The cultured products category continues to rise, thanks to concurrent market trends.

Big things are fermenting in the cultured dairy product category. And the starter cultures are ongoing consumer demand for health and nutrition, indulgent and intense flavors and convenient formats.

The analogy between the product itself and the state of the category is an apt one, given that it has taken time and a certain convergence of factors to spur growth in many cultured subcategories. While the yogurt segment burst forth in a remarkable way during the 1990s, other sectors are starting to experience a renaissance of sorts, from stalwarts like cottage cheese to emerging ethnic favorites like kefir.

The reasons behind the expansion are varied, but all signs point to consumers’ seemingly insatiable appetite for new and intriguing products as well as for foods and beverages they deem better for their overall health. Cultured products fit those bills, in that they provide sensory attributes like rich taste, smooth texture and creamy mouthfeel along with functional benefits like ingredient compatibility, extended shelf life and high levels of calcium, protein, probiotics and fiber. Cultured products are also versatile, commonly used in ingredients or consumed individually for a quick meal or snack at home or on the go.

Research bears out the current dynamic of the category. According to the latest Dairy Facts published by the International Dairy Foods Association (IDFA), Washington, D.C., sales of most cultured dairy products increased in 2005 (the last year tracked), continuing the trend that began a decade ago. Within the category, sour cream and dips experienced record movement, reaching more than 1.3 billion pounds in sales by volume.

Meanwhile, according to Chicago-based Information Resources Inc. (IRI), sales of yogurt, yogurt drinks, sour cream, kefir and another combined segment spanning flavored milk, eggnog and buttermilk all experienced increases in the past year. Some brands in each category jumped 50 to 90 percent.

Yogurt comprises the largest part of the cultured products market in the United States. According to IRI, sales of yogurt and yogurt drinks reached $3.2 billion in the last 12 months, a nearly 7 percent increase over the previous time period.

While sales growth has stabilized or even slowed in some areas, there is still a remarkable difference in the yogurt selections of 2007 versus 1997. “The category continues to outperform overall food, and we think yogurt has tremendous upside potential,” says Tim Kenny, senior vice president of sales and marketing for Londonderry, N.H.-based organic yogurt maker Stonyfield Farm, who cites European consumption trends as a model.

Within yogurt, the trend sparking the most buzz recently has been the emphasis on the health attributes of yogurt, namely probiotics — the active cultures, also known as “good” bacteria, found in cultured products. Live and active cultures, which help convert sugars and other carbohydrates into lactic acid, have been shown to improve digestive health and aid nutrient bioavailability of B vitamins, calcium, iron, zinc, copper magnesium and phosphorus, among other benefits.

Alan Hiebert, an analyst in the education department at the Madison, Wis.- based International Dairy Deli Bakery Association (IDDBA), says promoting the attributes of live cultures has been a boon to many yogurt manufacturers. “In the yogurt category, I think the trend is toward drawing attention to the naturally-occurring health benefits of yogurt and toward fortification,” he says. “On the additive side, we’ve seen yogurt products with cultures that can speed digestion, which can lead to weight loss; yogurts with cultures designed to boost the immune system; yogurts designed to lower cholesterol; and yogurts with added omega-3 fatty acids and with added grain for more fiber.”

The Dannon Co., White Plains, N.Y., has focused intently on this area. “Dannon has embarked on a mission to bring Americans foods that provide benefits beyond basic nutrition in addition to great taste,” says Michael Neuwirth, senior director of public relations. “These ‘high-health’ products have clinically-proven functional benefits beyond that of traditional yogurt.”

As part of that philosophy-driven strategy, Dannon has adapted some global innovations of its France-based parent company, Group Danone, including the development of a cultured fresh dairy drink called DanActive™, made with the Lactobacillus casei culture. In 2006, Dannon also rolled out the probiotic yogurt Activia™ in stores around the country. “Activia is clinically proven to help naturally regulate your digestive system by helping with slow intestinal transit,” Neuwrith explains, adding that during its first year of availability, Activia generated more than $130 million in sales. A light version was released earlier this year.

This year, Dannon has expanded on that probiotic groundwork with an expanded national launch of DanActive and the reformulation of its popular Danimals smoothies for kids. The drinkable children-oriented yogurts now include Lactobacillus GG, a culture that has been clinically proven to have positive effects on gastrointestinal function, the function of the immune system and maintenance of oral health.

