State of the industry 2015: It’s cultured dairy’s time to shine
The cultured category is made up of yogurt, cream cheese, cottage cheese, dairy dips and sour cream. Yogurt often dominates the conversation, thanks to Greek yogurt and the like. But, for once the story in cultured dairy products isn’t all about yogurt. Cream cheese and cottage cheese are trying to bring the attention back to them with innovative new products, capitalizing on trends like savory flavors, snacking products and emphasizing protein. These are trends that are showing up across the cultured aisles.
Yogurt’s popularity remains strong. Its versatility is on full display as food processors display increased interest in Greek yogurt especially, which they pair with cream cheese and hummus in dips. Greek yogurt’s success continues to inspire the category, bringing more interest for other styles of yogurt, as more Australian-style and Icelandic yogurt products hit the market. Drinkable yogurts are gaining steam as the snacking trend takes hold and consumers look for easier, on-the-go quality protein options.
According to a 2015 Category Insight report on yogurt from Fona International, Geneva, Ill., companies continue to innovate to meet the demand for convenient, nutritious and tasteful snacks, while yogurt has moved beyond the breakfast menu. Classic berry and yogurt combinations are now competing with passion fruit, peanut butter and jelly, rhubarb, pumpkin, beet, tomato and other savory flavors, noted the report.
The cultured landscape is changing and processors have a unique opportunity. By thinking outside the box, by creating more hybrid products (like Greek yogurt cream cheese or dairy dips with yogurt, etc.), and by continuing to innovate with flavors/products, processors can bring consumers attention back to the entire category by giving them what they want — quality protein, easy snacks, convenience and a good, clean nutritional profile.
A picture of the landscape
Over the last five years yogurt production has continued to climb, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service, increasing from 4.1 billion pounds in 2010 to 4.7 billion pounds in 2014. (See graph on page 54).
The yogurt category’s dollar sales grew 3.2% to $7.4 billion, while unit sales were at a standstill, according to Information Resources Inc. (IRI), Chicago, for the 52 weeks ended Aug. 9, 2015.
According to Chicago-based Mintel, spoonable and drinkable yogurt segments are both expected to see growth through 2020, though sales for spoonable products are seeing a steep slowdown from preceding years. Yogurt drinks’ growth rate is forecast to stay ahead of spoonable yogurt as the novelty of Greek yogurt subsides. While consumers’ interest in Greek-style products will remain, other yogurts are headed into the spotlight to help support yogurt’s long-term future growth, states Mintel in its “Yogurt and Yogurt Drinks, U.S., August 2015” report.
The Mintel report further noted that “the yogurt category is primed for growth, even as it experiences a slowdown from Greek yogurt’s fading novelty. Interest in health will allow for continued positive performance at a steady growth rate.”
Bellevue, Wash.-based The Hartman Group offers another view on this, pointing to the premium side of the category. The company said that the premium yogurt category is poised for continued growth, even as the base category flattens out or declines in terms of volumetric growth, and it cited three main reasons:
- There is a strong stable of growing, early-stage brands trading at low distribution levels;
- Premium yogurt has a large number of $1 million+ early-stage growth brands across the United States;
- And premium growth is more or less constant in the non-measured channels (e.g., Whole Foods Market, Trader Joe’s, natural/specialty).
The Hartman Group noted that the premium category had seen two historical waves — Natural/Organic and then Greek— and now it’s poised for a third wave: Further specialized yogurts (indulgent, medicinal and nutritional).
The group breaks down four areas of innovation: super-indulgent full-fat yogurt brands; high-density probiotics; more targeted nutritional profiles (high-protein and low-sugar, for example); and alternative textures/styles (think Aussie- or Icelandic-style).
According to Mintel, the yogurt category has an opportunity to evolve to better cater to adult needs, particularly through on-the-go lifestyles and the growth in snacking as a replacement for meals. Yogurt drinks offer stronger growth potential than spoonable yogurt. Although yogurt drinks are fairly new to American adults (children have been drinking them for years), manufacturers have opportunities to make yogurt drinks more trial-worthy through flavor and texture improvements and by communicating greater health benefits to popularize them beyond kid-only consumption.
The snacking and protein revolution
Innovation in drinkable yogurts has great potential.
According Mintel, 38% of consumers still said they prefer to eat yogurt, not drink it. But, 63% agree they are interested in information on yogurt drink benefits. Yogurt drink trial interest will likely rise with product awareness, noted Mintel.
