BUTTER WHIPS RIVALS IN DAIRY DEPARTMENT GROWTH

MADISON, Wis. -- Butter products are leading the way in dairy department growth, according to the International Dairy-Deli-Bakery Association's "What's In Store" annual trends report. Overall, dairy department sales experienced a 3.7% increase in 1998, the most recent year for which data is available, researchers concluded.

consumption fell 7.1% since 1988, according to U.S. Department of Agriculture statistics cited in IDDBA's study.

But, What's In Store indicated the butter category is rebounding strongly, thanks in part to new product advancements. For example, new butter substitutes have quelled consumer fat concerns with claims that the products lower blood cholesterol. Such items now on shelves include Benecol, created by McNeil Consumer Healthcare, a division of Johnson and Johnson, New Brunswick, N.J., and Take Control, by Unilever subsidiary Lipton Foods, Englewood Cliffs, N.J.

Another new advancement was developed by two Australian researchers at the SCIRO Animal Production Laboratory. They discovered that cows fed a diet that includes soy yields milk with fewer saturated fats, making the butter produced from this milk healthier.

Butter products weren't the only dairy foods to see increases. IDDBA's poll also found that milk sales grew 3.8% in 1998. Although sales have been in a slump in recent years, milk production last year was up 0.8%, rising to 157.4 billion pounds, from 156.1 billion pounds in 1997.

IDDBA again cited USDA figures indicating that the growth in fluid milk sales have come not from whole milk, but from low-fat and skim milk. Crunching the numbers, the report stated that whole milk consumption has slipped by more than one-third since 1982, while consumption for the other varieties has nearly doubled since that time, indicating a shift to a more health-conscious attitude by consumers.

The influx of value-added products in the fluid milk category has helped boost the commodity's profile. Examples include the Luna Delicious Sleep products, created by Drinks That Work, Davenport, Calif. The company claims the product contains soothing botanicals in a soy and grain base that helps the mind and body rest. Another company that has produced a value-added product is Land O'Lakes, St. Paul, Minn. They are producing a chocolate milk product with added calcium. Also, H.P. Hood, Chelsea, Mass., produces a calcium-fortified, nonflavored milk called CalciMilk.

Two companies have also attempted to add value to milk by extending shelf life. Givaduan Roure Flavors, Mo., and Rhodia, Inc. Madison, Wis., have joined to produce a new flavoring ingredient that reduces milk's perishability, called ESL (extended shelf life).

Another factor -- perhaps the most influential -- at work in improving milk sales last year was the advent of plastic single-serve containers, which have made milk a direct competitor to soft drinks, coffee and tea -- three categories that have dominated the away-from-home beverage market in the past.

The study indicates that sales of milk in single-serve plastic containers have begun to rise, with the chocolate single-serve products achieving the biggest gains. The only drawback has been cost, said the study. Milk averages 70 cents per quart, while nationally branded sodas average 33 cents per quart when on special, and private-label brands average 28 cents per quart.

Another obstacle to the growth in the single-serve milk container category is constant budgetary restraints. Soft drink companies' advertising budgets continue to dominate the away-from-home promotional market, IDDBA said.

More sophisticated labeling options have added new luster to the milk category as it moves away from commodity to branded status. Labels have the ability to focus a consumer's eye on the product's most appealing aspects. In the case of fluid dairy, they might highlight that the milk is organic or hormone-free.

Like milk, yogurt sales also rebounded in 1998, with sales rising to $1.83 billion, up 3.2% from $1.77 billion the year before. One new product adding value to the category is a dairy-free yogurt product. The cultured, calcium-fortified, soy-based yogurt was created for lactose-intolerant consumers by White Wave Foods, Boulder, Co.

Another dairy category experiencing sales gains is cottage cheese, according to What's In Store. In 1998, cottage cheese sales rose to $841.5 million, up 8.9% from $773 million in the previous year.

In the refrigerated juice category, sales were $3.62 billion, up 10.5% from $3.27 billion from the previous year, with orange juice leading the pack. Likewise, refrigerated dough sales were $1.34 billion, up 4.3% from the previous year, with biscuits leading the category on sales of $513.5 million, up 1.4%.

In one of the dairy cases few reversals, egg sales slumped in 1998, falling 0.1% from the previous year's sales figure, to $2.14 billion. The study noted, however, that though sales are down, egg consumption was up for the year, with American consumers eating an average of 245.2 eggs per person, an increase of 2.2% from the year before. Preliminary data from ACNielsen shows that consumers will eat an average of 250.2 eggs per person at year end and an average of 252.0 eggs in the year 2000, despite increased consumer concern over cholesterol and food safety.

In addition, the IDDBA study used ACNielsen data to pinpoint other characteristics associated with the dairy category. For example, it found that milk contributes to one-third of total dairy department sales, occupies an average of 15.5 linear feet and contributes an average of $215 per linear foot, per week. In comparison, cheese products occupy 24.5 linear feet, but only contribute $93 per linear feet, per week.

International data compiled by the IDDBA found that dairy has continued to be successful with sales increasing 29% between 1992 and 1996. Contributing to the rise were population growths in emerging markets, as well as the rise of urban middle-class consumers who now own refrigerators. Fast-food restaurants also added to the increased popularity of dairy products abroad. The rise is expected to continue, according to Euromonitor statistics cited in the IDDBA report, which predict that dairy sales will increase 3% annually through 2001.