Consumer interest in health, along with governmental attempts to combat obesity and the dairy industry’s increasing emphasis on the nutritional aspects of dairy foods are creating opportunities for dairy processors and marketers in 2014 and the years ahead. In addition, the children of baby boomers and a growing population of nonwhite U.S. citizens are leading a charge to more adventurous eating, including a preference for ethnic flavors and foods.
Those are some conclusions Dairy Foods draws from analyzing trend reports from the International Dairy-Deli-Bakery Association, the Dairy Council of California and Innova Market Trends.
Milk, yogurt, cheese trends
The long, slow decline in fluid milk consumption is well-known and documented. But that does not mean milk processors should sit on their hands. Extended shelf life packaging offers on-the-go convenience and expands consumption opportunities, according to IDDBA’s “What’s in Store 2014” trends report. Single-serve packaging expands the opportunities for milk consumption and increased flavor varieties.
IDDBA calls yogurt “the star of the dairy industry.” Globally, the spoonable yogurt category is the leader, with 20% of new dairy product introductions, followed by hard and semi-hard cheeses (11.7%), and drinking yogurts (10%). Greek yogurt accounts for 35% of yogurt sales, according to IDDBA, citing statistics from Packaged Facts.
Yogurt consumption has reportedly increased by 113% since 2001, according to the Dairy Council of California, Sacramento. Young adults (between 18 and 34 years of age) have largely driven this increase, buying yogurt for its overall health benefits and as a breakfast food. In turn, young adults are feeding it to their children, fostering another generation of yogurt-eaters, according to the Dairy Council of California’s semi-annual trends report released last fall.
Yogurt drinks containing probiotics are a rapid growth area, particularly popular among children, the dairy council finds. Many are seeking the benefits of probiotics in yogurt, which now extend beyond traditional immune-system and intestinal benefits to effects such as decreasing obesity, reducing blood pressure, helping with satiety, minimizing anxiety and depression, enhancing brain function and even reducing breast cancer risk.
While these benefits have not been proven beyond a doubt, some researchers are encouraging the 2015 Dietary Guidelines Committee to include probiotics in general recommendations for a healthy diet for overall, rather than specific, health benefits, according to the Dairy Council of California.
Cheese goes spicy, smoky
Cheesemakers continue to add flavors, whether these are new takes on traditional varieties or entirely original ones. Allen Hendricks, vice president of foodservice and education, Wisconsin Milk Marketing Board, Madison, told IDDBA, “We are seeing many robust flavors in cheese, such as specialty peppers, aging, spices like cumin and smoked varieties.”
Jim Dimataris, director of processor relations, California Milk Advisory Board, Modesto, agreed. “The spicy and smoky flavors like Chipotle, Jalapeño, Habanero, etc., continue to be popular. There is a continued appetite for smoked cheeses and the bold flavors of super-aged cheeses, too,” Dimataris said.
Although few cheesemakers have the advantage of natural caves, many are developing their own aging rooms that are temperature- and humidity-controlled, allowing cheesemakers to practice the art of affinage.
Restaurant, retail trends
“Restaurants continue to be the training ground for most of our culinary adventures, and that includes cheese,” noted Dimataris. “We continue to see the trend of cheese plates as dessert (versus appetizer). This trend generates additional wine and/or port sales to top off the dinner.”
Hamburger chains are at the forefront of flavor trends, IDDBA found. Robust flavors have proliferated, including sharp Cheddar, Pepper Jack and Smoked Gouda. New varieties like Chèvre and Brie are showing up on burgers, too.
What happens in restaurants crosses over to retail, giving retailers opportunities to talk about and promote new cheeses.
“They can sample more exotic cheeses and can show consumers pairing ideas for wines, beers, and other beverages right in the store,” Dimataris told IDDBA. “It’s also a way that retailers can tap into the expertise of commodity organizations . . . that offer pairing apps, brochures and tips sheets with ideas of how to maximize merchandising for cheese and other dairy items,” he added.
Dimataris also noted increasing interest in Mediterranean cheeses and dairy items like Haloumi, a grilling cheese also known as Yanni, and Labne, a yogurt cheese. Latin American cuisine continues to drive sales of Hispanic cheese.
Jennifer Giambroni, director of communications, California Milk Advisory Board, told IDDBA, “Millennials really could be considered the ‘cheese generation.’ They grew up eating it, they have been exposed to many new varieties of cheese beyond commodity cheeses and they have an adventurous spirit. The artisan and specialty cheese category is made for this buyer, as long as they can access it easily and in a convenient format.”
