It’s November — the air is crisp, pumpkin-spice offerings are seemingly everywhere, and the Thanksgiving holiday is looming. November is memorable for more than those reasons, however. It is also the month that Dairy Foods publishes its annual State of the Industry report.
You might notice something potentially troubling as you flip through our November 2021 eMagazine: For the most part, the dairy categories did not realize the impressive growth at retail — based on data from Chicago-based market research firm IRI — that we reported in our November 2020 issue.
The news is not necessarily bad, however. After all, 2020 was a year like no other, with the COVID-19 pandemic pushing dairy demand away from food service and toward retail as many U.S. consumers stayed put in their homes.
A year like no other
American consumers did not just consume more dairy at home in 2020. They consumed more dairy overall. According to the International Dairy Foods Association (IDFA), the average American consumed a full 3 pounds more of dairy foods and beverages in 2020 than in 2019 — for a total of 655 pounds (citing data from USDA’s Economic Research Service).
“What 2020 shows us is that Americans are choosing to include dairy in all parts of their day because it’s delicious, nutritious, and fits almost any occasion,” says Michael Dykes, D.V.M., president and CEO of IDFA. “Despite challenges posed by the pandemic to all parts of the supply chain in 2020 — including the near-overnight loss of the foodservice sector — per-capita dairy consumption continued to surge upward thanks to growth in ice cream, butter, and yogurt. Last year’s consumption figures are nearly 70 percentage points above the annual average, showing America’s growing appreciation for their favorite dairy products.”
A still-changing landscape
The demand for dairy is regaining some steam on the foodservice side, so the slowdown in growth for many retail dairy categories should not come as a surprise. But the return to offices and schools on the part of many consumers does not mean the end of pandemic-related impacts to the dairy segment — and the larger food and beverage industry.
“Nearly two-thirds of U.S. adults agree that the pandemic has made them reevaluate their life priorities,” notes Jenny Zegler, associate director of Food and Drink for global market research firm Mintel, in a Sept. 15 post citing recent Mintel research on American values. “In food and drink, U.S. adults say the pandemic caused the most change in where they eat, how they grocery shop and how they approach their diets.”
One change with staying power, Zegler points out, is a more holistic view on health that moves consumers’ self-care approach from “comfort food to nutritious food.”
In its July 2021 report titled “Food Market Outlook 2021: Grocery Shopping, Home Cooking, & Food Preferences in the Waning Pandemic Period,” the Packaged Facts division of Market Research Group LLC agrees that the pandemic had an “extraordinary impact” that has significantly changed consumer behavior in relation to food and beverages.
Dairy processors would be wise to note — and respond to — this reality.
“Several trends in the food industry will gain even further traction in 2021 and beyond, including plant-forward, lab-created/cultured protein alternatives, better-for-you products, healthier indulgences, restaurant quality at home, sustainable packaging solutions and evolutions in online sales and distribution,” Packaged Facts points out.