Promise For The Future

Margarine enjoys a richer outlook than butter as more consumers reach for healthier spreads.

Chefs and bakers may declare butter to be better, but shoppers looking for table spreads are expected to stray in greater numbers from the genuine creamery article for nutritional as well as economic reasons.

That's the long-range assessment of market analysts, but it's not necessarily reflective of the here and now, at least to one retail grocer.

“In the last five months, I have seen our customers moving toward butter and away from alternatives,” says Ben Ablan, category manager for Chesterfield, Mo.-based regional supermarket chain Dierbergs Markets Inc., responding amid the holiday baking season, when butter usage historically spikes. “I see consumers continuing to move back to butter and away from alternatives.”

But that doesn't mean shoppers aren't seeking out alternatives. “I have quite a few customers that are asking for soy-free alternatives,” Ablan notes.

The analysts at Chicago-based Mintel see such behavior as a growing trend. “Tighter food budgets have begun to affect the FDMx butter segment as sales declined in 2009 and are estimated to decline again in 2010,” says a September 2010 Mintel report on the sweet and savory spreads segment.

Dollar sales of butter were about $1.3 billion for the year ending Oct. 30 in food stores (excluding supercenters) with at least $2 million in sales, according to Nielsen Company data. That's 0.7 percent lower than the same period a year ago; units sold dropped 2.7 percent.

Margarine sales for the same period fell nearly 10 percent to just under $1.7 billion, according to Schaumburg, Ill.-based Nielsen, with a 5 percent drop in units sold.

Mintel's long-range forecast for butter alternatives is much sweeter — modest annual sales increases through 2015 after finishing 2010 down 6.6 percent. “Margarine and table spreads sales are expected to experience a CAGR of 2.7 percent during 2011–15, as health-conscious consumers increasingly seek out better-for-you products,” Mintel reports. “Generally, BFY products carry a higher price, which should result in slightly higher sales, even if units sold do not increase substantially.”

Meanwhile, butter is expected to go about the same distance in the other direction — down 2.5 percent during 2011 to 2015, Mintel projects. “Volume sales will decline as consumers tighten budgets even further,” the report finds. “Butter prices in June 2010 were 5.8 percent higher than in June 2009, and these higher prices, while driving up dollar sales, can also lead consumers to forgo butter purchases or trade down in price to private label butter or margarine/table spreads.”

Sea Change

At least one major butter producer concurs with that assessment. “There has been a multiyear trend toward more consumer purchases of private label butter over branded options,” says Jim Walsh, VP of marketing at New Ulm, Minn.-based Associated Milk Producers Inc. (AMPI). “That trend appears to have continued in 2010, probably a reflection of consumers' continued efforts to trim their food budgets.”

This past holiday season, however, was full of promise for retail butter sales. “Right now, we're seeing butter in the $1.60 range, which has spurred business because retailers can feature a far more attractive price as compared to before Thanksgiving,” Walsh, whose company is a major butter supplier to retail, foodservice and food ingredient customers located primarily in the eastern half of the United States, told PG in early December. Most of AMPI's butter is sold under private labels, though some is marketed under the State Brand moniker.

“I predict that December sales are going to ultimately be stronger than last year's level,” Walsh says, noting he observed a 5 percent decrease in overall butter sales compared with 2009 before heading into the holiday season.

Private label sales of butter accounted for about half of all FDMx sales in 2009–10. “A growing presence of private label organic lines, including butter, has helped to drive sales,” Mintel reports, noting that consumer behavior has been affected by volatile price swings in the butter market.

Butter quarters continue to be the biggest seller for both branded and private label products. “We have seen an uptick in demand for unsalted butter as a percentage of the total butter category,” Walsh says. “This may be due to consumers' health concerns. Also, the popularity of the Food Network and programs featuring professional chefs are driving consumers to try more recipes that call for unsalted butter.”

On the other hand, several butter manufacturers — embracing the trend toward more natural ingredients — are using sea salt in their salted butters. “In a mature segment such as butter, adding a trendy new type of ingredient is an innovative way to catch consumers' eyes in a market with heavy private label presence,” Mintel says.

The segment is so mature that, despite brand allegiance weakened by cost consciousness, the Land O'Lakes brand is so firmly entrenched in the grocery shopping experience that it controls nearly 26 percent of the entire segment.

