U.S. dairy industry sees growth beyond milk as consumer preferences evolve

USA – As U.S. consumers continue to reduce their milk consumption, other products in the dairy aisle are capturing attention and driving growth, presenting new opportunities for dairy farmers.

According to market research firm Circana, the refrigerated dairy aisle remains the largest category in retail grocery, generating US$76 billion in sales over the past year. Over the last three years, retail dairy sales have increased by 15.4%, or $10.1 billion.

Cory Geiger, lead dairy economist with CoBank’s Knowledge Exchange program, highlighted the resilience of the dairy sector, noting that dairy’s growth rate continues to outpace liquor, the second-highest category of retail sales.

A new CoBank report offers a positive outlook for retail dairy sales, with the volume of dairy products sold growing by 7.7% over the past decade.

Tony Banks, senior assistant director of agriculture, development, and innovation for the Virginia Farm Bureau Federation, emphasized that this growth has occurred despite inflationary pressures on retail food prices over the past four and a half years.

However, Geiger advised the dairy industry not to become complacent, as consumer tastes and purchasing patterns are evolving.

The report indicates that private labels are outpacing branded products in 10 out of 15 dairy categories, including yogurt, cream cheese, cream, and creamers.

Cheese, butter, and yogurt are identified as key drivers of category growth, along with emerging dairy products designed to meet rising demand for healthy, protein-rich snacks.

The U.S. Department of Agriculture reports significant increases in per capita consumption of butter (up 43.2%), cheese (up 45.8%), and yogurt (up 142.4%) over the last 25 years.

U.S. cheese consumption currently stands at a record 40 pounds per capita annually, though European consumption patterns suggest there is still room for growth.

The global cheese snack market is projected to exceed US$75 billion this year, with North America accounting for nearly 24% of that share.

New flavors and formulations are driving growth, and snack cheese product launches in major U.S. dairy export markets have surged by 152% since 2019, according to the U.S. Dairy Export Council.

Banks noted that U.S. dairy exports have continued to grow over the past 25 years, evolving from a marketplace for surplus milk to a major source of demand for U.S. farmers and the industry.

The CoBank report also highlighted potential in the lactose-free product category, offering dairy processors an opportunity to reach the 120 million Americans who cannot consume traditional dairy products due to lactose intolerance.

Banks suggested that additional development of lactose-modified products could help slow the decline in fluid milk sales by opening up the market to a broader segment of the U.S. population.

Geiger concluded on an optimistic note, stating that the “future looks bright” for the dairy industry, with most U.S. consumers indicating they have no plans to reduce their dairy consumption.

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