For most consumers, the choice between butter and margarine has typically revolved around health concerns. Fear of fat gave butter a bad reputation during the 1980s and early 1990s, as Americans became convinced that counting fat grams held the key to their health and weight woes.

As the new millennium approached, however, news of the unhealthy properties of margarine and other butter substitutes shook those consumers to the core. Meanwhile, a new class of alternatives arrived in the form of products like Smart Beat, Smart Balance and Benecol. But these spreads came with their own set of usability problems, particularly when it came to cooking or baking.

The verdict is still out as to who will eventually win the war for consumer preference. In a battle that’s shaping up to be as close as the upcoming presidential election, butter and margarine are in a virtual dead heat.

According to data from Chicago-based Informa­tion Re­sources Inc. (IRI), dollar sales of refrigerated butter in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) rose 1.7 percent during the 52-week period ending May 16, 2004. Similarly, sales of margarine, spreads and butter blends fell 1.1 percent in dollars and 5.9 percent in units. While these figures are surely nothing to write home about, processors are confident that overriding health concerns will convince consumers to choose taste – and ultimately butter.

 “In many consumers’ minds, butter is a better alternative because it’s an all-natural product that doesn’t have trans fats or hydrogenated oils,” says Debbie Boyce, director of foodservice and retail sales, Odell’s, Reno, Nev.  “As there’s more awareness of the health impact of those types of alternatives, consumers aren’t as ready to move away from butter.”

As more consumers embrace today’s trendy low-carb diets, they find themselves granted permission to indulge in butter and other high-fat foods. Unfortunately, many of butter’s most popular carriers, such as bread and baked potatoes, are frowned upon. The result is “a wash,” says Tom Hickey, marketing manager, Level Valley Creamery, West Bend, Wis.

While butter’s use as a condiment may be on the decline, its use in cooking and baking remains strong. Consequently, Arden Hills, Mich.-based Land O’Lakes recently introduced Soft Baking Butter with Canola Oil for the retail channel. According to spokesperson Lydia Botham, the product allows consumers to avoid the problem of over-softening butter and, thus, ruining their home-baked goodies.

Odell’s, meanwhile, has brought its popular foodservice butters to the retail market. In addition to its 100 percent natural clarified butter, the company also markets the Chef’s Butter line of shelf-stable “seasoned finishing butters” in Basil Pesto, Garlic Herb and Steakhouse flavors.

Regardless of the innovative products processors bring to market, one challenge remains that will undoubtedly keep many consumers from buying as much butter as they otherwise might. During the first quarter of 2004, butter prices soared more than a dollar to $2.36 per pound, its highest price ever so early in the year — and a real cause for concern, according to Jed Davis, director of marketing, Cabot Creamery Cooperative, Cabot, Vt.

“At the butter prices we’ve seen lately,” he says, “it’s just a matter of time before retail sticker shock sets in for consumers and they begin to cut back.”

According to Hickey and others, some retailers try to manage such price fluctuations by “playing the market” — building up their inventories while prices are low so they will be able to meet demand without raising prices during times of crisis. This tactic may be a wise one, as butter demand has remained high so far.

 “The butter market is the highest it’s ever been this early in the year,” Hickey told Dairy Field this past spring, “and there’s a lot of trepidation as to what the supply of milk is going to be over the summer months and into the fall when everybody’s demands increase dramatically.”

While some consumers remain stringently brand loyal, private label products account for 50 percent of retail butter sales. This trend could be considered a negative in that it perpetuates the “commodity” image many dairy products, including butter, have fought to shed. But many processors believe private label actually may enable some consumers to stick with butter during times of high pricing because they can temporarily switch to a value-priced store brand and then return to their branded favorite once prices calm down.

“As the market goes higher and you see retails on butter all over $3, people are going to be reluctant to choose the brand,” says Hickey. “When they see the private label alternative is at least 40 to 50 cents less per package, they are going to be far more likely to put that product into their grocery cart.”  df

Top 10 Butter Brands*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$1,106.6	1.7%	100.0%	467.0	-5.4%
Private Label	485.2	-1.8	43.8	231.5	-9.0
Land O’Lakes	341.8	0.6	30.9	123.7	-5.5
Challenge	56.9	5.9	5.1	19.1	3.8
Breakstone	26.8	4.2	2.4	13.0	-1.4
Tillamook	24.9	19.1	2.2	9.3	16.0
Crystal Farms	19.6	14.9	1.8	9.3	4.3
Keller’s	18.6	11.4	1.7	8.4	9.4
Hotel Bar	15.6	10.0	1.4	7.1	4.2
Cabot	13.7	14.2	1.2	5.0	7.8
Darigold	9.1	-9.0	0.8	3.9	-18.4
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending May 16, 2004. Source: Information Resources Inc.
Top 10 Margarine/Spread/Butter Blend Brands*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$1,186.6	-1.1%	100.0%	858.2	-5.9%
I Can’t Believe It’s Not Butter	202.7	2.2	17.1	114.4	-2.0
Shedd’s Country Crock	181.1	1.5	15.3	100.3	-0.8
Private Label	99.9	-1.0	8.4	112.6	-6.6
Parkay	95.2	-9.7	8.0	71.4	-12.4
Land O’Lakes	79.3	38.6	6.7	50.4	24.0
Blue Bonnet	77.2	-9.3	6.5	93.8	-14.1
Imperial	58.1	-4.1	4.9	73.3	-5.9
Fleischmann’s	50.5	-13.0	4.3	33.7	-12.6
I Can’t Believe It’s Not Butter Light	45.4	-24.3	3.8	26.0	-27.7
Brummel & Brown	37.9	-7.8	3.2	22.0	-11.6
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending May 16, 2004. Source: Information Resources Inc.