Innovation has helped consumers realize that dairy products can be more than just a commodity.
By Carol Radice
Products such as cheese, milk, yogurt and eggs, that purport to enhance brain function, support heart health, and aid with digestion amongt their benefits, continue to draw consumer interest.
Lured by these products that offer nutritional features beyond their conventional counterparts, consumers are returning to the better-for-you dairy category in near pre-recession numbers. Industry observers are encouraged, saying that the number of new customers entering the category is a true sign the category is poised for continued growth.
“Two years ago the category took a hit, but thanks to innovation, consumers have returned,” says Dustin Finkel, brand manager for Horizon Organic, which is manufactured by Broomfield, Colo.-based WhiteWave Foods. He adds that milk sales started to rebound in 2010 and brands such as Horizon saw double-digit growth. “This year we are seeing a continuation of that as sales continue to climb.”
While Finkel says the company is experiencing growth across all of its product lines, he points out that two key areas in particular, their DHA and single-serve portfolios, have been instrumental in driving growth. “Consumers are continually looking for added nutrition in products. For instance, as babies transition from formula with DHA to milk, mom is looking for ways to continue that benefit,” he says.
Moms are also looking to extend the nutritional value of milk outside the home, seeking alternatives beyond juice. Finkel says single-serve offerings fill that need. “We saw explosive growth during the back-to-school period last year and our goal is to continue that success by helping mom see that single-serve is ideal as an after school snack, at kid’s sports practices or any time they are on the go,” adds Finkel. “To date, retailers have been excited about bringing a portable, healthy solution to their juice aisle or dairy case.”
Despite the flat sales of branded milk last year, Eric Snowdeal, milk and cream product manager for Organic Valley, based in La Farge, Wis., sees strong signs that the category is rebounding. He says where consumers’ foods come from is important, as well as the story behind the product. At the same time they seek brands that can offer them solutions.
“A great example of that is the popularity of omega-3 supplemented milks, which have been driving growth in the fluid dairy category for the past couple of years and continue to gain momentum as consumers look to add more omega-3s to their diet,” says Snowdeal. “People feel good about their purchases when they realize not only are they buying a product that is healthier for them, it’s healthier for the environment.” Organic Valley launched its version of the drink in 2010.
Tim White, managing director for Atlanta-based CFM Beverages, maker of Mega Moo Vitamin Milk, says that portability, in addition to health, are key drivers in the better-for-you dairy category. Mega Moo Milk is an aseptically packaged, vitamin fortified flavored milk that contains no artificial flavors or sweeteners and is RBST free. It is available in chocolate, strawberry and vanilla and is shelf-stable for 250 days.
“Our passion is making sure children have an alternative, better-for-you, natural beverage choice,” says White, adding that perfecting the taste was something the company took very seriously. The product spent several years in R&D before officials were satisfied that they created a drink that tasted good and was healthy. Using 1% milk, it is low in fat, sugar and calories. While the product was designed to appeal to children, White says increasingly parents are buying the drink for themselves as well.
Many observers attribute the category’s growth to a more educated consumer. As consumers become more knowledgeable, observers say they are expanding their range of organic purchases beyond vegetables, to other segments such as meat and dairy. The definition of what constitutes healthy is also broadening and people are seeking out local and environmentally conscious products at a rapid pace. More attractive pricing is also playing a role in growing the category.
“Conventional prices have risen so dramatically that the consumer who may have been on the fence is increasingly being enticed to buy natural and/or organic dairy,” says Jay Totman sales manger for West Grove, Pa.-based Natural Dairy Products, makers of the Natural by Nature brand. Totman adds that last year was one of the best on record for the company. “While there are a number of reasons we did well, it was mainly because of the way we have remained true to our mission to provide our customers with niche, organic, dairy products from grass fed cows,” he says.
Product recalls have also raised consumer awareness, leading consumers to search for safer options for their families. For example, David Will, general manager of Chino Valley Ranchers, based in Arcadia, Calif., says the massive egg recall in late 2010, has been a boon for his company. “That recall really shook a lot of consumers up and highlighted the safety issues the conventional egg industry faces,” says Will. “This has kept us beyond busy this year.”
Greek to me
During the past few years, interest in Greek yogurt has skyrocketed. Nicki Briggs, director of communications for Norwich, N.Y.-based Agro Farma, maker of Chobani Greek Yogurt, says the reason is simple: consumers have learned to expect more from their yogurt. “For a long time yogurt was viewed as something one ate because it was good for you, but a sacrifice in terms of taste and texture,” says Briggs. With the introduction of Greek yogurt, she says people now have a yogurt that is good for them and tastes decadently rich. “When people enjoy a product they eat more of it,” she adds.
Also factoring into the popularity of Greek yogurt is the way it is produced. Olympus Dairy yogurt is produced in Greece, using a family recipe that is generations old, says Nickolas Nicolaou, sales and operations manager for the Astoria, N.Y.-based company. It takes four pounds of milk to make one pound of yogurt, says Nicolaou, who adds that when whey is strained from the milk it creates a thick, creamy nutritious product with higher protein content. “Consumers are responding to the fact that Greek yogurt is a healthier product that tastes better,” he says. “The same effect can be achieved by adding thickeners, but the results are inferior.”
