Flavored milk is one of the shining stars of the dairy industry. It’s innovative, it has lots of added value and therefore it yields higher margins, and when packaged for single serve it does very well in a variety of channels including convenience stores, foodservice and vending.

Not surprisingly, the category has shown some outstanding growth at various times throughout the last several years. But in the past couple of years, flavored milk sales have hit something of a plateau.

But a look at the most recent figures from IRI indicates that the category may be coming off that plateau. Unit sales were receding by more than 5% in each quarterly period in 2004. But more recently, units slipped just 2.4% in the first quarter this year. And dollar sales are growing again.

Keep in mind that these are not usually commodity products, and increases in dollar sales are not just reflective of increased ingredient costs. In some cases increased dollar sales could be coming from an increase in the ratio of value-added products in the marketplace. Keep in mind too that these IRI figures represent food drugstore, and mass merchandiser stores other than Wal Mart. But they do not include convenience and food service sales where this category is strong.

Elsewhere in milk, skim and lowfat milk held steady in terms of units sold for the 52 weeks leading up to May 15—a good sign for this normally sluggish category. And this is while dollar sales were up 8.6%. Looking at the top 10 brands, half showed growth by both dollar and unit measures, with the biggest gainer being Horizon Organic.

Whole milk, on the other hand, continues to lose ground. This despite the general perception that consumers are less concerned about fat in their diet than they once were. During the most recent six quarters, unit sales were consistently off.

Finally, a look at the top 10 brands of flavored milk reflects some of the changes in strategies among the top players, and most of these brands are sold by either Dean Foods, National Dairy Holdings or HP Hood.

Meanwhile, private label sales are on the up, and the Prairie Farms brand continues to grow at a substantial pace.