Though restaurateurs might not be pleased, retailers take comfort in consumers’ interest in cooking at home. Innova Market Insights, Duiven, The Netherlands, states that consumers are reassessing their needs and going back to basics by finding more pleasure in simpler food.
There has been a shift towards home cooking, with food bringing family and friends together, according to Innova. Where consumers shop also has been affected; Innova points to the so-called “hourglass model,” meaning there is growth on the budget and premium sides but the center ground is being squeezed. Value packaging and “good value” claims on the products themselves and in-store value promotions are prospering, according to Innova.
IDDBA notes a shrinking middle class and cites the Innovation Center for U.S. Dairy, Rosemont, Ill., which predicts a reduction in mid-priced brands and retailers. Dairy producers and retailers will need to address the new markets (high end and low end) and better meet the needs of consumers’ new definitions of value.
Health and well-being
Well-being is an overarching trend shaping product offerings in the dairy case. Many refrigerated dairy case products boast natural nutritional properties, protein and vitamin content, satiety characteristics, and the ability to provide energy, in addition to functional additives, according to IDDBA.
Dairy products are uniquely positioned as a medium for functional additives. Processors market products to address protein consumption, digestive health, cardiovascular health, immune system support, relaxation, beauty and skin health, and life-stage nutritional needs. Dairy products continue to provide an excellent medium for fortification.
Nutrition is getting closer to being truly recognized as the answer to healthcare budget crises around the globe, claims Innova Market Insights. Some big food manufacturers are looking to all areas of health for a more holistic approach in providing nutritious food and beverage solutions to consumers. Clinical nutrition is being eyed as a highly profitable platform along with health alternatives, such as traditional Chinese medicine.
P is for protein
Consumers are increasingly interested in protein for its long list of health benefits, according to the Dairy Council of California. Among the benefits are muscle building, exercise recovery, weight loss, satiety and healthy aging. The dairy council states that 63% of consumers consider protein when they purchase packaged foods and beverages.
Protein benefits the entire spectrum, from babies to seniors. Markets have opportunities to target specific subgroups (teenage athletes, for example) with messages about protein’s health benefits, according to the Dairy Council of California.
Protein comes in many forms. Protein substitutes and novel plant protein (such as pea protein) are emerging. Some food companies tout the benefits of plant protein, challenging the traditional wisdom that animal protein is superior. Whey protein is considered one of the highest-quality protein sources and is currently being investigated for its effect on satiety and weight management and its ability to mitigate pre-diabetes, according to the Dairy Council of California.
Dairy processors and the dairy industry have some work to do. The dairy council said consumers generally do not associate protein with dairy products. They consume meat, beans and eggs instead. The Dairy Council of California is educating health professional and consumer audiences about milk and dairy foods as a high-quality protein source. There are opportunities for the dairy industry to aggressively market products as being “good” or “excellent” sources of protein, the council said.
Dairies making fermented dairy products should look into the new research on the gut “microbiome”—the collection of bacteria in the intestinal tract believed to have an impact on the entire body. “Healthy bugs” in the intestinal tract may be responsible for vitamin and amino acid production; fighting off diabetes, obesity and cancer; stimulating the immune system; destroying toxins; and boosting overall health, reports the Dairy Council of California.
The research provides support for the habitual consumption of probiotics currently found mostly in fermented dairy products such as yogurt and kefir, according to the Dairy Council of California.
Dairy for weight control
While obesity rates have stabilized for both adults and children, the incidence remains high. One-third of adults and 17% of children are classified as obese. The American Medical Association officially recognizes obesity as a disease. Although recognition does not have legal implications, experts think it may open the door to reimbursement for prevention and treatment of overweight conditions, according to the Dairy Council of California.
Concurrently, the incidence of metabolic syndrome — the cluster of risk factors for heart disease that includes high blood pressure, overweight and unhealthy blood glucose and lipid levels — is dropping due to better control of symptoms such as blood pressure and cholesterol.
A number of observational studies continue to link higher milk and yogurt consumption to lower rates of metabolic syndrome, with components such as calcium, vitamin D, protein, dairy fat and trans-palmitoleic acid possibly acting as protective agents. If clinical trials and mechanistic studies support these findings, this could be positive for the dairy industry, according to the Dairy Council of California.