Aside from health, versatility is one of the top qualities Greek yogurt offers. Keeping that message top of mind with consumers has been a focal point at Agro Farma. The company’s website features a multitude of recipes that include yogurt—from oven fried chicken to key lime pie. “By providing consumers with delicious recipes that are easy to follow, our goal is to help them understand yogurt can be incorporated into almost any dish,” says Briggs. She points out that yogurt makes a great substitute for butter, sour cream, heavy cream and oil, which means consumers can cut a lot of fat and saturated fat from their diet, while imparting a great texture and depth to a recipe without sacrificing taste.
Better-for-you non-dairy products are also faring better than in past years. In light of the number of people now drinking organic coffee, Organic Valley recently introduced the first certified Organic Soy Creamer in original and French vanilla flavors. “Our Soy Creamers are free of artificial colors, flavors, preservatives, high fructose corn syrup, and hydrogenated oils,” says Snowdeal, adding that the product also features fair trade organic vanilla and cane sugar. “As is the case with all of our soy milks, every carton is made with all-American soybeans which can be traced back to our Organic Valley family farms.”
According to Jennifer Hartley, director of marketing for WhiteWave’s Silk brand, overall plant-based milk alternatives were up 13% in 2010. Hartley says that many Silk users are lactose intolerant, providing a steady consumer base regardless of the economy. However there are challenges to growing the segment. Hartley says those challenges involve overcoming consumers’ misperceptions of taste while helping them understand alternative milk products such as soy can be used the same way conventional milk is used.
“Consumers perceive soy milk as more nutritious than conventional milk, but are concerned it will not taste good or appeal to the whole family,” says Hartley. As the average household has three varieties of dairy and non-dairy milk in their refrigerator, the brand recently set out to show consumers through its Dairy Challenge promotion that they can use Silk the same way they would use cow’s milk. Additionally, two of Silk’s biggest breakout products have been the recently introduced almond milk and coconut milk. “Based on the number of new households this has added to the category, this says to us that expanding beyond soy is something consumers want and need,” she says. With this growth and innovation, Hartley says it may be time for retailers to examine if they are allotting enough space to the category.
Observers say packaging and placement can also be instrumental in increasing trial and driving repeat business. For example, the Mego Moo Vitamin Milk package is designed to appeal to both moms and kids. Making it eco-friendly was also important. “Not only does the packaging provide shelf-stability, which allows us to lower our carbon footprint, reduce energy and save on fuel use, it is recyclable,” says White. He suggests their milk sells best in the juice, cereal or dairy aisle, next to other healthy single-serve drink options. “Since it doesn’t need to be refrigerated the options for placement are really limitless,” he adds. Down the road the company may explore adding additional sizes if consumer demand is there, but right now the smaller size offers maximum convenience and portability.
Finessing assortment is another key to increasing penetration, says Natural Dairy Products’ Totman, adding that duplicity is not always a retailer’s best bet. “Where we see growth opportunity is in niche products other companies are not producing such as our whipped cream, ricotta cheese and whipped butter in tubs,” he says. “For a company our size it’s not about volume, but doing the right thing for our farmers and the land.”
Horizon has expanded its DHA line of milk to include a fat-free option and DHA has also been added to Horizon’s chocolate milk. While some companies use fish oil as their DHA source, Horizon prefers to use a plant-based source. In coming months Horizon will be introducing a brick cream cheese and flavored all-natural organic half and half. “We are continually seeking out products that can meet the needs of moms and partner with her to provide a better value,” says Finkel.
In July Agro Farma will be adding new flavors to the Chobani Champions line. “We hear from parents all the time telling us how much their kids—who would never touch yogurt—love ours,” says Briggs. “Other parents tell us they never offered their kids yogurt because of its nutritional profile until they discovered Chobani.”
Cultured dairy products such as kefir have also been gaining in popularity thanks to inherent probiotics qualities that are said to aide with digestion. “While taste is always a concern, we’re also seeing a strong move toward convenience and health benefits,” says Julie Smolyansky, CEO of Lifeway Foods, based in Morton Grove, Ill. The company recently introduced BioKefir, a 3.5-ounce shot concept, which according to Smolyansky combines great taste, a convenient size, and has twice the probiotic activity of their conventional line of kefir. Later this year Lifeway will launch a frozen kefir dessert containing 10 live and active cultures that is 99% lactose-free, gluten-free and high in protein and calcium. Smolyansky says the dessert will have the same tart and tangy flavor as Lifeway Kefir.
Earlier this year Chino Valley Ranchers introduced Soy Free Organic Omega-3 eggs. According to Will, the free-range birds are fed a specially formulated diet, free from soy that includes organic flaxseed. Calling it a niche of a niche, he says the eggs are ideal for people with soy allergies who have not been able to enjoy organic eggs. “The top question consumers were asking us was if our chickens were fed soy so it seemed like it was time to introduce a product they could safely eat,” says Will.