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Dairy Analyst Debbie Perkins reported in a June podcast that interest in the dairy market is at an all-time high. Propelling

that growth is growing favor for yogurt and the specialty cheese categories, said Perkins, Managing Director of Rabobank Dairy Analyst and Food & Agribusiness Research.

In fact, according to retail data from SPINS, sales of natural and organic yogurt and kefi r grew 11 percent in the natural channel in the 52 weeks ending Nov. 1. Sales were even greater (17 percent) for the same period in the conventional channel.

Overall natural and organic yogurt sales were $718.9 million last year, compared to $538.8 million spent in 2007 according to SPINSscan. Stonyfi eld, the leading natural brand, earned $208 million. Sales of the top 20 brands of yogurt (natural, organic and conventional) were $3.7 billion in supermarkets, drugstores and mass market (excluding Walmart) in the 52 weeks ending Nov. 30 according to Information Resources, Inc., a Chicago-based market research fi rm.

Predicting real change in the natural food and beverage market in 2009, London-based market research fi rm Mintel International asserts that the more exotic fruits and fl avors of nature will be infused into the taste and smell of new products hitting the market.

“Today’s manufacturer is constantly looking for those tastes and aromas that stand out and capture shoppers’ imagination. By adding exotic fruits and unusual ingredients to everyday products, companies give people the opportunity to experiment and move out of their comfort zones without breaking the

bank,” said Lynn Dornblaser, New Product Analyst at Mintel’s Chicago offi ces.

So when it comes to yogurt, fl avor appears to be the real selling point. Adding truth to Dornblaser’s theory, Rachel’s, Broomfi eld, Colo.- brand of all natural cottage cheese is side stepping traditional fl avors. Th e new line off ers fl avors that are sweet (Pear Mangosteen, Pomegranate Orange Cranberry, Lemon Verbena Berry) and savory (Cucumber Dill, Roasted Red Pepper, and Sun Dried Tomato Pesto).

“Both natural foods and grocery customers will be pleased to have an updated take on yogurt and cottage cheese to choose from. Aft er all, with more than 33 strawberry yogurts

in the average grocery store shelf, who wouldn’t be excited about pomegranate blueberry, plum honey lavender or mango pineapple passionfruit,” said Carolina Fryer, Rachel’s brand manager.

Some consumers are looking for added nutrition from their products. According to Chasidy Atchison, from Better Whey of Life™ yogurt, “It isn’t surprising that the dairy category has grown in importance. Yogurt is an ideal for delivery of healthful ingredients like probiotics and whey protein. Whey protein is

naturally found in milk and probiotics thrive in the cultured milk environment. If Europe is any measure, we still have lots of growth ahead!”

Better Whey, headquartered in Evanston, Ill., is the fi rst yogurt to be enhanced with whey protein—a superior protein for building lean, strong, and toned bodies. Available in fi ve fl avors, each 6-oz. cup is packed with 15-17 grams of protein.

“Whey protein is the most easily digested and rapidly absorbed protein, getting to

where your body needs it most quickly and effi ciently. Consumers living an active lifestyle can get more out of the exercise they already do by incorporating Better Whey of Life into their diets,” explained Chasidy.

Also, newly launched at this year’s Expo East, DAHI-India’s, Dahlicious Lassi features “Slow-Cultured™ DAHI”— a tastier, healthier cousin to yogurt that boasts a 4,000 year history of use. Based on traditional Indian Lassi, the drink also features organic low-fat milk from domestic grass-fed cows sourced by the Tewksbury, Mass. fi rm. Each 8-oz. bottle contains 15 million unique, live, active probiotic cultures which support healthy immune and digestive systems. Dahilicious Lassi comes in fruit fl avors like banana and mango and added spices like cardamom.

Liberte, headquartered in Montreal, QC, Canada, has updated the packaging on its line of fruit-on-the bottom yogurts called Six Grains. With active acidophilus/bifi dus Bioghurt cultures to boost the body’s digestive system and hearty grains, this line is a perfect breakfast item or snack.

A few years ago, we were introduced to the concept that “Milk does a body good.” Th is idea has recently expanded to include dairy products, in general. Writing in the May 2008 issue of Nutrition & Metabolism, researchers concluded, “Dairy products may be used in a weight maintenance diet without contributing to weight gain compared to diets that are low in dairy products.”

