Dairy Sales on the Rise: Here’s Why

According to the International Dairy Deli Bakery Association (IDDBA), dairy sales have shown a positive trend in the early months of 2024, fueled by new buzzwords and emerging trends in the category. This marks a welcome change, considering that overall dairy sales struggled towards the end of 2023.

Chad Galer, vice president of product innovation and food safety at Dairy Management Inc., stated that dairy now boasts the largest food aisle presence at retail, with substantial growth observed this year. “Consumers continue to gravitate towards dairy due to its delightful taste, nutritional benefits, accessibility, and versatility, solidifying its role as a dietary staple despite economic pressures,” he explained. The U.S. Department of Agriculture reported an increase in dairy consumption, with Americans consuming an average of 655 pounds of dairy products per person, highlighting a resilient and growing affection for dairy.

For many consumers, incorporating dairy into their daily diets is almost unavoidable. From plant-based milk and Greek yogurt to specialty cheese and creamers, dairy plays a vital role in various eating occasions.

A significant contributor to this resurgence is the rising consumer emphasis on healthier eating habits. A recent Circana study found that 39% of consumers are prioritizing healthier food choices in 2024. Elena Umanskaya, vice president of marketing for Lactalis Heritage Dairy, noted, “Consumers are drawn to dairy because milk, a primary ingredient in our products, is a good source of essential nutrients.” Dairy products align perfectly with this trend, offering key nutrients such as protein and calcium.

Gut health remains a critical focus in the dairy sector, particularly regarding yogurt. Additionally, supermarkets are witnessing a continued influence of added protein functionality to meet the demand for high-protein diets, according to Rich Gillmore, vice president of center store for Gelson’s Markets in Encino, California. “Regenerative agricultural practices are emerging as a significant trend in the dairy category,” he added. “Several brands are making claims related to this, and some now carry certifications, applicable to both traditional dairy and plant-based options.”

The Rise of Cottage Cheese

Many grocery retailers have noted that cottage cheese is one of the most significant trends recently, with sales up by double digits compared to last year. With its high protein content, cottage cheese reflects consumer preferences for wholesome, nutritious dairy products. A recent Circana study revealed that dairy items with higher protein content are experiencing an 8% year-over-year growth.

“There have been high-profile social media influencers promoting the benefits of cottage cheese, leading to its resurgence,” Gillmore remarked. “Interestingly, just a few years ago, I would have described it as a declining category. Some cleaner, organic, non-GMO brands are performing exceptionally well, alongside traditional brands.”

Another notable trend is the increasing interest in whole-fat milk, as numerous studies debunk negative perceptions surrounding full-fat options. Whole milk sales rose by 8 million gallons in 2023, now accounting for more than 45% of all milk sales, with this trend expected to continue strong into 2024, according to IDDBA. Recent legislation passed by the House of Representatives aims to reintroduce whole milk into American school cafeterias in 2024, following a 13-year ban.

Additionally, milk production is projected to rise in 2024, potentially leading to lower prices at supermarkets, which may further boost sales in the coming months. The USDA anticipates prices dropping below $20 per hundredweight, marking the lowest levels seen in years. Whipped cream is another dairy product experiencing success, building on the significant sales increases observed in 2023.

Effective Marketing Strategies

In the 2024 market, effectively marketing dairy products requires a focus on the stories behind the brands. Gillmore noted, “Signage that showcases the founder or farmer in the field with their herd or harvesting their crops resonates with consumers seeking a connection.” Many brands are striving to stand out with revitalized branding, sustainable packaging, and new product launches to meet evolving consumer demands.

Umanskaya emphasized the importance of aligning dairy product marketing with consumer preferences. “For instance, shoppers are looking for dairy items high in protein, lactose-free, or low in sugar,” she said, suggesting that stores should highlight these products in their marketing efforts.

Balancing Dairy and Non-Dairy Options

As consumer interest in non-dairy alternatives rises, dairy manufacturers are responding by introducing plant-based options, including dairy-free cheese. Jason Potter, senior vice president and head of category leadership at Advantage Solution, stated that consumers are increasingly drawn to dairy products fortified with functional ingredients like probiotics, vitamins, and minerals for enhanced health benefits.

“Consumers purchase dairy alternatives not only for their flavor but also because they perceive these products as healthier, believe they offer a good source of protein, and due to lactose intolerance or dairy allergies,” he explained.

With the growing shelf space for alternative dairy products, supermarkets face challenges in determining which dairy items to stock. Gillmore noted, “Over the past few years, this has been a moving target. Over a third of our fluid milk sales are plant-based, leading us to adjust our shelf space distribution to balance the innovation in plant-based offerings with the demand for traditional dairy products, including regenerative and organic options.”