Dive Brief:
- Refrigerated dairy has grown into the largest category in retail during the last year with $76 billion in sales, according to a report released last week by agricultural research company CoBank.
- Butter, cheese and yogurt items have driven the segment to a growth rate of 15.4% over the past three years, worth $10.1 billion, the report said.
- Snackable dairy options continue to surge in popularity. Cheese snacks are poised to grow at a compound annual growth rate of 6.5% through 2034, and they are projected to hit roughly $75.1 billion in sales this year, CoBank said.
Dive Insight:
While many consumers are distancing themselves from animal-based products, dairy is gaining popularity as food tastes evolve. This makes the category more lucrative than ever.
Bill Roberts, CoBank’s senior economist for food and beverage, said in the report that an aversion to processed foods has benefited dairy.
“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,” Roberts said. “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.”
But the growth in the segment is not just relegated to name brands. Private label butter, cheese and yogurt also have seen a bump, with store-branded items outpacing premium brands in 10 out of 15 dairy categories, according to Circana data cited by CoBank.
Corey Geiger, CoBank’s lead dairy economist, said processors are using a wide array of applications for dairy products to their advantage.
“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,” Geiger said.
Cheese remains a key part of the dairy category, CoBank said, with its consumption rising 46% over the last 20 years. Butter has seen 43% growth during the last quarter-century, while yogurt rose 142% in that period driven by the popularity of Greek yogurt and drinkable snack options, the report said. Growth in these categories has helped offset a decline in fluid milk consumption.
Dairy producers have inundated the category with new product lines.
Yogurt giant Chobani debuted Creations, a line of dessert-inspired Greek yogurt offerings, in 2023. Cheese maker Sargento has grown to $2 billion in annual sales, with its biggest success in recent years coming through its Balanced Breaks snack products that mix the dairy staple with nuts, banana chips, Ritz crackers and Chips Ahoy!, among other items, into a portable offering.
As companies innovate, they could find further success in using dairy in novel ways. These may include sweet and spicy cheese products. Yogurt also can be used as a protein-boosting ingredient in food and beverage items. Frozen pizza brand Yough, which launched last year, uses Greek yogurt as its star ingredient, with 32 grams of protein per pie.