Another addition to the yogurt section is Greek Style yogurt, a fat-free alternative to traditional, with the added benefi ts of twice the protein and fewer carbs. And it’s lower in lactose than traditional yogurt. Another perk here is the manufacturing process. Greek yogurt is creamier than regular because of a traditional

By Brenda Porter-RockwellNatural Food Network Contributor

NEW PRODUCTS TARGET SPECIALTY, HEALTH-CONSCIOUS CONSUMER

Dairy Case Makeover

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DAIRY AISLE

straining process, dating back hundreds of years, where the straining removes the whey.

Stonyfi eld Farm in Londonderry, New Hampshire, has added a new organic Greek yogurt line called Oikos. At Expo it unveiled Blueberry and Honey fl avors of Oikos. Liberte also added a Greek style yogurt to its line—Mediterranee—which now boasts new Coconut and Lemon fl avors.

However, to promote these yogurt alternatives, companies are focused on working with their retailing partners to get the message across. “We have point of sale materials available to help educate consumers about whey protein. We are also committed to sampling in key accounts and are open to working with accounts on any educational vehicles they may have to help in our quest to educate the public,” explained Better Whey’s Atchison.

Th e same can likely be said for probiotics. Dannon pushed probiotic yogurt to the forefront with the launch of DanActive, a hot product that one could assume would make it easier for retailers to sell “healthy” yogurts. New research however, suggests, there is still more work to be done. A recent national study of 1,000 adults, conducted by Opinion Research Corporation, found that only 15 percent of Americans were familiar

with probiotics and their benefi ts.

Even more surprising? About 85 percent of respondents said they knew “little to nothing” about probiotics. Two thirds of respondents had

never heard of probiotics at all. In spite of this, however, Mintel data from earlier this year found that North America leads the world in growth in the digestive health category. Nielsen LabelTrends showed sales of U.S. refrigerated probiotic yogurt rose to $1.05 billion in 2008 with 29.9 percent rise in the last 12 weeks of the year suggesting the category will likely remain a best-seller for a long time to come.

Retailer Gerry Spinelli said in today’s economy, cost trumps fl avor and function.

“Most people are looking for value—the right price on the best size. I see customers buying a quart of plain or vanilla yogurt then adding their own berries at home,” said Spinelli, owner of Spinelli’s Market in Denver, Colo.

In his January Facts, Figures, & the Future newsletter Phil Lempert reported that sales of “refrigerated natural yogurt were up the past four years, including an 11.5 percent advance to $285.6 million in the 52 weeks ending Nov. 29. Fiber-presence absolutely soared this past year, by 874.8% to $75.2 million, continuing a rise from nearly zero in 2004.”

Strawberry remains the most popular

yogurt fl avor recording $383.5 million in sales last year, up 13.5 percent, according to Nielsen.

Liquid MilkWhile unconventional fl avors fi nd takers

in the yogurt section, Americans are not so adventurous with their milk. Standards like chocolate, vanilla and strawberry still apply—and may be what keeps consumers coming back for more. According to IRI’s “Mid-Year 2008 Consumer Insights Builder” market data, milk continues to be the leader of the dairy pack. About 96 percent of consumers purchased milk in 2008. IRI’s market data tracked the percentage of U.S. households buying milk at least once in conventional channels during the 52 weeks ending June 29, 2008.

Even sans new fl avors, the milk market isn’t lacking in innovation. Companies have long added calcium and vitamin D to milk for stronger bones. However, yesterday’s mom likely never envisioned the increased interest in functional, healthy ingredients and their spillover into the milk aisle.

“I think certain books and movies are bringing the information forward that many haven’t seen before,” said Jennifer Lynn Bice, Owner, Redwood Hill Farm & Creamery, headquartered in Sebastapol, Calif., Books such as Omnivore’s Dilemma, Fast Food Nation, and the movie “Supersize Me”…people

continued on page 15

When Dannon launched Activia in the U.S. in 2006 and DanActive in 2007 probiotics became a spectacular marketing success

leading to remarkable sales growth estimated at $428 million.Th ree years later you can add “sustained” to those adjectives.Refrigerated probiotic yogurt recorded double-digit gains the past

four years topping $1.05 billion in sales, including a 29.9 percent rise for the 12-week period ending November 2008. Organic yogurt also experienced double-digit gains since 2004, ending the year at $227.2 million on a 16.2 percent rise, according to Nielsen LabelTrends data gathered from U.S. food, drug and mass merchandise (FDM) stores (excluding Walmart).

Activia grossed $326 million in U.S. sales and DanActive, $65 million in FDM in the 52 weeks ending Nov. 30 according to Information Resources, Inc., a Chicago-based market research fi rm. Globally these are billion-dollar brands (marketed under several brand names). Group Danone’s success has inspired a broad range of product

introductions, largely in the dairy case but including baby food, cereal, sweeteners, frozen foods, non-dairy beverages and even pizza.

