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Making Premium a Destination: The Dairy Case


It’s no secret that sales of traditional dairy milk have been steadily declining for decades – dropping as much as 36 percent since the 1970s. There are many factors at work here, but most point to the fact that dairy milk producers haven’t kept up with consumer desires, making the mistake of assuming their product was a commodity that shoppers could not live without. While they sat still – pushing the same basic formulations in the same boring packaging – everything changed around them.

And the same holds true for many retailers that continue to keep their dairy aisle stocked mostly with traditional dairy and other commodified offerings (such as soy milk – another segment on the decline). They are missing the opportunity to provide products that today’s consumers really want: high-quality, healthy, convenient, premium-brand beverage experiences.  Now, those shoppers are beginning to vote with their feet, seeking out the retailers that are stocking the kind of products they demand in their weekly shop.

This shift in consumer behavior isn’t new – note the premium “Starbucks effect” on coffee consumption and the premium “Ben & Jerry effect” on American’s taste in ice cream – but it’s becoming even more widespread. Middle-class consumers are “trading up” in just about every segment as the collective palate becomes more sophisticated and more focused on savoring food and drink experiences. This is causing an increase in the number of consumers looking for higher-quality food experiences, ones they did not grow up with.

Interestingly, Coca-Cola has recently taken aim at the dairy case with FairLife, a kind of industrialized, lactose-free “premium” milk experience that promises “superior nutrition you can feel good about.” One thing Coke has right is that today’s consumers, especially the coveted Millennials, do want to feel good about the products they buy and consume.

This is because consumers are looking for authentic, premium experiences – words like "artisanal," "traditional" and "high-quality" come to mind. Part of what drives today’s consumers is their intense knowledge of where their food is coming from and how it was produced - they want to connect with the brand behind the product.

And of course, there is also the growing trend toward “plant-based” diets that flies in the face of traditional dairy – soymilk was the first alternative and now almond milk, with its superior taste and flexibility (it simply "acts" more like milk), has taken over the alt-dairy mantle. The almond milk category is exploding, representing 55 percent of alt dairy sales, while soy represents just 35 percent. But, to be truly successful with today’s consumer, the “premium” experience must go beyond what’s inside the package to the packaging itself – giving consumers a product they are proud to have in their refrigerator, one that not only looks good but also includes language and symbols that appeal to their core values.

Integrating a premium almond milk brand into the dairy case is helping retailers – both natural and conventional – grow the alt dairy category by making it easy and desirable for consumers to go "plant-powered" and dairy-free. And these offerings are also “free-from” other undesirable ingredients – such as GMOs, gluten and added sugars and fats – while being sustainable and extremely high in calcium and protein – attributes that appeal to a huge number of today’s shoppers.

Opening up the dairy case to almond milk brands is a way to not only increase the profitability of this declining aisle, but it’s also a huge opportunity to consistently attract the consumers you want in your store: those who are happy to pay a price premium in the categories that matter to them.

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