Dairy products have growth potential, Part 1

• Most U.S. consumers purchase dairy, which is also the largest category in retail.

• During the next three years about 90 percent 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 percent 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.

• Consumer tastes and purchasing patterns continue to evolve – and that means dairy processors, manufacturers and marketers also need to innovate.

Grocers have long known that the dairy aisle is a traffic driver, revenue generator and a sales leader. It’s the very reason stores have been designed with the dairy case situated at the back of supermarkets. The 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 U.S. sales, the dairy aisle1 stands as the largest category in retail, based on 52-week rolling average Circana sales data through June 2024. During the past three years, dairy retail sales have notched a growth rate of 15.4 percent or $10.1 billion. Dairy’s growth rate continues to outpace liquor, the second-place retail department.

And dairy’s growth has not all been driven by recent price inflation. Dairy-product consumption has grown by 7.7 percent on a per capita basis for a compound annual growth rate of 0.8 percent during the past decade, moving from 606 pounds to 653 pounds per person on a milk-fat-equivalent basis based on U.S. Department of Agriculture data. Keep in mind that the growth in per capita consumption and domestic sales data does not include U.S. dairy exports that in 2023 pushed past 22 percent of the U.S. milk supply on a skim-solids basis.

But not every dairy-product category has grown; Americans are eating more of their dairy rather than drinking it. Fluid milk posted a negative 2.3 percent compound annual growth rate during the past decade based on USDA data. The big three – butter, cheese and yogurt – have more than matched fluid milk’s slide.

During the past 25 years the key growth categories on a per capita basis have been several, per the USDA.

• Butter increased 43.2 percent.