pportunities continue to abound for dairy products at home and abroad. Despite stagnant and slipping fluid sales, consumers still are flocking to their favorite dairy foods, whether for health concerns, indulgence or comfort.

Nutrition and obesity are issues that continue to dominate the food industry scene. And while animal rights extremists try to undermine efforts to promote dairy as beneficial to health and weight management, scientific evidence continues to mount that milk presents a treasure trove of benefits to the human body.

The low-carb craze came and went, but from its ashes the best of the sugar-free and NSA products remain to serve a growing demographic that seeks to reduce or eliminate sugar from their diets. More are coming to recognize that calories count, and those looking to reduce their intake will find new attention paid to fat content.

In the frozen arena, Dreyer’s Slow Churned Light has been a wild success; the company predicts sales will soon overtake that of its regular ice creams. It wasn’t long before competitors also began to introduce products made with similar technology that promises the taste of superpremium ice cream but with a fraction of the fat.

Among cultured products, Dannon introduced a line of yogurts with a boosted fiber content. Meanwhile, Yoplait added plant sterols — shown to help lower cholesterol — to a range of its products, building upon its support of research to unlock dairy calcium’s key to weight loss, efforts the rest of the industry soon followed. The yogurt segment remains strong overall, as consumers gradually become more educated to the benefits of probiotics as delivered by tasty dairy foods.

Cheese continues to be a favorite, with growing success owed in part to a lack of trans fats and inclusion on the menus of popular reduced-carbohydrate/high-protein diet plans. Revised school nutritional guidelines have opened up fresh opportunities for improving school milk programs and raising new generations of enthusiastic milk drinkers. And the demand for organic dairy products continues to grow by leaps and bounds.

In all, nearly a thousand new SKUs of dairy foods across all product categories have been introduced so far this year, according to Productscan Online.

But as processors worked to develop new products, lawmakers fought to gain more access to global markets so as to share these innovations with the rest of the world. Demand for dairy products — especially those with health benefits — continues to grow abroad, and the U.S. Free Trade Agreement with the Dominican Republic and Central America (DR-CAFTA) is another foot in the door for the U.S. dairy industry and the U.S. agricultural sector as a whole.

Changing Dairy Product Sales*
Cheese	0.7%
Yogurt	10.7
Fat-free milk	-3.9
Buttermilk	-6.0
Reduced fat/lowfat milk	-1.2
Cottage cheese	3.8
Whole milk	-1.7
Sour cream	11.0
Flavored milk	2.7
Eggnog	4.5
Creams	14.5
Ice Cream	5.2
*Percent change in per capita sales ofselected dairy products, 2002-03. SOURCE: Dairy Facts 2004, International Dairy Foods Association.

Not only will the trade agreement tear down barriers to trade in these markets, it is expected to help lower the cost of doing business at home by allowing less expensive sugar onto our shores. This should benefit processors who purchase ingredients to manufacture the dairy food products that are in the highest demand: frozen desserts, yogurt and flavored milk.

“The inclusion of sugar in the DR-CAFTA agreement is a significant step forward in allowing U.S. dairy processors access to more competitively priced world sugar,” says Connie Tipton, president and chief executive officer of the International Dairy Foods Association. “If companies were able to purchase sugar at world prices, the dairy industry could save as much as $110 million annually.”  Under the full terms of the agreement, U.S. companies will be able to import 109,000 metric tons of sugar from the DR-CAFTA nations within the first year; this amount will grow to about 153,000 metric tons annually over 15 years.

With that, Dairy Field offers its annual State of the Industry report, with an in-depth look at each category, focusing on brand leaders and product trends. We also take a look at the global market, ingredients and the deli scene.