DAIRY: BUILDING A DESTINATION

Liza Casabona

When SN published its first issue in 1952, the dairy industry was in the midst of a distribution revolution that would change how consumers used and purchased milk. Prior to the 1940s, families had their milk delivered in glass quart bottles. Following World War II, a new generation of more affluent, mobile consumers began purchasing milk in grocery stores.

For the commodity-based dairy case, recognition as a self-standing entity would prove a milestone in the development of the category. In the earliest days, management of perishables categories was often assigned to one person, and though department groupings varied from chain to chain, it was common to find a deli buyer who bought dairy, a perishables buyer who bought everything, or a dairy manager who also oversaw the deli, according to industry veterans.

"When you take a look at many of the things that have gone on in the supermarket business in the dairy aisle, it's a reflection of the fact it was very late in coming to have a dairy department manager. When you didn't have a manager, you really didn't have the same care or advocacy for the department," said Willard Bishop, president, Bishop Consulting, Barrington Ill., and a former vice president of research for the Supermarket Marketing Institute (today known as the Food Marketing Institute) in the early to mid-1970s.

Industry observers recalled that early refrigerated aisles were not immediately integrated into the grocery store, partly due to the fact that milk suppliers themselves largely took responsibility for overseeing and stocking coolers. This arrangement created the perception that the aisle was outside the store. In those cases where some oversight was required, the small department usually fell under the jurisdiction of Center Store.

"From 1970 or 1975 and onward, people began to appoint dairy managers," Bishop said. The trend coincided with the industry's shift to constructing larger stores that allowed the dairy department to expand as well. Store formats had to shift first, creating the space needed for the growth in the dairy case, he said. More importantly, as store formats expanded, room was made for product innovation that has given rise to today's dairy-case selection. Until then, development of the dairy case was hindered by the lack of any brand names, particularly for the category's main player, fluid milk. Other products associated with the dairy aisle for most of its history have suffered the same lack of identity, said Jeff Manning, executive director of the California Milk Processor Board. With only a few exceptions, deficiencies in brand development meant very little innovation for long periods of time.

"The big innovation was going from paper cartons to plastic cartons, and that's the problem. We probably went 50 years without big innovations in the milk industry," he noted.

The first plastic-coated paper milk cartons were introduced in 1933, according to the International Dairy Foods Association. They would give way to plastic containers in 1964, ushering in a new variety of sizes for milk as consumers shifted to once-a-week grocery shopping.

Cheese was an exception to the brand dilemma, and received more attention from department management because of recognizable names. Kraft, Northfield, Ill., introduced its first prepackaged, sliced natural cheese in the 1950s. Packaged cheese, easily merchandised in supermarket formats, would have a large impact on the ensuing cheese boom.

"The invention of processed cheese was a milestone for the direction American cheese consumption took," said Laura Werlin, author of the "New American Cheese," a cultural look at cheese in the United States published by Stewart, Tabori, and Chang, New York. Processed cheeses had a longer shelf life and could be shipped much further. They also offered convenience to consumers, said Kevin Ponticelli, executive vice president of Kraft Foods and general manager, Kraft Cheese division. Convenience would be king by the advent of the 21st century.

Indeed, as new products emerged, merchandising in stores took on new importance, and retailers sought to update their presentation in the dairy case. The first doorless, dairy case was introduced in a Red Owl store in Madison, Wis., in 1957. For the first time, milk products were being merchandised in a format that encouraged the grab-and-go concept that was becoming so important to supermarkets. Just a few years later, the introduction of rear-load gravity cases that slid milk forward for display would help revolutionize in-store handling, as well as labor practices in the dairy aisle, said Bishop.

More recently, the industry has pegged great hopes on the introduction of single-serve milk beverages in resealable, plastic bottles to revitalize flagging milk sales. The development has been hailed by many industry observers as the most important development for the dairy aisle in decades.

Product offerings within the dairy aisles did, however, expand outside the milk section. From the 1950s to 1975, per-capita yogurt consumption increased from 0.11 pounds to two pounds during that time. Today, annual consumption averages 5 pounds per person.

Other products not related to dairy helped make the department a destination, like Pillsbury's prepared, refrigerated dough products that were rolled out in the early 1950s, marking a new avenue for category expansion.

Convenience foods would take off in the late 1980s and early 1990s, as would an increasing array of innovative products ranging from single-serve soy milk drinks to squeezable yogurts, proving once and for all that the dairy aisle is not only a category in its own right, but an important profit center for stores.