After years of struggling to overcome the unhealthy image that led many consumers to switch to margarine during the 1970s and 1980s, butter makers finally thought they had the upper hand.

TOP 10 BUTTER BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$1,311.9	14.2%	100.0%	449.6	-2.6%
Private Label	608.3	19.4	46.4	229.9	0.3
Land O’Lakes	380.2	8.6	29.0	111.8	-7.4
Challenge	62.2	5.9	4.7	17.6	-7.6
Breakstone	35.8	28.7	2.7	14.6	13.9
Tillamook	28.6	9.6	2.2	8.7	-5.9
Crystal Farms	24.4	16.9	1.9	9.4	0.5
Keller’s	20.7	12.9	1.6	7.1	-9.8
Hotel Bar	16.8	12.3	1.3	6.0	-8.1
Cabot	16.0	17.4	1.2	4.9	4.4
Darigold	10.6	15.1	0.8	3.8	-0.5
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart,for the 52-week period ending July 10, 2005. SOURCE: Information Resources Inc.

In this particular case, their good news came in the form of bad news for margarine makers, as scientific evidence of the dangers of trans-fatty acids, present in most margarines and other spreads, were given substantial media coverage, resulting in fear among consumers, who long had thought they were doing the healthy thing by opting for butter alternatives.

Butter makers’ jubilation didn’t last long, as the “good news, bad news” nature of the scenario quickly came to light. They had just barely begun to revel in margarine’s misfortune when a new subcategory of “healthier” spreads made the scene. Sold under such brand names as Benecol, Smart Beat, Smart Balance and Take Control, these products not only contained zero trans-fats, but also promised to lower cholesterol levels and reduce one’s chances of developing heart disease.

At first, butter makers shrugged off these niche products, confident they couldn’t possibly pose much competition to the almighty butter. In recent years, however, trans-fat-free spreads have assumed a much higher profile, and several mainstream margarine manufacturers, including Promise, Land O’Lakes and Fleischmann’s, have thrown their hat into the ring, producing trans-fat-free versions of their spreads. Still, butter producers remain confident that, in the end, consumers will opt for taste, and thus choose butter.

“Up to a certain point, the consumer will sacrifice a little on taste if they think they are being better about their health,” says Jed Davis, director of marketing, Cabot Creamery Cooperative, Cabot, Vt. “At a certain point, however, if the flavor delivery isn’t hitting that threshold, consumers start making the decision to sacrifice in some other area of the food chain, rather than one they really appreciate like butter.”

There’s no ignoring the numbers, however, as some of the “healthier” spreads have begun experiencing rapid growth. During the 52-week period ending July 10, 2005, sales of Smart Balance rose 21.2 percent in dollars and 12.7 percent in units throughout supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, according to Chicago-based Information Resources Inc. (IRI). Smart Balance Light fared even better, up 57.8 percent and 51.8 percent, respectively. Overall, the margarine, spreads and butter blends category recorded meager growth, increasing 2.9 percent in dollars and slipping 0.6 percent in units.

Meanwhile, dollar sales of butter rose 14.2 percent, while unit sales fell 2.6 percent, illustrating the pricing battles the category has faced in recent years. During 2004, butterfat prices surged, surpassing $2 per pound. This resulted in retail butter prices of $3 and higher. According to Kevin Nagle, director of marketing, Crystal Cream & Butter Co., Sacramento, Calif., the $3 mark is generally the point at which consumers begin turning their backs on butter, resulting in the kind of unit sales decreases the category has been experiencing of late.

“At that point, they start looking for alternative sources,” Nagle says. “Many folks are very price-sensitive and will, in a minute, jump from butter to another form.”

Of course, there are those consumers who remain extremely loyal to butter no matter what. Chief among them are amateur (and professional) chefs and bakers, who believe passionately that nothing can replicate the taste and performance of butter.

TOP 10 margarine/spreads/BUTTER blends BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$1,232.5	2.9%	100.0%	854.0	-0.6%
I Can’t Believe It’s Not Butter	244.7	15.3	19.9	131.1	10.6
Shedd’s Country Crock	189.6	3.5	15.4	99.2	-1.4
Land O’Lakes	97.9	15.1	7.9	58.1	9.6
Private Label	96.3	-2.7	7.8	100.2	-8.5
Parkay	89.3	-5.1	7.2	66.3	-6.2
Blue Bonnet	86.5	10.0	7.0	105.9	10.3
Imperial	58.7	0.4	4.8	77.2	4.5
Fleischmann’s	50.3	0.1	4.1	34.6	2.2
Smart Balance	46.6	21.2	3.8	22.0	12.7
Brummel & Brown	37.4	-1.3	3.0	20.5	-5.8
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart,for the 52-week period ending July 10, 2005. SOURCE: Information Resources Inc.

Cabot Creamery Cooperative was banking on that loyalty when they made their high-fat specialty butters available through mail order during the holiday cooking and baking season. The Cabot Chef’s Butter Pack contained eight 1-pound solids of Cabot 83, an unsalted butter with 83 percent butterfat content, while the Cabot Combo Butter Pack featured four 1-pound solids of Cabot 83, along with four 1-pound solids of Cabot Old Fashioned Whey Cream Butter, an uncultured product which also contains more than 80 percent butterfat.

Cabot wasn’t the only butter force focused on fourth-quarter 2004 as an opportunity to boost sales. Rosemont, Ill.-based Dairy Management Inc. (DMI) joined forces with the Wisconsin Milk Marketing Board (WMMB) to fund a promotion designed to build “better butter usage” during the pivotal fourth-quarter, during which more than 40 percent of all butter sales take place, according to Dave Bavlnka, vice president of marketing for the WMMB. At the heart of the campaign was a series of print ads, which appeared in various consumer magazines, including Better Homes & Gardens, Family Circle, Ladies’ Home Journal, Good Housekeeping, Silverware, Gourmet, Bon Appetit and Real Simple. All featured the tagline, “Real Butter, Pure and Simple.”

“It describes butter to a tee because the ingredient label on butter is cream and salt,” Bavlnka says. “It doesn’t get any purer or simpler than that, especially when you compare it to ingredient labels on other spreads.”

The promotion also featured an extensive public relations campaign, including massive media kits and a national butter spokesperson that appeared on numerous television and radio satellite networks. Undoubtedly, the most unique facet of the campaign was a 1,200-pound block of butter that was carved into the shape of a cow on ice skates, surrounded by penguins. The event, which took place in New York City, was featured on the Fox News Network and picked up by the Associated Press.

Consumers responded well to the promotion, resulting in an increase of 3.4 million incremental pounds of butter in grocery stores during the fourth quarter, according to Madlyn Daley, vice president of branding information services for DMI. Had butter pricing not been such an issue, she believes the campaign would have been even more successful. Because sales increases were tracked only in the traditional grocery channel, the campaign may have actually been more successful than suggested by the official figures.

“I’m feeling very positive about butter,” Bavlnka says. “With the current trends pointing toward more natural foods and eating well, butter has a bright future. We just need to give it more attention.”