Known for his smooth, velvety voice, music icon Frank Sinatra was a great interpreter of the Great American Songbook. In “It Was a Very Good Year,” he outlines the times of his life at 17, 21, 35 and in the autumn of his life. Just like Sinatra’s nuanced voice and legacy, cultured dairy products such as yogurt, cottage cheese, sour cream and kefir have defied expectations, stacking up success in 11 of 15 Dairy15 categories, says John Crawford, senior vice president of Client Insights-Dairy at Chicago-based Circana.

“Overall, dairy saw positive trends in 2024 with the Dairy15 up 3.6% in dollars and 1.1% in volume,” Crawford explains. “We are seeing volume growth in 11 of 15 Dairy15 categories. [There is] softness in Margarine, Processed Cheese and Rfg. Desserts. Milk is slightly down, driven by Plant Milk declines.

“Cultured as defined was up 7.3% in dollars and 6.4% in volume and includes some of the fastest-growing categories in the Dairy15,” he continues. Among the successful cultured dairy segments Crawford outlines in 2024 were:

• Cottage Cheese, up 17.2% in dollars, up 12.6% in volume
• Yogurt, up 8.7% in dollars, up 7.5% in volume
• Cream Cheese, up 3% in dollars, up 0.9% in volume
• Sour Cream, up 4.3% in dollars, up 2.2% in volume
• Rfg. Dips, up 6.1% in dollars, up 5.8% in volume
• Kefir, up 24.1% in dollars, up 26% in volume

In U.S. multi-outlets and convenience stores for the 52 weeks ending Dec. 1, 2024, Circana reports that yogurt, comprising dairy yogurt, dairy yogurt drinks, dairy alternative yogurt and dairy alternative yogurt drinks, was No. 1 among cultured dairy subcategories, with $11.2 billion in sales, an 8.2% year-over-year (YoY) climb.

While dairy yogurt ($9.4 billion) and yogurt drinks ($1.4 billion) had growth of 8.3% and 9.6%, respectively, the dairy alternative segments didn’t fare as well. Plant-based yogurt drinks generated sales of $480,439 at a negative compound annual growth rate (CAGR) of 16.7%, while plant-based yogurt had a declining 3% CAGR and nearly $284 million in sales, according to the market research firm.

No. 2 and No. 3 in the cultured dairy category were refrigerated creamers, with $6.8 billion in sales and a 5% YoY growth, while cream cheese generated 3.2% growth and sales of $3 billion. The dairy subsegments left the plant-based counterparts in the dust. Dairy creams/creamers grew 6.5% YoY, amassing $5.6 billion in dollar sales.

Albeit from a much lower base, dairy alternative creams/creamers and non-dairy creams/creamers produced sales of $598 million and $582 million, respectively, with YoY declines of -0.3% and -3.3% for the period ending Dec. 1.

And while cottage cheese sales of $1.6 billion was surpassed by refrigerated whipped toppings ($2.4 billion, up 10.2%) and sour cream ($1.8 billion, up 4.2%) cottage cheese sales generated YoY growth of nearly 17% for the 52 weeks ending Dec. 1, 2024.

On a roll for several years

Circana’s Crawford notes that as inflation has eased, volume growth has returned. “While prices were still up in 2024, overall dollar growth is driven by both pricing and volume. In 2022 to 2023, dollar growth was solely driven by pricing,” he states. 

“Cottage cheese and yogurt have been on a roll for a couple of years with both dollar and volume growth. Cottage cheese is still reaping the benefits from the viral campaign providing new usage occasions and appealing to a younger consumer,” Crawford continues. “Protein is an important benefit for cottage cheese and yogurt; pre/probiotics are important benefits for yogurt and kefir.”

Functional dairy is a “dynamic landscape,” which stood at $44 billion in 2023. Yet, with a CAGR of 4.5% for the 10-year period of 2023-2033, Future Market Insights (FMI) forecasts the category to reach $67.1 billion by 2033. 

In an August 2024 report, “Functional Dairy Products Market,” FMI notes that growth is occurring because not only are cultured dairy products more widely available and growing in popularity, but consumers’ concerns about their health are driving the development of the global functional dairy products market.

In fact, approximately two-thirds of adults in the country are more concerned about their health than ever before, with FMI predicting “a bright future for functional dairy due to consumers’ proactive and preventive approach to health.”

