By nature, consumers are a fickle lot. witness music fads that go from smash to crash; movie stars who once ruled the box office, but suddenly find themselves unemployed; and cuisine styles that appear to go from haute to not seemingly overnight.

When it comes to the world of dairy, no category has felt the impact of the fickle consumer quite like butter and margarine. From debates over which product is healthier — or less unhealthy, as the case may be — to price fluctuations that routinely result in a mass exodus from one subcategory to the other, the vast majority of consumers don’t seem especially loyal one way or the other.

“There are consumers that will always eat butter and there are consumers that will always eat margarine, but there’s this huge group in the middle that is swayed by factors such as price,” says Brenda Doke, associate product manager, Keller’s Creamery LLP, Harleysville, Pa., a subsidiary of Kansas City, Mo.-based Dairy Farmers of America. “When we see increases in price due to raw materials increases in the commodity markets, then we see some consumers go to margarine because it’s a lower-cost product.”

TOP 10 INDIVIDUAL BUTTER BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$1,240.7	-6.4%	100.0%	450.7	0.2%
Private Label	573.0	-7.5	46.2	233.3	0.8
Land O’Lakes	355.1	-6.8	28.6	110.9	-0.8
Challenge	60.6	-2.0	4.9	17.5	0.9
Breakstone	33.8	-6.3	2.7	14.0	-4.5
Tillamook	24.1	-17.0	1.9	7.5	-14.0
Keller’s	22.0	6.4	1.8	8.0	13.8
Crystal Farms	20.4	-17.7	1.6	8.0	-14.0
Hotel Bar	19.3	13.6	1.6	6.6	8.4
Cabot	17.8	10.1	1.4	6.2	26.3
Horizon Organic	12.1	22.2	1.0	2.2	15.8
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 18, 2006. SOURCE: Information Resources Inc.

In regard to pricing, the past year has been a good one for butter. After surpassing $2 per pound in 2004, butterfat prices have fallen precipitously and have recently been hovering around $1.15 per pound. That trend has enabled the category to rebound sales-wise from last year when dollar sales of butter were up 21 percent, but unit sales were down more than 6 percent, according to Chicago-based Information Resources Inc. (IRI). During the 52-week period ending June 18, 2006, butter sales fell 6.4 percent in dollars — reflecting the decrease in butterfat price — but rose 0.2 percent in units throughout supermarkets, drugstores and mass merchandisers, excluding Wal-Mart, according to IRI.

While butter’s fortunes were on the rise, the margarine category didn’t fare so well — falling 4.5 percent in dollars and 7.7 percent in units, according to IRI. Lower butter prices certainly did their part in luring consumers away from margarine, but there’s also no denying the impact of the new labeling requirements, as well as all the media attention on the danger of trans-fatty acids, present in most margarines.

Suddenly, consumers were all-too-aware of the health hazards of eating margarine. As a result, a number of them switched over to butter, or to the growing number of trans fat-free spreads which promised them the best of both worlds — lowfat like margarine, but trans fat-free like butter.

TOP 10 INDIVIDUAL MARGARINE/SPREADS/ BUTTER BLEND BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category I Can’t Believe	$1,185.3	-4.5%	100.0%	792.2	-7.7%
It’s Not Butter	233.5	-5.5	19.7	123.6	-6.5
Shedd’s Country Crock	183.8	-3.4	15.5	96.0	-3.4
Private Label	85.9	-11.9	7.2	87.7	-13.4
Parkay	74.9	-17.7	6.3	53.6	-20.9
Blue Bonnet	74.8	-14.4	6.3	88.1	-17.7
Land O’Lakes	65.4	3.7	5.5	40.8	3.8
Smart Balance	62.3	34.5	5.3	29.0	32.4
Imperial	53.9	-8.3	4.5	71.8	-6.1
Fleischmann’s	44.2	-13.3	3.7	28.9	-17.9
Smart Balance Light	40.0	47.6	3.4	20.4	50.3
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 18, 2006. SOURCE: Information Resources Inc.

A closer look at the margarine, spreads and butter blends category reveals that trans fat-free spreads were the only products in the top 15 to achieve any significant growth over the past year. Ranked 10th in sales, Smart Balance Light racked up a 47.6 percent increase in dollar sales and a 50.3 percent increase in unit sales, while the original Smart Balance product moved up to seventh place (from ninth place at this time last year), thanks to a 34.5 percent increase in dollar sales and a 32.4 percent increase in unit sales.

Butter makers tend to shrug off the growth of trans fat-free spreads, pointing out that such increases appear larger than they really are, due to the fact that they are coming from a “small base.” What’s more, butter makers claim that the high price of trans fat-free spreads makes them prohibitively expensive for most consumers. Therefore, they say, such products remain primarily the domain of those who have been told by their doctors to avoid butter.

Not so, says Robert M. Harris, president and chief executive officer of GFA Brands Inc., the Cresskill, N.J.-based maker of Smart Balance, adding that it’s just “human nature to downplay someone who’s going after the same market.”

Recognizing the growing awareness of the danger of trans-fatty acids, some butter makers have taken to promoting butter as the naturally trans-fat-free choice. In Reno, Nev., for example, Odell’s is promoting the health aspects of butter over margarine, touting the fact that butter is trans fat-free.

Keller’s is doing likewise. “We focus on the all-natural goodness of butter and position ourselves as the product of choice,” Doke says.

While butter makers are certainly free to fend off competition from the trans-fat-free spreads, Jerry Kozak, executive director of the American Butter Institute, Arlington, Va. says the consumer shouldn’t expect to see butter touted as a health food anytime soon. That’s because the Nutrition Labeling and Education Act essentially prohibits butter makers from promoting their products as “healthy,” due to butter’s high saturated-fat content.

Odell’s recently shifted its focus from foodservice and ingredient markets to retail, rolling out a line of shelf-stable gourmet butters during the summer of 2005. All four products — Odell’s Seafood Butter, Clarified Butter, Original Popcorn Butter and Authentic Ghee — are sold in convenient 10-ounce tubs.

According to Tonja Park, in sales and marketing at Odell’s, the company markets its products to middle- and upper-class “foodie-type people” in the 32-to-50 age range who like to cook gourmet meals at home. Likewise, Odell’s sells its butters primarily through high-end retailers, like Whole Foods and Fresh Market, rather than mass merchandisers and club stores.

“Wal-Mart will always be there, but more and more people want to have the experience of shopping at a high-end gourmet retailer or natural foods store,” Park says. “They are not so much focused on the price as they are on the quality.”

In mainstream supermarkets, meanwhile, Northfield, Ill.-based Kraft Foods Inc. has been busy promoting its Philadelphia brand cream cheese products as an alternative to butter. The company has recently introduced several new varieties, including Philadelphia Jammin’ Swirls in Strawberry and Blueberry flavors, and Philadelphia Swirls in Triple Berries ‘N Cream, Brown Sugar ‘N Cinnamon Spice, Peaches ‘N Cream, and Garlic ‘N Herb.

While such introductions may give consumers additional choices when it comes to topping their morning bagel, butter makers remain confident they will be able to maintain their treasured place in the hearts — and stomachs — of consumers.

“As more new products become available to the consumer,” Doke says, “we’ll just have to look to remain relevant and provide solutions to our consumer, so they’ll let us stay in their refrigerator.”