The clean label trend (which is dominating the conversation in the food industry) isn’t so much a trend anymore, but a “movement.” This is a common thing I’m hearing when talking to dairy processors and suppliers lately. With consumers making it very clear what it is they want, more food manufacturers are recognizing this movement and are answering the call with new product innovation, more transparency about what they use, changing the ingredients, or in some cases,  all of these things.

Dairy processors move toward ‘clean’

Over the last five years, clean label claims appear more often on new dairy launches in North America, according to Innova Market Insights, Netherlands. The number of launches tracked with claims such as “not treated with growth hormones or antibiotics” has grown every year, up around 9%. Among yogurt drinks, around a third of the launches were tracked with a clean label claim in 2015.

The most frequently used type of clean label claim within the dairy category is “no additives and preservatives,” according to Innova.  It also shows strong growth from 2011 to 2015. And perhaps due to some media attention, natural has actually become a less-often-used claim, reported Innova.

In April, two prominent dairy processors made “pledges” to consumers to making their products cleaner. Nestlé Dreyers Ice Cream, Oakland, Calif., announced it was removing certain ingredients, including high-fructose corn syrup, from six of its brands: Edys, Häagen-Dazs, Outshine, Skinny Cow, Nestlé Ice Cream and Nestlé Drumstick. Meanwhile, Dannon, White Plains, N.Y., announced its commitment to sustainable agriculture, more natural ingredients and greater transparency.

For Nestlé, the focus will be on simplifying ingredient lists across more than 100 products, including the removal of artificial colors and flavors, and genetically modified organisms. The company will also use milk from cows not treated with rBST, will look to add more real fruit or fruit juice and reduce sugar by an average of 11% on select products. In December of last year, Nestlé also announced that it will transition to using only cage-free eggs in all of its U.S. food products, including ice cream, within the next five years. A nationwide roll-out for the newly updated products began in March.

Dannon pledged to its farmers, retail customers and consumers to further improve sustainable agriculture practices and technology for its milk supply, to increase transparency for its portfolio of products and evolve to more natural and fewer ingredients (that are not synthetic and non-GMO) for three flagship brands — Dannon, Oikos and Danimals. 

Dannon also commits that for these brands the feed of its farmers’ cows will be non-GMO, within a transition period of three years. This is a first for a leading non-organic yogurt maker, according to the company. To ensure full transparency for consumers, the company also commits to declare on labels the presence of GMO ingredients in its products nationwide by December 2017.  

Last December, Kraft Heinz, Chicago, removed artificial preservatives, flavors and dyes from its macaroni and cheese recipe, swapping out artificial food colors, including yellow 5 and yellow 6, for natural spices like paprika, annatto and turmeric.

Organic is everywhere

Sales of organic food and nonfood products in the United States broke another record in 2014, totaling $39.1 billion, up 11.3% from the previous year, according to the latest survey on the organic industry from the Organic Trade Association (OTA), Washington, D.C. The organic dairy sector posted an almost 11% jump in sales in 2014 to $5.46 billion, the biggest percentage increase for the category in six years. Despite the industry struggling with tight supplies of organic ingredients, organic food sales in 2014, at $35.9 billion, posted an 11% rise, according to the OTA.

Organic options are also becoming more readily available in conventional stores. Publix Super Markets, Kroger, Target and Aldi are all making attempts to add more organic selections in their grocery stores. Reports also say that Costco’s organics business has doubled in the past couple of years.

According to Eric Newman, vice president of sales at Organic Valley, La Farge, Wis., retailers are seeing the growth opportunity and more are competing for the organic consumer.

“Whether a retailer or CPG, everyone recognizes they need to be involved in organic. They’re definitely devoting more space to it and expanding their organic offerings,” he said.

According Angela Jagiello, associate director, conference and product development at OTA, as more shoppers choose organic (recent figures show that 83% of families have purchased organic), a greater percentage of organic products are sold through conventional grocers and club stores.  She said that 2015 marked the first year that natural foods retailers sold less than half of the total organic food in the United States.

Jagiello added that “one of the strongest areas for private label organic is in the dairy set, where estimates are that 40% of organic fluid milk is private label.”

According to Chicago-based Mintel, sales of organic products may be on the rise, but actual consumer penetration appears to have plateaued. More major grocery and mass merchandiser chains are adding or expanding organic ranges, however, and this increased availability of organic foods and beverages should translate into an uptick in organic food usage.

Millennials are significantly more likely to buy organic products from mass retailers (e.g. Target, Walmart, etc.), drug stores, dollar stores and convenience stores. As these retailers continue to increase their organic offerings, millennials appear  willing to support organic brands from nontraditional food channels, but these retailers are unlikely to convince non-millennials to experiment with organic foods and beverages outside of traditional food retailers, Mintel reported.