“We’re seeing a lot of drinkable yogurts right now,” said Andrew Buerger, founder and CEO of B’more Organic, Baltimore, Ore. “They’ve been around in Europe for a long time and initially Americans were a little wary of it, but are now embracing it as a perfect snack/meal for busy people on-the-go.”
B’more Organic makes a line of organic Icelandic “skyr” yogurt smoothies, recently adding strawberry to its lineup of five flavors. The drinkable yogurt comes in a 16-ounce bottle, with 32 grams of protein per bottle (or 16 grams per serving). The product is also GMO-free and is made with no added sugar. With the release of the new flavor, the company also updated its plastic bottle packaging with a cleaner look.
Buerger said, “All four panels teach the consumer more about our product and our brand as they read each side.”
This past year, several more companies introduced drinkable products, as processors see the need and potential for consumers.
Seeing its success with smoothies in the kids segment with its Danimals product, The Dannon Co., White Plains, N.Y., introduced yogurt-based Light & Fit Protein Shakes in January. The drinks contain 12 grams of protein per 10-ounce bottle. Michael Neuwirth, senior director of public relations at Dannon, believes there is an opportunity in other segments of the category for more drinkable products. Consumers are “looking for products that are low in calories, high in protein, portable and convenient,” he said.
Karoun Dairies, San Fernando, Calif., launched a line of Blue Isle Mediterranean yogurt drinks sold in 6- and 32-ounce bottles. One cup of the drink contains about 7 grams of protein.
Morton Grove, Ill.-based Lifeway Foods continues to see success with its drinkable kefirs, most recently adding a new low-fat watermelon flavor. The company jumped onto the protein train with a new line of Protein Kefirs earlier in the year. The nonfat cultured smoothie has 20 grams of protein per 8-ounce serving. The company said that the drink has become popular as a post-workout recovery tool or to help control unhealthy snacking.
Last year, Nuestro Queso, Rosemont, Ill., updated the packaging of its Hispanic-style drinkable yogurt smoothie line — Nuestro Yogurt. The company also added 32-ounce bottles and 6-packs of its 7-ounce singles. A serving (one 7-ounce bottle) contains 7 grams of protein.
Keep it clean, keep it functional
Beyond protein, the conversation in yogurt and other cultured products has turned to how can processors make them more functional (like adding grains, seeds, probiotics and vitamins); and how can they keep a clean label. Clean, functional ingredients and knowing the story behind the company (where is the food coming from), are top-of-mind for many consumers.
Chobani, Norwich, N.Y., was one of several companies to add grains. Last year the company created a line of Greek yogurt with fruit and whole grain steel-cut oats. This year’s extension, called Ancient Grain Blend, mixes Greek yogurt with steel-cut oats, quinoa, chia, buckwheat and fruit. Flavors include Raisin Brown Sugar and Oats Peach.
Alongside several new product and flavor releases this year, Chobani updated its core product packaging this summer. The packaging was given a bold, new look, with an emphasis on its functionality, clean ingredients and appetite appeal.
The goal, according to Michael Gonda, vice president of communications at Chobani, was to really stand out on the shelf, and also to emphasize the message of what the company was already doing with its products — non-GMO, less sugar, rBST-free, etc.
Yoplait (a brand of General Mills, Minneapolis) focused on functionality with its new Greek yogurt line called Plenti. The yogurt is made with fruit, seeds (flax and pumpkin) and whole grains. It contains a 1:1 sugar-to-protein ratio (12 grams of each). All colors, flavors and sweeteners are derived from natural sources. According to Alicia Beerman, marketing manager for Plenti, the feedback the company was getting was a desire for a more filling yogurt and higher protein. This new product filled that need.
Dannon emphasized clean ingredients and protein with its launch of Oikos Triple Zero at the beginning of the year. The Greek yogurt contains 15 grams of protein per 5.3-ounce serving and has no added sugar, no artificial sweeteners or fat.
In an effort to engage with a wider audience, the brand became the official yogurt of the NFL. Through its marketing efforts, Dannon aims to change the current market where yogurt is disproportionately consumed by women.
