CoBank Report: Dairy products have more growth potential
CoBank's Corey Geiger says dairy's future looks bright
5 August 2024
2 minute read
By: Grocers have long known that the dairy aisle is a traffic driver, revenue generator and a sales leader. It’s the very reason that stores have been designed with the dairy case situated at the back of supermarkets. This design concept draws consumers through the store, creating an opportunity to grab more items as they make their way to the dairy case.
At $76 billion in annual US sales, the dairy aisle stands as the largest category in retail, based on 52-week rolling average Circana sales data through June 2024. Over the last three years, dairy retail sales have notched a growth rate of 15.4% or $10.1 billion. Dairy’s growth rate continues to outpace liquor, the second-place retail department.
Dairy’s growth has not all been driven by recent price inflation either. Dairy product consumption has grown by 7.7% on a per capita basis for a compound annual growth rate (CAGR) of 0.8% over the past decade, moving from 606 to 653 pounds per person on a milk-fat equivalent basis based on USDA data. Keep in mind that Bottom line, consumers’ tastes and purchasing pattern continue to evolve, and that means dairy processors, manufacturers, and marketers need to innovate, too. Dairy products have diverse applications to meet the needs and expectations of most U.S. consumers, including taste, affordability, convenience, health and wellness, and high-quality protein. Processors can entice consumers to purchase dairy products through effective product differentiation, innovation, clear labeling, health benefits messaging, competitive pricing and promotion strategies.
Report key points
- Most US consumers purchase dairy, which is also the largest category in retail. Over the next three years, approximately 90% of people have no plans to reduce their dairy product purchasing behavior.
- Globally, the cheese snack market is projected to reach $75.1 billion this year, and it could grow at a compound annual growth rate of 6.5% through 2034.
- Private labels are outpacing brands in 10 of the 15 dairy categories. Store brand options making considerable inroads include yogurt, cream cheese, cream, and creamers.
- The lactose-free product category provides a simple, yet relevant, tool of innovation for dairy processors to help reach the 120 million Americans who cannot enjoy traditional dairy products due to some form of lactose intolerance.
- Consumers’ tastes and purchasing patterns continue to evolve, and that means dairy processors, manufacturers, and marketers need to innovate, too.
To read the full report, click here.
