For the first time since pre-pandemic days, dollar and volume sales could both be up for dairy milk in the USA retail trade, even though prices are on the downswing. And those increases are happening without much grocery promotion. According to Circana, a Chicago-based marketing research firm, about 30% of dairy sales are due to promotion, and for dairy milk that number sits at just 9%.
“So no price decreases, no deals, no TPRs, no displays, no features, no nothing,” John Crawford, SVP, Client Insight–Dairy, at Circana, told Supermarket News magazine. “Dairy milk saw some increases for the first time in a long time.”
THE BOOM OF PRIVATE-LABEL MILK
The charge is being led by private-label milk, which makes up some 50% of dairy sales over the first half of 2024. In fact, in Circana’s “Dairy 15,” which tracks the number of categories within dairy, excluding eggs which tend to skew the data, private-label through May was outpacing brands in nine of those categories. Whipped toppings, yogurt, refrigerated desserts, frozen novelties, and margarine have been big winners for private labels in the dairy section lately.
The recent growth shown by whipped toppings is especially impressive, according to Crawford. “Three years ago, whipped toppings was a very small private label category,” he said. “Whipped toppings started to grow, private-label got in there, and now it’s well over 50% private label within whipped toppings. It’s all because of the growth that private label has driven.”
DAIRY SALES BY CATEGORY
Total dairy sales through May 19, 2024, were up 1.9% year over year at over $38.6 billion while volume sales increased 1.3%. Due to inflation easing, milk was down slightly in dollar sales — 0.6% vs. the first half of 2023 — but volume sales ticked up 0.1%.
Cottage cheese (up 16.0% in dollar sales year over year and 13.5% in volume), whipped toppings (up 10.2% in dollar sales year over year and 10.8% in volume), ice cream/sherbert (up 11.8% in dollars, 7.3% in volume), deli/dairy specialty cheese (up 8.8% in dollars, 10.1% in volume), dairy butter (up 6.4% in dollars, 3.7% in volume), and yogurt (up 6.1% in dollars, 5.5% in volume) have been the main drivers in dairy over the first five and a half months of the year. Cottage cheese is still getting a boost from TikTok, where influencers are showcasing various ways users can use it.
Natural cheese chunks (up 6.9% in dollars year over year, 7.6% in volume), dairy yogurt drinks (up 6.4% in dollars, 5.4% in volume), and dairy pre–sliced alternative cheese (up 5.5% in dollars, 5.6% in volume) have also been strong movers.
Whole milk dollar sales and volume sales are also on the rise, and it’s a trend former IDDBA President and CEO Michael Eardley first started following a few years ago in Europe. “People want food that tastes good,” Eardley told Supermarket News. “They are eating less, but they are eating better. I would much rather have a small glass of whole milk than half a gallon of low-fat milk and I think that is what people go for. It’s really total calories and when you feel better about your food you are going to be more active and you are going to work those calories off.”
Non-dairy or plant-based dairy has been a hot item, leading to grocery retailers dedicating more shelf space to the products, but sales in both dollars and volume categories have cooled significantly. Through May 19, 2024, non-dairy milk dollar sales were down 28.3% year over year and volume was down 18.1%. Similarly, dairy alternative whipped toppings dropped 23.2% in dollar sales and 24.3% in volume.
MAKE SURE TO ORDER ENOUGH
Even though retailers are using promotions less for dairy these days, they are still up from last year, according to Crawford. He said promotion dollars are now on the way back. And if a grocer is starting to lean on promotions more, they should make sure there is enough stock on the shelf.
When it comes to the dairy section grocers have always been on the lookout for the product that offers the most growth. For a time that was non-dairy and plant-based products, but with the demand declining retailers might want to dedicate less shelf space to the dairy alternatives and offer more displays of traditional favorites like dairy milk.
2024 COULD BE THE YEAR OF VOLUME
As for the coming months, Crawford sees volume sales continuing to be on the upswing and prices remaining low. Dollar sales should remain flat, perhaps up a little, but the dairy section will be driven by volume as opposed to being driven by pricing.