A world beyond Greek
Though Greek yogurt is certainly not going anywhere, and new products continue to show up on the market, the emergence of other styles of yogurt shows no signs of slowing. New premium yogurts are trending, from Aussie-style to whole-milk and grass-fed milk varieties. Aussie-style is yogurt made with whole milk, and it usually has a smooth, thick, creamy texture. It’s not strained, unlike Greek- or Icelandic-style yogurts.
The Hain Celestial Group, Lake Success, N.Y., created a new line of Aussie-style yogurt called Dundee. The non-GMO yogurt is packaged in a low and wide 8-ounce plastic container, with call-outs that include gluten-free and rBST-free. Each 8-ounce serving contains 14 to 17 grams of protein, depending on the flavor.
Earlier in the year, WhiteWave Foods, Broomfield, Colo., introduced Yulu, another Aussie-style yogurt brand. The company said the yogurt is created through a process called “double smoothed” giving it an extra creamy texture. A 5.3-ounce cup has 9 grams of protein.
Targeting the whole-milk trend, Stonyfield, Londonderry, N.H., launched an organic whole-milk yogurt brand called Oh My Yog! It’s made with a unique three-layer format — fruit on the bottom, honey-infused yogurt in the middle and a layer of cream on top. It comes in flavors like strawberry, apple cinnamon and gingered pear.
New flavors and packaging options hit the market for other premium yogurt brands as well. Smari, Petaluma, Calif., maker of organic Icelandic-style yogurts, known for its high protein and low sugar content, added whole-milk varieties to its line this year. A 5-ounce serving contains 13 to 16 grams of protein. The company recently downsized from a 6-ounce cup to a 5-ounce cup, based on consumer requests. It also added four new flavors to the whole-milk line, including black cherry with chia, Key lime and New Orlean’s coffee.
Also getting into the full-fat game, New York-based siggi’s added a whole-milk version to its line of Icelandic-style yogurts (called skyr). Flavors include strawberry and rhubarb and mixed berries.
Aussie-style yogurt maker, Noosa Finest Yoghurt, Bellvue, Colo., launched 4-ounce 4-packs of its tart cherry and blueberry varieties to meet consumer demand for on-the-go snack sizes. It also added flavors last summer: cranberry apple in 8-ounce and 4-ounce 4-packs, and vanilla in a 24-ounce size. The company also brought back its popular pumpkin variety (in 8-ounce and 4-ounce packs), now available nationally.
Pomeroy, Ohio-based Snowville Creamery re-introduced its line of yogurts now made with A2 milk (which contains only the A2 type of beta-casein protein). Its yogurt, made with fat-free milk from grass-grazed cows, comes in low-fat and cream-top varieties. An 8-ounce serving contains 11 to 15 grams of protein, depending on the variety. Keeping it clean, the company uses just milk, cream and live bacterial cultures to make the yogurt, plus cane sugar and natural flavors (for its flavors like Gingamon or vanilla).
Flavor is also playing a huge role in spurring innovation. Not only are unique flavor combinations like gingered pear, peach mango and raisin brown sugar showing up, but savory flavors (like beet, tomato and sweet potato) are now making their way into the yogurt aisle. Blue Hill, New York, N.Y., has a unique lineup of grass-fed yogurts that come in six savory varieties: carrot, beet, tomato, butternut squash, sweet potato and parsnip.
Coffee and a variety of seasonal flavors like pumpkin, cinnamon, apple and cranberry are also exploding across the category. Miami-based Alpina Foods Inc. created a new line called Café Selections. The Greek yogurt is infused with real coffee and comes in flavors coffee, mocha and caramel macchiato.
“Industry trend reports have confirmed that U.S. consumers are seeking out products that have protein, energy and/or natural ingredients,” said Alpina Foods Marketing Manager Anya Sarkisov. “Consumer reports have also been showing that coffee sales are on the rise while soda sales are continuing to decline. So we created Café Selections this year as a direct response to consumer demands. It has real coffee with up to 30 milligrams of caffeine and 10 to 12 grams of protein [per serving].”
As part of its huge portfolio expansion this year, Chobani also added a couple different coffee varieties to its line. Its regular cup line now has a coffee flavor, and Coffee Break Bliss (coffee-flavored low-fat yogurt with biscotti pieces and chocolate) was added to its Flip line.
Chobani was among the many companies adding new seasonal flavors. New limited-batch summer flavors included plum, watermelon and Flip Strawberry Summer Crisp (with golden graham crackers and white chocolate). Autumn flavors include cinnamon pear and Flip Pumpkin Harvest Crisp (with pie crust pieces, pecans and glazed pumpkin seeds).