More efficient processing
Dairy companies need to pay attention to their manufacturing practices. “Waste reduction” and “regaining trust” are two of the top 10 food and beverage trends for 2014 identified by Innova Market Insights. Manufacturers’ sustainability efforts are focusing on reducing food loss or waste wherever possible. Food loss during production and waste at the retailer and consumer end of the food-supply chain will be heavily scrutinized. Ingredients derived from the waste stream will hold enormous potential.
Recent food safety scares and scandals have crippled consumer confidence, states Innova Market Insights. Companies have their work cut out in order to regain consumer trust. Ingredient origin will be used as a marketing tool. The consumer should ultimately benefit from higher quality foods that are clearly traceable, Innova Market Insights states.
“Traceability is high on the agenda and manufacturers are actively marketing this to consumers,” said Lu Ann Williams, director of innovation at Innova Market Insights.
Global product-launch activity featuring the word “origin” for claims purposes increased by 45% for the first half of 2013 compared to the second half of 2012. Further growth in the use of this claim is anticipated, Williams said. “Among the leading market sub-categories responsible for this growth are cheese, chocolate and coffee.”
World dairy, sugar trends
Food commodity markets are becoming more balanced and less price volatile than in recent years, according to the Food Outlook report by the Food and Agriculture Organization (FAO) of the United Nations.
“The prices for most basic food commodities have declined over the past few months. This relates to production increases and the expectation that in the current season we will have more abundant supplies, more export availabilities and higher stocks,” said David Hallam, director of FAO’s Trade and Markets Division.
World sugar production is forecast to increase only slightly in 2013/2014. The rise is likely to be limited in Brazil, the world’s largest sugar producer and exporter, where unfavorable weather conditions have hampered harvesting operations.
World milk production in 2013 is forecast to grow by 1.9%, according to the FAO. Asia and Latin America and the Caribbean are expected to account for most of the increase, with only limited growth elsewhere. International dairy products prices have declined from their April peak, but still remain at historically high levels.
10 trends to watch in the dairy case
1. Dairy is one of the most frequently shopped grocery departments — 36 trips per year.
2. Sales of yogurt are projected to grow 17% by the year 2017. Yogurt is a growing breakfast and snack category.
3. Three macro factors impacting the dairy case are: a decreasing number of middle-income households; a diversity of shoppers by age and ethnic group; and access to smart technologies (encouraging unprecedented levels of transparency).
4. Watch for dairy processors to boast protein content and promote the nutrients in dairy beyond calcium and weight management.
5. Dairy to-go trends include products with longer shelf-lives, as well as occasion-specific desires (mid-morning snacks) and complete convenience (serving utensils included).
6. As consumer palates evolve, so does the demand for specialty cheese and robust flavors.
7. Retailers seek to entice more sales by expanding their cheese sections and providing cheese mongers.
8. Restaurant menus influence cheese at retail. Traditional foods (hamburgers and mac-and-cheese) go upscale with specialty cheeses, like Gouda, Brie, blue and goat.
9. Interest in Latin and Mediterranean cuisine is appearing in the cheese case as consumption of varieties like queso fresco, Cotija and Feta rises.
10. Millennials have had more exposure to specialty and artisan cheese varieties. This makes them ideal customers for authentic cheeses in convenient forms.
Source: “What’s in Store 2014” by the International Dairy-Deli-Bakery Association, Madison, Wis.
Understanding consumer segments
• Minorities, which comprised 37% of the U.S. population in 2012, will make up 57% of the population in 2060.
• By 2030, Millennials will total 78 million (compared to 56 million baby boomers). This younger generation is brand agnostic, bargain seeking, technology hungry and the most ethnically diverse ever.
• Leading global food trends to meet consumer needs are pleasure, health, convenience, well-being and ethics.
Source: “What’s in Store 2014” by the International Dairy-Deli-Bakery Association, Madison, Wis.
For further information
• “What’s in Store 2014” by the International Dairy-Deli-Bakery Association, Madison, Wis. Learn more about this 230-page trends report on the association’s website: www.iddba.org/wis.aspx.
• Dairy Council of California. Subscribe to the council’s twice a year Trends newsletter. Email Kendall House, KHouse@DairyCouncilofCA.org.
• Innova Market Research. See the company’s Innova Database, www.innovadatabase.com
• Dairy Foods. The eight-part “State of the Industry” is in the November 2013 issue and online, dairyfoods.com.