Fun new flavors and formats, like Crystal Farms' Pepper Jack snack cubes with jalapeño peppers, will help keep the dairy category vibrant.
Retail Opportunities
To counter the consumer perception of dairy as too expensive, Stibel advises: “The way to overcome this hurdle is to reinforce the health benefits of most dairy offerings, ranging from prebiotics and probiotics to milk, cheese and other better-for-you products. There is also a huge opportunity in dairy protein, which is already growing because of the basic demand for protein, and the particular need for protein among the growing number of Americans on GLP-1 weight loss diets.”
He additionally points to new product opportunities in healthy protein drinks, which “have the potential to be better-tasting and healthier than anything in the cold case”; cheeses, which can be premiumized like wine and chocolate; yogurt, which may serve as a meal replacement, liquid beverage or snack; and other dairy snacks, which are able “to trade people up from salty and sweet to something that is much more enjoyable and far healthier.”
In the area of in-store marketing, Sibel asserts: “There are many things that grocers can do to stimulate demand for dairy products, but none more important than in-store sampling and dietitian recommendations. In-store sampling has proven time and again to be of great value to our dairy clients and also to be of value to grocers by driving traffic to the dairy. This sampling can be done in concert with complementary products such as wine and cheese, chips and dips, etc. Ditto dietitian recommendations, because dietitians know more about nutrition than most doctors and nurses, and have the ability to nudge consumers toward better-for-you products, even at higher prices.”
To further nudge shoppers toward dairy, Stibel offers a few outside-the-box ideas, including “the creation of a dairy bar, which could be a cheese bar one week, a protein shake bar the next and a yogurt bar the following. There could also be a very creative personalization-type vending machine, not unlike the Coca-Cola Freestyle or retail coffee dispensers in grocery, that permit consumers to personalize their dairy selections, from yogurts to shakes.”
Meanwhile, according to Roerink: “Transparency is the currency of trust, and we’re seeing more retailers provide information to drive permissibility. We also see these concerns being addressed in the integration of locally sourced items; grass-fed milk, cheese and butter; organic eggs; vegan or vegetarian alternatives to dairy items, etc. I believe consumer education and information, hand-in-hand with assortment variety, is that winning continuum of choice that will help shoppers be engaged.”
Regarding health, she notes: “Nutrition is a big win for dairy, and more retailers are calling out protein content and the wide variety of nutrients delivered by the various dairy items. Protein continues to be red-hot, and items across the store are calling out protein content and linking it to many benefits, whether getting ready or recovering from a workout, or general energy and sustenance.”
As far as product development goes, Roerink asserts: “Dairy has done a tremendous job in limited-time flavors, line extensions and the integration of completely new items. Especially around the major holidays, items ranging from dairy creamers to cheese and yogurt will introduce holiday-relevant limited flavors, and that is exactly what consumers are looking for.”
Additionally, merchandising the category can involve more than just the dairy department. “Lately, I’m seeing more cross-merchandising displays aimed at breakfast, with several breakfast staples experiencing deflation [being offered at] enticing price points,” says Roerink. “For instance, H-E-B had a breakfast taco display with tortillas, shredded cheese, eggs, bacon, etc. These types of things work for many reasons, easy meal ideation and ease of shopping [among them.]”
[Never miss a story – sign up for Progressive Grocer's FREE Daily newsletter]
“We believe it’s crucial to align our marketing with our mission, both in-store and beyond,” notes Drake. “Our new brand campaign, Protecting Where Your Food Comes From, emphasizes the origins of our products. We aim to inform consumers that by choosing Organic Valley, they are helping to protect the sources of our food. Supporting our climate-friendly dairy, sourced from small family farms, allows consumers to make a positive impact on the environment.”
Emerging Trends
What are upcoming areas of focus in dairy? “Addressing digestive and gut health within the dairy sector remains a critical focus,” observes Drake. “As consumer awareness and demand for functional foods increase, it’s essential to continue developing and enhancing dairy products that support these health needs. This involves innovating with probiotics, prebiotics and other gut-friendly ingredients to create a range of dairy products that taste good and offer significant health benefits. By prioritizing digestion-friendly options, we can meet the evolving preferences of health-conscious consumers and maintain a competitive edge in the market.”
“I think variety is going to be a big one, a.k.a. multiple flavors in one package, or mix-and-match promotions,” predicts Roerink. “Today’s consumer has their favorites, but experimentation with new flavors is a definite trend across the store. That means more limited-time flavors, more mixed varieties, and the inclusion of some more exotic and global flavors.”
She adds: “I think we’ll see more protein callouts across dairy items, along with education about other important nutrients. Both meat and dairy are running behind other categories on that, and it is a big selling opportunity. The aging Boomer generation is more focused on protein, calcium, etc. — the positives in food — than they were 10-15 years ago, when the focus was more on the negatives such as fat, saturated fat and cholesterol.”