Green Mountain Creamery, Brattleboro, Vt., owned by Commonwealth Dairy, added a coffee flavor and pumpkin pie flavor in its blended Greek yogurt line.
Dessert-inspired flavors continue to show up across the category as well. Chicago-based Müller Quaker Dairy created a new line of dessert-inspired yogurt made mixed with a layer of fruit or caramel, and served with flavored mix-ins on the side. Flavors include dulce de leche, peach cobbler and strawberry cheesecake.
“We’ve found that people are looking for products that they can feel good about eating but don’t sacrifice on taste. We’ve seen a demand for flavor combinations that can satisfy a sweet tooth without going overboard,” said Brian Hannigan, marketing director, Müller Quaker Dairy.
“Indulgence is a big part of what drives yogurt consumption,” said Alpina’s Sarkisov. “Yogurt with toppings and unique dessert blends are increasing in popularity across the United States. For example, Alpina Foods recently launched NBA All-Stars yogurt, which is a creamy, low-fat vanilla-flavored yogurt with cookie and candy toppings.”
Chobani added cherry and dark chocolate to its Indulgent Greek yogurt line, while tiramisu was a new flavor for Dannon’s Light & Fit Greek line this summer.
Cottage cheese makeover
With innovative new products hitting the market, cottage cheese is seeing a resurgence, as companies try to change the cottage cheese conversation (whether with an emphasis on protein or flavor innovation, with both savory and sweet).
Cottage cheese production hit a five year low, decreasing from 432.8 million pounds in 2010 to 382.5 million pounds in 2014, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service. (See graph). While cottage cheese dollar and unit sales are both up 2.7%, with $1.1 billion dollar sales, according to IRI, for the 52 weeks ended Aug. 9, 2015. (See table).
Two unique products hit the market this year that not only added flavor innovation to the category, but packaging innovation as well. Artisa fine curd cottage cheese, produced by Smith Dairy Products Co., Orrville, Ohio, is an all-natural and slow-cooked cottage cheese that has a creamy, fine-curd texture and features fruit on the bottom. Flavors include pineapple, strawberry, peach and apple cinnamon. The cottage cheese is packaged in a 5.3-ounce transparent single-serve cup, similar to what you see with yogurt. Each serving has 15 grams of protein.
Los Angeles-based Good Culture created a line of organic cottage cheese that included both savory and sweet flavors, like sun-dried tomato, Kalamata olive and strawberry chia. The product is also sold in a 5.3-ounce container, featuring bold colored cups, corresponding to its flavor. It contains 16 to 18 grams of protein per serving.
Lynnfield, Mass.-based HP Hood launched two new flavor additions to the Hood Cottage Cheese line — cucumber and dill, and garden vegetables. The cottage cheese contains 13 grams of protein per half cup.
As for cream cheese, the staple cultured product has been showing up in combination with Greek yogurt and in new savory dips. Several companies added unique flavors to existing lines.
Though unit sales have struggled (IRI shows unit sales down 1.2% for the cream cheese/cream cheese spread category), dollar sales are up 5.2% to $1.5 billion.
One company used cream cheese as its base for a new hearty, dairy dip being marketed to men. Man Dip, created by Ted and Andy LLC, features chunks of meat and spices. It comes in flavors like Habanero, Buffalo Chicken, Jalapeno Popper and Cajun. The dip is produced by Duke Food Products, Easley, S.C.
Challenge Dairy Products Inc., Dublin, Calif., added two flavors in its cream cheese spreads — salsa and strawberry.
Expanding on the typical cream cheese spread, Sierra Nevada Cheese Co., Willow, Calif., introduced a line called Cultured Classics, which includes old-fashioned cream cheeses (organic, regular and flavored) and crème kefir. The line also includes crème fraîche, described as rich in fat (40%), cultured to a slightly nutty tangy flavor, and said to be ideal for cooking.
There’s a lot happening in the cultured dairy aisles these days. Like we said, the cultured landscape is changing and for the better. Dairy has all the good things consumers are looking for, and cultured dairy is poised to really make its mark.
What’s the industry buzzing about?
- Drinkable yogurts
- Dessert flavors
- Savory flavors
- Functional dairy
- Grass-fed milk
- Clean ingredients