Mintel also noted the challenges producers of organic products face. Consumers appear skeptical of organic in general due to the prevalence of natural claims, as well as a limited awareness of organic regulations. More than half regard organic on a label as an excuse to charge more for a product, and only 42% trust that organic-labeled products are actually organic, said Mintel. Consequently, companies will need to address consumers in a more open and transparent way to maintain credibility in this confusing market.

Cost and supply is another challenge.

“We need more conventional farmers to transition to organic. Demand far outweighs supply, driving costs up, and making it very hard for brands to compete in this space,” said Jesse Merrill, co-founder and CEO of good culture, Los Angeles. “We’d see a huge increase in organic products and organic consumers if we solved this ongoing issue.”

Whole nutrition and innovation

The market is prime and ready for new organic dairy innovation that grabs consumers’ attention, this includes fortified products, convenient packaging and flavor innovation.

“In addition to the overall evolution of the organic industry, one strong area of growth is in fortified organic products,” said Mike Ferry, president of premium dairy, WhiteWave Foods, Broomfield, Colo. “We have found that consumers are increasingly choosing organic foods that contain added nutrients, vitamins and minerals because of the benefits they can deliver.”

Horizon launched an organic dairy beverage that’s fortified with more protein (15 grams per 10-ounce serving compared to 8 grams per 8 ounces in standard 1% white milk). Called organic chocolate protein plus, it’s sold in a single-serve bottle, for an on-the-go option.

Other processors agree with a focus on creating products that deliver on the needs of the consumer.

“For dairy specifically we see the consumer looking primarily for two key things — clean and simple organic products, as well as unique and meaningful product innovations,” said Brian Carson, director of organic sales, Humboldt Creamery, Fernbridge, Calif.

The desire for real food and clean and simple ingredients is bringing attention back to whole-milk/full-fat dairy products and grass-fed dairy as well.

“We are experiencing a paradigm shift where people are looking to real food as their primary source of nutrition,” said good culture’s Merrill. “Consumers are looking for full-fat dairy products that are satiating, delicious, less processed and contain less junk.”

She added, “People are looking for sustainable, real foods — grass-fed, whole-milk and organic/natural all roll up to that bigger need.”

Good culture recently updated its flavored cottage cheese line with new “cleaner” packaging and a whole-milk recipe at the beginning of the year. The cottage cheese is available in five flavors, including sundried tomato and strawberry chia.

Ferry added, “While grass-fed milk is a niche product within the organic dairy category, consumer interest in it speaks to the larger trend we continue to see from consumers who want to know more about what’s in their food, and where it comes from.”

Organic Valley, a company that focuses a lot on transparency, launched organic grassmilk yogurt in 24-ounce containers earlier this year, and will be adding 6-ounce cups of the whole-milk cream-on-top organic yogurt in September. The grassmilk yogurt will be available in four flavors: blueberry, strawberry, vanilla and plain.

The company also relaunched its organic flavored half & half coffee creamers in a plastic bottle with a flip top.  The creamers, which were discontinued during a butterfat shortage, were requested back by popular demand from customers, according to Organic Valley’s Newman.  He said it’s the only certified organic flavored half & half creamer on the market. It’s available in hazelnut and French vanilla flavors.

Petaluma, Calif.-based Clover Stornetta Farms introduced a new line of organic nonfat Greek yogurt. The company said the yogurt is “fruit-forward,” meaning organic fruit is second (after milk) on the short ingredient list. The yogurt comes in six flavors, including blueberry, strawberry and peach.  The strawberry flavor contains 110 calories, 13 grams of sugar and 12 grams of protein per 5.3-ounce cup. 

This spring, Three Twins Ice Cream, Petaluma, Calif., introduced first-to-market organic sundae ice cream cones and two new shelf-stable organic cone varieties — cake cones and sugar cones. Each box of frozen organic sundae cones includes three cones and has a suggested retail price of $5.99. Each box of organic cake cones and sugar cones includes 12 pieces each and has a suggested retail price of $3.19 and $4.19, respectively.

“Although organic products have undeniably started to enter mainstream status in recent years, the industry is still in its infancy and there is gargantuan growth to be had,” said Neal Gottlieb, founder of Three Twins Ice Cream. “I believe the greatest growth potential is for products that are priced close to their conventional rivals but offer better taste [and] cleaner ingredient statements.”

This is the focus for many producers of organic — staying true to their “clean ingredients” statements, maintaining high standards, focusing on transparency, educating people on what organic really means and finding a way to get prices to where plenty of consumers can and will buy it.