But that hasn't stopped upstarts and boutique entries like Celles Sur Belle Traditional Churn Butter with Sea Salt Crystals from France, or West Country Farmhouse Butter, a British product that also contains sea salt. And PastureLand Organic Butter, from Goodhue, Minn.-based PastureLand Dairy, claims to be made from the milk of “100 percent grass-fed cows.”

Mintel reports: “Growth in the market has been fastest in the specialty/premium and natural/organic subsectors … Retailers have increased their selection of these types of products, including private label and store brands. [This has] allowed consumers to trade up without making a trip to a farmers' market or specialty food store necessary.”

Some retailers are pursuing their own specialty products as well. “Our deli has had success with a number of flavored gourmet butters — prepared in our kitchen — which we promote as finishing butters for meats, seafood and produce,” says Todd Vasel, Dierbergs assistant director of marketing and advertising.

Spreading the News

Among margarines and table spreads, Englewood Cliffs, N.J.-based Unilever dominates the segment, with a market share approaching 51 percent. And though four of the food giant's brands reported sales declines of up to 15 percent in the past year, sales of its Shedd's Country Crock Plus brand — boasting extra calcium and vitamin D — were up more than 19 percent.

Demonstrating the benefits of value-added ingredients, Smart Balance's omega-3 product line was up 6.6 percent in sales, while its original formula dropped 10.6 percent. Other Smart Balance products include flax seed oil, which may benefit cardiovascular health and immunity, and extra-virgin olive oil. The Earth Balance brand includes a range of buttery spreads that purport to be “always non-GMO, and free of trans fats, hydrogenated oils and artificial ingredients of any kind.” The spreads, made by Paramus, N.J.-based GFA Brands Inc. (which also owns Smart Balance), are made with a proprietary blend of “expeller-pressed oils” that supports healthy cholesterol levels, according to the company's website.

Launched in 2009, Melt Buttery Spread is an organic butter alternative that claims to support a healthy weight when replacing other fats. Used as a spread and in baking, Melt's key ingredient is organic virgin coconut oil. The product is positioned as a rich source of medium-chain fatty acids, or “good fats,” that the body burns as energy instead of storing as fat. Produced by Hailey, Idaho-based Prosperity Organic Foods Inc., Melt is available in more than 500 stores throughout the western United States, including Whole Foods, Raley's, Albertsons, Haggen/Top Foods, Sprouts and Bristol Farms, and is expected to be available soon in Kroger's Western Division banners.

Store brands are getting in the game as well. East Coast retailer Giant Food, a division of Quincy, Mass.-based Ahold USA, includes a margarine spread in its new Nature's Promise Organics line, and Bentonville, Ark.-based Walmart offers its Great Value Cardio Choice Buttery Spread, with added omega-3 and vitamins A, B, D and E.

“Value-added ingredients are key to innovation and thus rising sales,” Mintel stresses, “especially in a mature market like this one.”

Demographics also are playing a role. Mintel reports that Asian and Hispanic consumers are “slightly more likely to have switched from traditional butter to healthier products, and also to use margarine with plant sterols, indicating these groups find either value or validity in claims for improving health.”

Butter may have enjoyed a brief resurgence as trans fat-laden spreads came under fire, but reformulated and value-added table spreads have come back with a vengeance. Despite the warm spot in many cooks' hearts for real butter, it looks like long-term concern for heart health is going to be driving long-range growth in the spreads segment.

Out With the Butter, in With the Oil

A newly released survey of dietitians reveals a strong preference for olive oil as the food oil of choice, even for individuals on diets.

Canola oil was the second choice, while other oils — safflower, soybean, peanut, corn and flax — trailed far behind, according to the survey underwritten by Baltimore-based Pompeian Olive Oil Co.

The survey solicited participation from 787 dietitians, 95 percent of whom “recommend replacing butter and hydrogenated fats” with olive oil. Also among the key findings of the survey was that olive oil is considered by respondents one of the top two “healthy foods and ingredients,” the first being fruits and vegetables, and the third, salmon and fish.

The study was conducted by Dr. Doug Bibus, a nationally recognized lipid nutrition expert and community faculty member at the Center for Spirituality and Healing at the University of Minnesota, and president of Austin, Minn.-based Lipid Technologies LLC. “Recent epidemiological reviews are now suggesting that dietary refined carbohydrate may be a major culprit of increasing obesity rates and that dietary fat may not be as harmful as once thought,” Bibus says. “Clearly, dietitians in our survey feel that olive oil is an important part of any diet.”

Complete survey results can be found at www.pompeian.com/dietitiansurvey.