Dairy Foods Blog

Innovation keeps dairy brands on top

Why do some brands grow retail sales? Because they offer new products and new ideas, like using protein and developing on-the-go packaging.

May 23, 2014

The consumer packaged goods industry delivered anemic growth in 2013, inching up 1.8%. The edibles category basically mimicked the trajectory of the whole industry (+1.7%), while nonedibles grew just over a percentage point and general merchandise was flat. But there’s more that meets the “I.” When manufacturers and retailers bring “I”nnovation to their categories, those departments enjoyed growth that far outpaced the market.

Overall leaders in terms of dollar volume for dairy continue to be milk, cheese, yogurt, juice and eggs. In the frozen category, dinner entrees lead the basket ring at the register, followed by ice cream, poultry, pizza and seafood.

But categories backed by innovation, including refrigerated spreads, iced coffee, butter and refrigerated dressings, grew much faster than non-innovators. Key leaders creating this “frozen fury” include fruits and frozen vegetables. Consumers are starting to “drink their meals,” and their use of fruits and vegetables to propel a convenient, good-for-me drink has helped lift these categories. Handheld breakfast is another booming area and driving growth for industry.

The top manufacturer across the dairy aisle is Kraft with over $5.2 billion in category sales. A number of manufacturers are in leadership positions because of their recent innovations. Chobani, which this past year earned a spot in the “billion dollar club”, and Eggland’s Best lead the pack with double-digit growth.  

A number of category growth leaders are using innovation to spark their upswings — particularly leveraging protein and on-the-go consumption to drive sales, sparking better-than-category growth for the likes of Hillshire, Tyson and Kellogg’s.

Consumers’ search for value has taken them away from grocery stores to more affordable channels like Walmart, Club, Dollar and Mass. Dairy has begun to experience a shift in channel preferences to source its broader assortment. While grocery has grown in terms of dollar share, it’s not growing at anywhere the pace of more value-oriented retailers.

But the real story here (and it is even more profound in the frozen category) is the double-digit growth explosion at dollar stores. Dairy essentials are winning big. Butter has spread its sales upwards by more than 75% due to its availability in this platform. (See table at right.)

“Better for you” is around us more than ever. More than $4.6 billion of successful new product launches can be attributed to some type of better-for-you positioning.  Our New Product Pacesetters report shows more natural and organic foods and those offering more fiber, more vitamins or with real fruits and vegetables. At the same time, the products contain less sugar and fat, and are offered in more controlled serving sizes.

Simplicity, wellness and excitement

Three emerging themes are driving many of today’s new product launches: simplicity, wellness and excitement. Some representative products are Chobani Bites, Bolthouse’s Mocha Cappuccino, Land O’Lakes Sauté Express and Laughing Cow, which reduced the fat in its cream cheese spread.

The passion for Greek is extending everywhere and anywhere. We believe it’s going to continue to ride this wave through smoothies, bars, dressing, dips and even some health and beauty products.

So, how do we see the future? We think that shopper targeting is essential. Knowing your customers’ passions and emotions is critical to success.

Niche innovation is critical to achieving longer-term success. We see a growing amount of targeted innovations, whether it is to an aging population or to a growing segment like Hispanics.

Thinking about tomorrow

Take a long look at your innovations and plan their second years and beyond. Far too often new products fail in their out years because the innovation teams have moved on to other launches and their “babies” aren’t supported.

And finally, be sure you have a good strategy to meet consumers in their quest for value. Shoppers are adapting and we need to be there with the right products, promotions and pricing to win this important segment.  

Sandy Krueger is Executive and Practice Leader and Larry Levin is Executive Vice President and Practice Leader at IRI (Information Resources Inc.), Chicago. This essay is adapted from their keynote address, “Driving Growth in Dairy and Frozen Aisles,” at the National Frozen & Refrigerated Foods Association’s Executive Conference in April.

Dairy Foods seeks essays from dairy processors. Contact carperj@dairyfoods.com.

Dairy Does Dollar

Butter                             76%

Yogurt                           51%

Milk                               31%

Margarine                     24.5%

Creamer                        23.1%

Processed cheese       15%

Annual sales increases of selected dairy products at dollar stores.

Source: IRI, Chicago



You must login or register in order to post a comment.



Image Galleries

4 mouth-watering grilled cheese sandwiches you have to make in April, National Grilled Cheese Month

In recognition of National Grilled Cheese Month (April), Arla Dofino asked two food bloggers to re-imagine this comfort-food classic.

Heidi Larsen of FoodieCrush.com and Maria Lichty of TwoPeasAndTheirPod.com created four grilled cheese sandwich recipes that call for creamy Havarti, dill Havarti, smoked Gouda and Eureka! Organic Breads products.

Arla Foods, a cooperative owned by European dairy farmers, is the fifth largest dairy company in the world. The Arla Dofino brand of cheese includes Havarti, Gouda, Edam and Fontina, which are made by the Hollandtown Dairy in Kaukauna, Wis.

3/31/15 2:00 pm EST

Raising the bar with in-line mixing and blending technologies: high output with flexibility and low costs

On Demand In this webinar, you will be introduced to advanced in-line blending, dosing and mixing technologies that offer high flexible productions, reduced product losses, shorter batch times, uniform products, and reduced ingredient costs. As a result, Food Manufacturers can optimize their productions and increase their profitability.

Dairy Foods Magazine

april df cover

2015 April

We look inside Kroger's Denver plant; Also, see what trends are happening in yogurt.

Table Of Contents Subscribe


What is your favorite way to eat cheese?
View Results Poll Archive


Tharp & Young on Ice Cream: An Encyclopedic Guide to Ice Cream Science and Technology

An at once an all-inclusive guide to the meaning of hundreds of technical terms and ideas needed for ice cream manufacturing, as well as a practical introduction to the ingredients, freezing methods, flavoring, and packaging of ice cream, sherbet, sorbet, gelato, frozen yogurts, novelties and many other kinds of frozen desserts.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.


Facebook logo 40px 2-12-13 Twitter logo 40px 2-12-13  YouTube logo 40px 2-12-13  LinkedIn logo 40px 2-12-13google plus

Dairy Foods Buyers Guide

cover df july 2013Resource for buyers in the dairy processing industry to find information on the leading suppliers and manufacturers.

Find Ingredients, Equipment, Distribution, R&D and More.

Start Your Search Today.