Neuwirth says the high health sector has just begun to be tapped. “We have a lot we can learn about retail merchandising from other parts of the world with more developed yogurt markets,” he says. “One example of this is the categorization of cultured dairy products by their benefit — whether it be ‘regularity,’ ‘immunity,’ ‘cardio-vascular’ — rather than by product format.  It is very interesting to imagine what could be possible here in the future.”

Further backing up its commitment to the category, Dannon is expanding its U.S. manufacturing facilities in a bid to double its sales over the next five years.

Stonyfield Farm (85 percent owned by Groupe Danone) has also brought to the fore many yogurts with functional-food status. “The fastest growth recently has come from product or segments that have a promise of some added health assurance beyond what yogurt normally provides, and that includes organic as well as any enhanced probiotics,” Kenny says. “When you combine organic and enhanced probiotics, those now account for about 12 percent of the category.”

Although Stonyfield Farm has not created products with specific strains for purposes like digestive health or immunity, Kenny says, its yogurts feature a “cocktail” of live and active cultures and the prebiotic fiber inulin, which aids the body’s use of probiotics and also helps better absorb nutrients.

Stonyfield Farm has been busy on the R&D front, too. One of its latest products is a new 2-a-Day yogurt that provides twice the calcium of other leading yogurts. “Most 6-ounce yogurts provide roughly 20 percent of daily calcium. Our regular yogurt is a little higher because we don’t use fillers, but nothing is as high as 50 percent, which is what you get with 2-a Day,” Kenny explains.

Another new product from the nation’s leading organic yogurt company is geared toward younger consumers. Stonyfield Farms’ Shift yogurt-based beverage was created to make a dent in the thriving energy drink category. “Consumers have told us that energy drinks are disappointing because they are basically water pumped with caffeine,” Kenny says. “They are looking for a food that could provide energy benefit, but that have real food value.”

Other yogurt manufacturers have joined the culture club, so to speak. Dallas-based Dean Foods, for example, reports that its Mountain High Original Style Plain is the best-selling multi-serve yogurt in the western United States, a product that features five live and active cultures.

Meanwhile, although there was no official announcement as of press time, category leader Yoplait, from Minneapolis-based General Mills, may have something in the probiotic pipeline. Yoplait associate marketing manager Derek Herbst acknowledges burgeoning consumer interest in live and active cultures and probiotics, and reports that some new products would be coming soon. “By the end of May, we’ll probably get some indication of the thing we will bring to market,” Herbst says.

The focus on probiotics isn’t limited to cup or drinkable yogurt products. TCBY, the Salt Lake City-based chain of frozen yogurt retail stores, recently celebrated the 20th anniversary of its White Chocolate Mousse flavor by touting its inclusion of seven live and active cultures.

While much of the news in the yogurt segment revolves around health and wellness, flavor has continued to be a marked trend, with a continued expansion into bolder, more intense and sometimes indulgent flavors.

The Yoplait brand, for example, now includes three new flavors of its mousse-like Whips!® line. Dulce de Leche, Creamy Latte and Chocolate Mint are follow-ups to last year’s debut of Chocolate Whips. “It’s permissible indulgence, from the consumer aspect,” Herbst says. “One of the things we see with indulgence in general, with our Chocolate Whips, is that people are definitely looking to be able to have indulgence but it doesn’t have to cost them a whole lot in terms of calories or fat.”

Indeed, bolder and more dessert-inspired flavors are cropping up among many brands and many formats of yogurts. LightFull Foods Inc., San Francisco, recently reformulated its smoothie line to include flavors like Chocolate Satisfaction, Café Latte and Mango Oasis, among others, all formulated to create a feeling of fullness, or satiety.

Flavors are also a draw for the still-booming youth part of the yogurt segment. While strawberry, banana and vanilla are best-sellers, some brands are experimenting with bolder varieties, like Dannon’s Danimals Xtreme in Smashin’ Passionfruit and Banana Guava Cliffhanger geared for older children, and Yoplait’s Go-Gurt® in Crazy Berry Bolt and Extreme Red Rush, among other flavors.

Another hallmark of the youth yogurt market is the ongoing splintering within it. Stonyfield Farm, for example, continues to score well with its YoBaby line for of whole milk yogurt for babies and toddlers, while Yoplait has aimed for young children with its Yoplait Kids, omega 3-enhanced yogurts sold in colorful cups in flavors like strawberry and strawberry banana with marketing tie-ins to kids’ television programs like “Blue’s Clues” and “Dora the Explorer.”

Although yogurt has taken much of the spotlight in the cultured products category for the better part of a decade, other subcategories are showing signs of vitalization.