Beginning in 2004 with 19 new SKUs, probiotic dairy and dairy case product introductions soared. Th ere were 192 brought to market last year following 113 launched in 2007 (excluding supplements), according to Datamonitor’s Product Launch Analytics. Th e London-based market research fi rm tracks new food and beverage products. New dairy case SKUs total 383 since 2004 with an additional 69 pre-biotic dairy case product launches in the U.S. market.

One to closely follow is Yakult, a 74-year-old probiotic drink from Tokyo-based Yakult Honsha Co., Ltd., that was introduced in Southern California in September 2007.

According to a recent Nielsen rating (November, 2008), Yakult garners more

than 10 percent of the dollar share in the probiotic dairy category, making it the number two probiotic dairy drink in major grocery stores in California. Internationally, Yakult is the leading

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DAIRY AISLE

probiotic drink selling 25 million bottles daily; the U.S. is the only country where it is ranked second. Since the product’s launch, Yakult has won over many customers, selling nearly 100,000 bottles daily. A recently launched TV campaign is expected to give the product further momentum in the marketplace.

Retailers in California, Arizona and Nevada report strong sales at health food stores and chains including Vons, Albertsons, Gelson’s, Ralphs and Stater Bros. in Southern California with Raleys, Andronico’s, SaveMart and Nob Hill in Northern California. In Nevada Smiths stocks Yakult and it is found at Basha’s, Fry’s and AJ’s in Arizona.

“Our mission is to contribute to the health of people everywhere,” says Mr. Teruo Tabuchi, vice president and chief operating offi cer of Torrance, Calif.-based Yakult U.S.A. Inc. “and through expansion, we can continue to educate more individuals about the benefi ts of probiotics.”

Th e distinctly shaped 2.7-fl uid ounce bottles are sold in a fi ve-pack at a SRP of $2.99. Each bottle contains around eight billion Lactobacillus casei Shirota. Th e active ingredient is named for microbiologist Dr. Minoru Shirota who, in 1930, cultured the bacterium to withstand strong gastric acids and reach the intestines alive and in turn, improve digestive function. Today Yakult is sold in 32 countries and the parent

company is valued at $2.8 billion, according to Yakult Honsha.

Traditional bacterium is fragile and temperature-sensitive limiting shelf life and grocery display options.

Yogurt from cow and goat’s milk account for the largest share of sales of probiotics, at 36.6 percent but innovations including whey drinks, a kefi r coated wellness bar called Attune and even probiotic pizza are expanding the market.

Laura Howard, founder and chief fl avor offi cer of Laloo’s (pronounced Lay-looz) in Sonoma, Calif., saw an opportunity in the dessert freezer.

“Th e more probiotics your product contains the better it is for you,” said Howard who adds live culture to her frozen goat’s milk yogurt.

Th e benefi cial bacterial go into a dormant state during processing. “Like bears hibernating,” she explains. “Once ingested they wake up and are invigorated from the temperature in your body,” she says.

Why goat milk?“It’s thousands of years old. It has history and

lore and 75 percent of the world drinks goat’s milk,” she said. Lactose sensitive consumers can eat goat’s milk products due to its smaller fat globules. “Researchers claim it is the milk most similar to mother’s milk,” said Howard.

“We are the alternative dairy for the

luxury dairy crowd,” says Howard. Flavors like Cherries Tuilerie and Cajeta: Mexican Caramel and Texas Toff ee, provide consumers a decadent excuse to consume one of the most healthy products in the store, she said. “Laloos is singularly positioned to send a really loud message and it’s a fun message for grocers to send,” according to Howard whose product is stocked by 1000 retailers, mainly health food stores. Th e fi rm will soon expand production to Wisconsin to service the East Coast and conventional chain accounts. Costco recently began stocking Laloos.

While dairy is predominant, a new spore-forming variety of probiotic bacteria has been

developed with a hardened interior that acts like a seed. “Th is spore, or seed, protects the cell’s genetic material,” according to Jeff Leach, co-founder of World’s Healthiest Pizza. Ganeden Biotech developed the culture which is added to the pizza crust and

can withstand 350-degree temperatures.Th e Ganeden Lab probiotic is clinically

proven to survive harsh manufacturing processes such a pizza ovens, as well as the acid and bile of the digestive system of humans, according to Leach.

Th e global market for probiotic ingredients, supplements and foods was worth $14.9 billion in 2007, according to BCC Research of Wellesley, Mass. It was estimated at $15.9 billion in 2008 and will reach $19.6 billion in 2013, according to BCC.

