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Dive Briefing:
- Refrigerated dairy grew to become the largest segment of the retail industry last year, generating $76 billion in sales, according to a report released last week by agricultural research firm CoBank.
- According to the report, butter, cheese and yogurt products have grown by 15.4% over the past three years, reaching a market size of $10.1 billion.
- Dairy snack options continue to grow in popularity, with cheese snacks expected to grow at a compound annual growth rate of 6.5% through 2034, reaching an estimated $75.1 billion in sales this year, according to CoBank.
Dive Insight:
While many consumers are moving away from animal products, dairy products are gaining popularity as food tastes change, making this category more profitable than ever.
Bill Roberts, CoBank's chief food and beverage economist, said in a report that the aversion to processed foods has helped dairy.
“One thing we’ve learned from following the plant-based category is that long ingredient lists are a barrier to many young, health-conscious consumers,” Roberts said. “Dairy is generally perceived as having a clean label with few ingredients. Dairy brands can capitalize on that with the right mix and marketing.”
But the growth in this segment isn’t limited to brand names. Private-label butter, cheese and yogurt are also on the rise, with store-brand items outselling premium brands in 10 of 15 dairy categories, according to Circana data cited by CoBank.
Corey Geiger, CoBank's chief dairy economist, said processors are taking advantage of the many uses dairy products can offer.
“The healthy snacking category is a growing megatrend that dairy can capitalize on through a variety of conveniently packaged solutions, from reduced-fat cheeses and specialty yogurts to functional dairy beverages,” Geiger said.
According to CoBank, cheese remains a key part of the dairy category, with consumption growing 46% over the past 20 years. Butter has grown 43% over the past 25 years, and yogurt has grown 142% over that period, driven by the popularity of Greek yogurt and drinkable snack options. Growth in these categories has helped offset the decline in fluid milk consumption.
Dairy producers are pouring new products into this category.
Yogurt giant Chobani launched Creations, a line of dessert-inspired Greek yogurts, in 2023. Cheesemaker Sargento has grown to $2 billion in annual sales, and its biggest success in recent years has been its Balanced Breaks snack line, which mixes dairy with nuts, banana chips, Ritz crackers, and Chips Ahoy! into a portable form.
As companies innovate, they can use dairy in new ways to become more successful. This could include sweet and spicy cheese products. Yogurt can also be used as a protein-enhancing ingredient in food and beverage items. Yough, a frozen pizza brand launched last year, uses Greek yogurt as its main ingredient, containing 32 grams of protein per pie.