Sales of cottage cheese are up, to the tune of 771 million pounds a year sold, according to IDFA.  In that segment, manufacturers are starting to follow the lead of the health-oriented yogurt makers.

One influential example is Northfield, Ill.-based Kraft Foods, Heeding consumer feedback about functional foods, Kraft recently introduced LiveActive Cottage Cheese for Digestive Health, sold under its Breakstone’s and Knudsen brands. This cottage cheese has been enhanced with prebiotic fiber to help consumers boost fiber intake and naturally regulate digestive systems. “Consumers have indicated interest in digestive health products — more than 70 percent of Americans are more likely to try a new product offering a digestive health benefit,” explains John Lazowski, senior director of marketing, cultured.

Lazowski says the Breakstone’s and Knudsen brands are driving innovation in other ways. “They are the only national brands available in single-serving packaging, with four-packs of individual 4-ounce servings,” he says. Cottage Doubles are also convenience oriented, featuring a single-serving, two-compartment cup that pairs cottage cheese with a consumer’s favorite fruit topping.

Lazowksi says cottage cheese is becoming more relevant to consumers. “We look at our cottage cheese products in a broader category we call healthy dairy snacking,” he says. “We feel there is an opportunity to grow demand for cottage cheese by appealing to consumers who enjoy yogurt.”

Dean Foods, meantime, is also going the better-is-better route. In late March, the company began offering a version of probiotic cottage cheese made with Lactobacillus acidophilus, Bifidobacterium and Lactobacillus casei, sold under its Dean’s, Land O’Lakes and Country Fresh brands. Further, the dairy giant recently added New York-based cottage cheese maker Friendship Dairies to its portfolio.

In addition to improving the nutrient profile of cottage cheese, dairy manufacturers also are zeroing in on taste. Cabot Creamery, Montpelier, Vt., launched a new technology for cottage cheese production using a horizontal cottage cheese closed-vat system to improve consistency and texture. Smith Dairy, Orrville, Ohio, also has worked to improve the quality of its cottage cheese through a slow-cooked process and recently introduced new flavors, like Pineapple Cottage Cheese sold in a bright orange container.

And for another hint that this category is the new place to be, Dallas-based sour cream stalwart Daisy has launched its own line of cottage cheese.

Cream cheese is another example of a mature segment that reflects consumer trends for flavor and convenience. Along with its signature brick cream cheese, Kraft’s Philadelphia brand includes flavored cream cheeses ready for spreading like Cream Swirls and Jammin’ Swirls, and different formats like soft cream cheese, whipped cream cheese and, for the convenience-driven crowd, Ready to Eat cheesecake filling.

Smaller and regional cream cheese companies are also mixing things up a bit, sometimes literally. Franklin Foods Inc. Enosburg Falls, Vt., recently added a new Yogurt & Cream Cheese product to its Hahn’s line of cream cheese, made with both cream cheese and yogurt for a smooth texture and reduced-fat profile.

Elsewhere in cultured products, sales of sour cream are up, to the yearly tune of nearly $7 million in sales, according to IRI, and 1.3 million pounds in volume, according to IDFA. “Sour cream as a category is viewed by many consumers as more of an indulgence, but we’ve found they’re incorporating more light sour cream as a healthier alternative,” Lazowski says. “Also, a growing Hispanic population may help spur more growth in sour cream. Hispanic consumers often use sour cream at least once a day in traditional dishes such as tacos, tostadas, enchilada, fajitas, soups and layered dips.”

In the companion segment to sour cream, sour-cream based dips, there has been some new product presence as well. Smith Dairy, for example, offers popular varieties like French Onion, but also a newer Lite Zesty French Onion dip. Likewise, Dean Foods has complemented its French Onion dip with no-fat and light versions as well as a flavorful French Onion with Bacon.

Another subcategory showing consistent growth is kefir, a cultured, enzyme-rich drink replete with good microorganisms for health and nutrition that was first popular in mainstream Russia. Once relegated to small corners of health food stores and European markets in the United States, kefir can now be found in many supermarkets. Brands like subcategory leader Lifeway Foods Inc., Morton Grove, Ill., have helped spur this segment’s growth, with products like organic, low-fat and kid-oriented varieties, in a host of flavor profiles and user-friendly, colorful packaging.

Some yogurt makers offer kefir as well, like the Nancy’s Cultured Dairy and Soy line from Eugene, Ore.-based Springfield Creamery, which has made kefir for more than 30 years and recently added a new low-fat, fully organic version.