Probiotic Product Introductions

Source: Datamonitor’s consumer packaged goods Product Launch and Tracking database. Dairy and Dairy case products in the food and beverage categories, USA only.

200

175

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125

100

75

50

25

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2004 2005 2006 2007 2008

KEY

SKUS

Probiotic Dairy

Kefi r

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Greek Yogurts

Yogurts w/Grains

1917

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113

192

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are realizing that there really may be something to ‘You are what you eat.’ “

Also, “Th ere is increased awareness of where our food comes from, how far it travels to get to our plate, and what its nutritional benefi ts are,” said Natural Dairy Products’ of West Grove, Penn., General Manager Dawn Fenstermacher about this new consumer trend. “Today’s organic products consumer is an informed consumer that is looking for not only the most nutritious product for their dollar, but also the most responsible manufacturers who are farming sustainably and treating their animals in a humane fashion.” Natural Dairy Products manufactures the Natural By Nature brand of organic, grass-fed dairy products, including fi ve varieties of organic milk.

Organic dairy cooperative Organic Valley’s Public Aff airs Manager, Jamie Johnson, added that consumers, or “citizen-partners” as OV calls them, “Are basing food purchasing decisions on how well the product aligns with their values. Th at is why the U.S. Department of Agriculture’s certifi ed organic seal is so important, it tells citizen-partners they are buying food …produced by farmers…following a strong environmental ethic to protect the earth, animals, our health and future generations.” Organic Valley is headquartered in LaFarge, Wis.

Among OV’s myriad of dairy products comes Regional Milks, or milks produced locally, as well as two newly launched organic dairy products: Whipped Butter, “Made with the sweet cream of [OV’S] humanely raised, pastured organic dairy cows, churn it to a perfect butter consistency, and then whip it with fi ltered air to allow for easier spreading,” and Vermont Cheddar Cheese made with the milk from OV’s Vermont dairy farmer-members.

Horizon Organic’s Milk Plus DHA Omega 3 milk, featuring omega-3 nutrients from algal oil. Docosahexaenoic Acid (DHA) is a type of omega-3 fatty acid, a nutrient that has been studied for its role in heart, brain and eye health development and has become an important nutrient for healthy child development.

Launched two years ago, Horizons’ two varieties of Milk Plus help fi ll an important niche in the dairy case, said Horizon’s Marketing

Manager Sarah Lovejoy. “DHA is something we don’t get enough of in our diet in the U.S. Adding this becomes especially important in things like milk and soymilk—things people have in everyday life, but with an added benefi t.”

While agricultural offi cials said sales of organic milk are only about 3 percent of U.S. milk sales, at least 15 percent growth in sales is projected in the next few years.

Th ere are about 1,800 organic dairy farms in the United States, with 170,000 cows.

Specialty CheesesSpecialty cheeses have added to the uptick in dairy purchases. Among

Redwood Hill Farm’s full line of 100 percent goat’s milk products comes artisan cheeses in traditional varieties like Feta alongside more specialty selections like the award-winning California Crottin, described as a “traditional French-style California Crottin [with] a wrinkly, geotrichum candidum rind, a fl uff y texture and robust, earthy fl avor,” the company reported. “We use only natural ingredients and process our products the

least amount possible,” explained Redwood owner Jennifer Lynn Bice.

Spinelli said he is buying less imported cheeses today than he did two years ago.

“Here consumers are still looking for value. Consumers now pay about $18 a pound for Reggiano Parmigiano; a few years ago it was half that. So it’s a dramatic change in this market. Customers are not purchasing specialty cheeses as oft en and they’re buying more domestic cheeses,” noted Spinelli who said he now

buys artisanal cheeses from California that he can sell for $10 a pound.Rogue Creamery, located in Central Point, Ore., off ers a range of natural

cow’s milk cheeses, including the 2008 award-winning “Hand-craft ed raw cow’s milk blue veined cheese [that] develops a beautiful natural rind as a result of hand turning and tending the cheese several times a week.”

Heini’s cheeses are naturally rBGH-free (a synthetic, genetically engineered growth hormone) and made with milk picked up from over 270 local farms in the heart of Ohio’s Amish Country every day. According to Heini’s Bob Walker, Heini’s Yogurt Cultured Cheese, one of their signature products, is a probiotic cheese that was developed over 35 years ago and is now a recognized category leader.

As long as children continue to be born, Americans’ thirst for milk will be a key driver in the growth of the dairy case. As children mature and become adults the quest for new and innovative fl avors and/or new delivery systems for added nutrition will always bring in new customers to the dairy case.

Continued from page 13

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