it registered one of the top year-over-year sales increases in the category.
Telling a good story
When it comes to marketing dairy in a 2024 world, emphasizing the stories behind the brands is critical to success.
“Signage showing the founder or farmer in the field with their herd or harvesting their crop seems to resonate with a public looking for a connection,” Gillmore said.
Many brands are doing their part by focusing on standing out with revitalized branding, sustainable packaging, and new product rollouts to meet consumer demands.
Umanskaya said the key to marketing dairy products in this economic environment is being attuned to what consumers put in their shopping carts and providing them with options.
“For example, consumers are looking for dairy products that are high in protein or are lactose-free or low in sugar,” she said, explaining stores should be highlighting these products in their marketing efforts.
Finding balance
Consumers are increasingly seeking non-dairy options, leading dairy manufacturers to introduce plant-based alternatives, including cheese.
Jason Potter, senior vice president and head of category leadership at Advantage Solution, said consumers are also showing more interest in dairy products fortified with functional ingredients like probiotics, vitamins, and minerals for added health benefits.
“Consumers purchase dairy alternative products because they enjoy the products’ flavor, they perceive these products as healthier than dairy, they believe alternative products are a good source of protein, and because of lactose intolerance/dairy allergy reasons,” he said.
With so many alt-dairy items commanding shelf-space, supermarkets are finding it more challenging than ever to determine what dairy products to carry.
“Over the past few years, this really has been a moving target,” Gillmore said. “Over a third of our fluid milk sales are plant-based, so we recently did resets to distribute the shelf space more equitably. We must balance the innovation around plant-based with the customer demand for traditional dairy products, including regenerative and organic offerings.