DENVER, July 17, 2024 (GLOBE NEWSWIRE) — U.S. consumers are drinking less milk with each passing year, but overall dairy sales are on a multiyear winning streak. Cheese, butter and yogurt are fueling category growth, along with new dairy-based products designed to capitalize on convenience, health and snacking trends.
Data from market research firm Circana shows the refrigerated dairy aisle has been the largest category in retail grocery over the last year with $76 billion in sales. Over the last three years, dairy retail sales have notched a growth rate of 15.4% or $10.1 billion.
According to a new report from CoBank’s Knowledge Exchange, the outlook for retail dairy sales remains strong with additional room for growth as consumer preferences and purchasing behaviors evolve. Cheese and butter have even more upside potential, and dairy products tailored to meet consumers’ growing desires 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 that to their advantage,” said Corey Geiger, lead dairy economist with CoBank. “The healthy snacking category is a growing megatrend that dairy products can capitalize on with a host of conveniently packaged solutions from low-fat cheeses and specialty yogurts to functional dairy drinks.”
Cheese continues to anchor the dairy category, with annual sales climbing. Per capita cheese consumption in the U.S. has doubled over the last 20 years, reaching 40 pounds in 2022. That’s still well short of per capita consumption in many European countries, indicating there is ample room for growth. Innovation in the cheese sector is being driven by expanded flavor varieties to reach more consumers as U.S. demographics shift. Hispanic-style cheese has been the fastest growing category over the last several years.
Butter has enjoyed a renaissance in the U.S. with per capita consumption climbing 43% over the last 25 years. While American butter brands have traditionally featured 80% butterfat, European-style butter with 83% butterfat has steadily gained global market share. U.S. consumers have been stepping up their purchases of butter with 83% butterfat and domestic manufacturers have been retooling production lines to better serve the U.S. market.
Yogurt has moved from being a morning meal to becoming an anytime snack or healthy dessert choice. Per capita consumption in the U.S. has grown 142% over 25 years, with Greek yogurt pacing category growth. Yogurt brands are also capturing new sales as consumers step-up use of weight-loss drugs. Danone attributes a jump in demand for its high-protein, low-calorie yogurts, at least in part, to consumers under treatment with those drugs or just trying to manage their weight or wellbeing.
Most U.S. consumers view dairy products as food staples, which has fueled sales of private label products. Private label sales are outpacing premium brands in 10 of the 15 dairy categories tracked by Circana. Store brand options making considerable inroads include yogurt, cream cheese and cream.
CoBank food and beverage economist Billy Roberts said consumer concerns around highly processed foods and preference for clean labels are areas where traditional dairy products can resonate, particularly with younger demographic groups.
“One of the things we’ve learned from following the plant-based food sector is that long ingredient legends are an obstacle for many younger, health-conscious consumers,” said Roberts. “Dairy products are generally perceived as having clean labels with few ingredients. Dairy brands can capitalize on that with the right product mix and marketing.”
Watch a video synopsis and read the report, Dairy Products Have More Growth Potential.
About CoBank
CoBank is a cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 77,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.
