NONFAT DAIRY SALES FRESH, FULL-FAT GOING SOUR: STUDY

PAMELA BLAMEY

CHICAGO -- Nonfat and some low-fat products are taking the lead in the dairy aisle, while juice sales are leaving milk in the cold.

These were some of the conclusions presented at the 1995 Dairy Foods Industry Convention here, from a study undertaken by A.C. Nielsen, Schaumburg, Ill., for the International Dairy Foods Association, Washington. Cheese was the only segment that showed growth among the refrigerated dairy products covered in the study, which represented U.S. supermarkets with annual volume sales of over $2 million.

For the year to date ending Sept. 9, 1995, cheese gained 2.7% in sales over last year, with $4.06 billion in total sales, while fluid milk sales were down 2.3% to $6.1 billion and table spreads slipped by 0.6% to $1.25 billion.

Overall, "healthy" products did well in most dairy segments with the exception of table spreads, but the study points out that statistics did not provide a clear link between the growth of this segment and the growth of the category overall. Fluid milk with regular fat was down 4.4% in volume, whereas reduced-fat milk slipped only 0.5%. "Healthy" cheese products gained 6.4% whereas regular fat cheeses were up only 0.9%, but "healthy" spreads were down 4.9% as opposed to regular fat spreads which showed 4.1% increase.

Private-label milk and cheese gained in volume, commanding 68.4% and 32% of purchases respectively, while the volume of private-label table spreads was virtually unchanged over last year.

A gradually widening gap in non-promoted prices of branded and private-label products may indicate that branded products will have to prove their value to customers in order to remain competitive: branded milk per gallon $2.82, (up 0.7%), private label $2.38 (down 0.8%); branded cheese per pound $3.57 (up 1.4%), private label $2.73 (down 0.7%); branded table spreads per pound $1.09 (up 1.9%), private label 89 cents (up 4.7%).

Cheese sales, excluding Nefuchatel, have showed almost monthly gains over 1994, up 1.8% year to date through Oct. 7, with total sales of over $1.3 billion. By segment, natural cheese has shown the most growth, with 46.4% of sales, up 5.7% over last year. Of these, natural spread or snack cheeses showed the largest increase, up 10.4% over last year, while natural chunk or loaf cheese still generated the most sales at 43.3%, up 4.3% over 1994. Natural shredded or crumbled cheese was up 9.7% at 33.5% of market share, while natural sliced cheese slipped slightly to 3.6%, down 0.8% over last year.

The West and East Coasts are more likely than any other regions to consume natural and cream cheeses, the study showed.

Cream cheeses were close behind natural cheese in volume, up 3.8% over last year to 10.6% of the category. Processed cheese, however, experienced a slight decline, down 1.5% to 39.9%, with shredded and crumbled losing 9.3%, spread/snack cheese down 8.2%, and chunk/loaf down 6.2%.

And "imitation" cheese seemed to be abandoned by consumers in comparison, down 8.3% to hold 1.7% of the category.

Sales of table spreads were lower than last year, down 3% in the year through Oct. 7. Butter showed its usual seasonal rise in April, up 9.9% though over 1994. While other spreads still hold the majority of the market at 59.9%, this is a decrease of 2% over last year, whereas butter at 20.5% market share increased 3.8%. Margarine slid 12.2% down to 18.9% of the category, and products categorized as "blends" fell 16.8% to cling to a 0.7% share.

The acceptance of "healthy" products among table spreads was evident only in completely fat-free spreads, which showed an increase in volume of 14.9%. The only other segment to show growth was regular butter, which increased 4.5%. Low-fat blends dropped 27.8% and full-fat blends dropped 10%, whereas light butter and margarine dropped 14.3% and 12.2% respectively. Low-fat spreads showed 2.5% less in sales than a year ago.

Similarly, in the fluid milk segment only skim and nonfat milk showed significant growth, up 9.4% to 17.6%, and low-fat or "one-percent" milk increased 3.8% to 13.6%. Reduced-fat milk was down 6% to 35.8%, and whole milk was down 4.2% to 31.4%. Overall the category dropped 1.7% from 1994, in spite of concerted publicity efforts by the milk industry, such as the "Got Milk?" and milk mustache campaigns.

But the IDFA is confident these campaigns will change this trend over time, according to Martin Veeger, assistant director of economics and market research.

"In initial research that we've seen [the milk mustache campaign] has done a lot toward changing customers' attitudes to milk and making them aware of its health benefits," he told SN.

He added that it is too soon to tell about the "Got Milk?" campaign's effect, as it only went nationwide a few months ago.

Nielsen suggested that losses in the fluid milk segment could be attributed to a weak ready-to-eat cereal market and to a strong juice and drink category, which was up 10.2% over last year, particularly during the summer months.

Veeger attributed the success of nonfat products to improvements in taste. "Without a doubt, nonfat dairy products are doing exceptionally well, because they are starting to turn a corner in taste and quality, and I think that's reflected in sales."

Turning his attention to the poor performance of butter, Veeger said there are several contributing factors: "Health concerns raised about the fat content of margarine, along with the fact that spreads are a lot more competitive in price than they used to be."