Dairy Market Trends
A look at the top 10 brands of shredded natural cheese indicates that consumers are willing to pay more for convenience even when overall cheese prices are higher than normal.
Several brands enjoyed considerable growth in the last year, although dollar sales were up more than unit sales. Higher commodity prices are probably being passed on to consumers but those consumers apparently aren't ready to give up the convenience of shredded cheese. Three brands had double-digit unit sales growth in the 52 weeks leading up to October 3, and overall, the category grew 1.8% in terms of unit sales and 8.3% in terms of dollar sales.
These numbers, provided by Information Resources Inc., are for food, drug, and mass merchandiser stores but do not include Wal-Mart.
The flavored milk picture is rather gloomy, with many of the top brands losing ground in terms of both dollar and unit sales. Keep in mind that these numbers do not capture foodservice or convenience store sales, which are important channels for flavored milk. However, in food, drug and mass merchandiser channels, dollar sales are off by a fraction of a percentage, and unit sales slipped 7% in the same period referenced above.
The Kemps brand had the most significant growth, perhaps as a result of market expansions brought about by its acquisition by HP Hood.
Quarterly sales of frozen novelties appear to be on a downward trend, with robust growth at the end of 2003 giving way to a slowdown in the first two quarters of 2004 and finally, a negative quarter ended in October. Unit sales were down by 3.5% for that last period.
Again, there are a lot of novelties sold in channels not represented here. Also, it should be noted these numbers are coming off some pretty strong growth in 2003.
Finally, Dairy Market Trends looks at a category that many dairy companies participate in-refrigerated iced teas.
The same quarterly reporting periods show tea enjoying substantial growth throughout the past year. Double-digit dollar sales were recorded in each of the four periods, and in the most recent period, sales jumped 14.2% by dollar and 11.5% by unit. We've said it before and we'll say it again-dairies have the equipment and the distribution capabilities that will allow them to enter the tea business. With double-digit growth, there's no reason not to.