Cash Cow

Value-added dairy products boost retailers' bottom lines and shoppers' choices.

Milk, cheese and yogurt are dependable dairy staples, but supermarket operators interested in growing the overall category should consider stocking their refrigerated and frozen cases with dairy products beyond the ordinary. Something, perhaps, like Elli Quark.

Due to hit retail dairy cases this month, Elli Quark is a fresh German-style cheese made with cows' milk and similar to cottage cheese, only smoother, creamier and with a milder taste profile. According to Preya Patel Bhakta, founder of Irvine, Calif.-based Elli, the product is an "all-natural, nutrient-dense source of protein and calcium, without the added sodium found in cottage cheese or the high sugar content of flavored yogurts."

Since the cottage cheese category "in particular is a segment that hasn't seen innovation in quite some time," a key part of Elli's strategy is the fresh new look of the offering, Bhakta observes. "We believe the packaging is very important as a means to promote the product and to stand out from the other dairy products on store shelves," she says. "Elli's packaging is clean, simple and eye-catching, which makes it unique. Additionally, the packaging clearly shares the product's health benefits on the front, such as its low-calorie, low-fat and high-protein content, which will be a big selling point for consumers."

Bhakta, who founded the brand last year because she "could not find dairy options available with the value, taste and texture I was seeking," feels that this gap in the marketplace "puts Elli in a unique position to become a successful dairy product for supermarkets, and a desirable option for consumers. [The line's five varieties] will result in increased store profit due to repeat purchase of the multiple SKUs."

Meanwhile, among traditional yogurt products, Yoplait Greek 100 and Yoplait Light from Minneapolis-based General Mills offer specific benefits to certain consumers: thick Greek-style yogurt with fewer than 150 calories, and a low-calorie product available in a range of indulgent flavors. Both product lines are endorsed by Weight Watchers.

Given the early success of Yoplait Greek 100, which launched this past summer, General Mills last month introduced two additional flavors after consulting consumer preferences: Tropical Fruit and Lemon. Additionally, this past fall, Yoplait Light launched a seasonal limited-time Pumpkin Pie SKU, which did so well that the company plans to roll out two limited-time flavors this spring: Yoplait Original Cosmopolitan and Yoplait Light Piña Colada.

Buttering Up

An established dairy case star with a decidedly upscale sensibility, Epicurean Butter is a Federal Heights, Colo.-based brand that offers flavored, or compound, butters in various sweet or savory gourmet flavors.

According to Epicurean Butter owner Janey Hubschman, "[These products] help home cooks prepare fine-dining meals effortlessly."

Although she notes that the brand's "sales are up considerably over 2011, and, with the projects we are working on with national grocery chains, we expect 2013 to be beyond impressive," Hubschman stresses that Epicurean Butter isn't content just to rest on its considerable laurels.

"Our chef is experimenting with some 'flavors of the world' — Moroccan harissa, Jamaican jerk, Thai green curry," she says, adding that the brand may expand its premium line.

When it comes to merchandising her butters successfully, Hubschman cites Austin, Texas-based Whole Foods Market as a particular standout. "One department orders our product, and then cross-merchandises it in the seafood, meat and produce departments," she explains. "We sell to many seafood departments — they actually sell more seafood because they can give consumers a simple preparation solution."

'Distinct From Ice Cream'

In the frozen section, manufacturers of value-added dairy products are also hoping to make an impact. One is Dallas-based Kaurina's Kulfi, maker of creamy frozen dessert bars in natural-ingredient flavors such as Pistachio Almond, Malai (Cardamon Cream) and Mango.

"It seems the trend is to go for smaller portions versus diet-type products," observes Kaurina's EVP Aman Singh. "Kaurina's snack kulfi bars are a mere 80 calories … with only 4.5 grams of fat and 7 grams of sugar. Folks still want to indulge, but do not want to feel guilty about it."

Singh says consumers' tastes are evolving. "People are interested in more exotic and gourmet flavors," he notes of the product, whose roots are in the Indian subcontinent. "While vanilla, chocolate and strawberries are the classics that will always be there, consumers also want to try more adventurous and different flavors."

In its bid to introduce a new category of frozen dairy dessert to the United States — "Kaurina's Kulfi is distinct from ice cream," Singh declares — the brand has won "a tremendous reception" in stores, he says. The manufacturer plans to expand distribution to more East Coast, West Coast and Midwest grocery stores throughout 2013.

"We have seen at our own product demos [that] when people try, they buy," Singh says. "One can't afford to do demos every day, so packaging has to be on target."

How is that best accomplished? "Having the right imagery and phrasing to properly communicate what your brand and product are about is key," he says. "We know that people aren't going to know what kulfi is, so we had to come up with phrasing that would help the consumer to understand it. Right on the front of all our packaging is a ribbon that says 'What Ice Cream Should Be!'" This, he says, "entices the consumer to at least pick up the box and learn what kulfi is and, of course, hopefully purchase it!"

Future Value

How will grocers — and consumers — derive extra value from dairy products going forward? "I see retailers pairing compound butters with many items," says Epicurean Butter's Hubschman, offering "artisan bread with compound butter sold in the freezer section" as a prime example and adding, in a nod to Whole Foods' practices, "You will begin seeing compound butters in the produce area — think roasted garlic herb butter merchandised near the russet potatoes."

"I think the trends toward healthier natural ingredients, smaller portions and ethnic variety will continue," says Kaurina's Singh. "As the U.S. population continues to diversify, people's tastes will continue to follow suit. Exotic gourmet flavors will become the norm."

Further, according to Singh, "The probiotic trend should continue as more cultured dairy products continue to be introduced into the market. … Consumers also are becoming more environmentally aware … so sustainable practices like recycled packaging will continue to be important."

For MilkPEP's insights on value-added milk products, visit Progressivegrocer.com/valueaddeddairy.

"Elli is in a unique position to become a successful dairy product for supermarkets, and a desirable option for consumers."

— Preya Patel Bhakta, Elli