When looking at the numbers globally for dairy and plant-based dairy between 2019 and 2024, there is huge divide of hundreds of millions of dollars, according to data from Chicago-based Euromonitor International.

In 2019, dairy and plant-based dairy generated dollar sales of $475 million and $17.2 million, respectively. Between 2020 to 2024, plant-based dairy had its ups and downs, clocking in at $19.8 million in 2021, dipping to $19.7 million in 2022 before seeing small growth in 2023 and 2024 with respective sales of $20 million and $21 million.

Dairy, however, is the runaway winner with YoY growth of $10 million to $30 million in dollar sales. For example, in 2022, dairy dollar sales globally were $538.7 million, in 2023, $570.1 million, and $590.4 million in 2024.

There also is an increasing shift of consumers toward nutrient-dense foods to achieve high nutrition beyond basic nutrition.

“[F]unctional dairy products have been long associated with vitamins, bioactive peptides, specific proteins, conjugated linoleic acid, antioxidants, organic acids, highly absorbable calcium, probiotic bacteria, and oligosaccharides,” the FMI report stated. “Numerous biologically active components in these dairy products are anticipated to boost the global functional dairy products market in the evaluation period.”

Renaissance-like appeal  

Carmen Licon, Ph.D., director of the Dairy Products Technology Center and PCC-DBII at California Polytechnic State University, San Luis Obispo, surmises that more functional ingredients like protein, fiber, prebiotics and probiotics within cultured dairy products as well as on-the-go snacking is giving cultured dairy renaissance-like appeal.

“From my perspective, the consumer is more conscious about what they eat and for what occasions they eat it,” Licon says. “In this sense, fermented products have gained a lot of importance in our diets, and dairy foods are well-positioned because of their high protein content. GLP-1 users are also an important part of the equation. This is an evolving topic but we are now aware that high protein content is ‘GLP-1 friendly’ and dairy, especially cottage cheese or Greek yogurt, are well positioned to fulfill nutritional needs.” 

Cottage cheese had garnered many recipe shares on TikTok, While consumers are using small curd cottage cheese instead of ricotta in lasagna — which is similar in texture — lowers the fat while upping the protein, Licon points to another interesting idea: cottage cheese ice cream.

“Cottage cheese shares a small part of the market; however, it’s been on grocer’s shelves for a long time. The fact that consumers are starting to innovate their use of dairy products as ingredients is what has changed the game.” She notes. “Using cottage cheese as a source of protein for ice cream is a very good way to transform an indulgent treat into a healthier alternative.”

Circana’s Crawford concurs that cottage cheese being used as a base in homemade ice cream “is an exciting usage occasion. There is even a cottage cheese ice cream brand called Smearcase which is new to market.”

Sharing the brand’s story 

In addition to Chobani, which released a ready-to-drink yogurt with 30 grams of protein, “Oikos Pro, 2 Good, :ratio, siggi’s and Lifeway (kefir) are innovating in the cultured dairy market,” Crawford adds.

To leverage growth and stand out from a sea of competitors, California Polytechnic State University’s Licon notes the importance of “Staying up to date with consumer needs and wants, offer good quality products, and especially, share the story and values of the brand.”

Circana’s Crawford agrees. “Dairy products have been doing a better job communicating key intrinsic benefits like calcium, protein, probiotics, etc.,” he explains. “In addition, cultured products, particularly yogurt, kefir and cottage cheese are recommended foods for people on GLP-1 medications.”

Licon anticipates that cultured dairy products will continue growing along with high protein and lactose-free products. Innovation in new product development, the use of social media and online platforms will continue to propel the dairy industry forward.

In fact, Future Market Insights stated that “Home penetration of functional dairy products increased by 100% from 2020 to 2021, compared to the same period in 2019. High-income buyers are more than twice as likely to shop for functional dairy products online. Additional motivators include lifestyle and the simplicity of price comparisons, both of which were cited by nearly 40% of online dairy shoppers.”

Using dairy as an ingredient also can assure growth, Licon says. “There’s room for more innovation and to find ways to use dairy as an ingredient in products that we haven’t thought of before, as an industry, we have to keep thinking ‘outside the milk jug,’” she concludes.