Health and Indulgence Both Winning in Dairy

Dairy products haven't seen the same year-over-year price spikes that other grocery items—most notably, meat and poultry—have, to be sure. Still, moderate inflation in dairy has helped pushed dollar sales for several dairy categories higher vs. 2020 levels even as volumes in those same categories are flat or down, according to data from market researchers IRI and 210 Analytics. 

Take milk: According to the Bureau of Labor Statistics' latest Consumer Price Index, retail prices for milk were 4.3% higher this October than they were in October 2020. Meanwhile, IRI reported last month, dairy sales at retail in October stood at $1.5 billion, up 0.6% from October 2020 and up 7% on a two-year stack. But milk unit sales were down 3.5% vs. the year-ago period, and milk sales by volume slid 5.5%.

There's a similar higher-sales, lower-volumes story for cream/creamers ($479 million in sales in October) and whipped toppings ($130 million). For natural cheese and cream cheese, dollar sales declined vs. year-ago levels, but dollar sales for both were up by double-digit percentages vs. October 2019.

Two dairy products seeing gains in both dollar sales and volumes? Yogurt and dairy desserts. Yogurt sales were up 4.9%, to $754 million, in October over the year-ago period and up 8.8% on a two-year stack. Yogurt also notched a 1.4% volume gain.

Yogurt's strong performance comes as consumers continue to seek protein-rich, lower-sugar foods and beverages and functional choices—with yogurt's natural probiotics a selling point on that front. Austin, Texas-based Whole Foods Market last month called out a host of health- and functionality-focused products, including a pair of new yogurts, in its 2022 food-trends predictions, released last month.

On the more purely indulgent side of the dairy spectrum, dollar sales for dairy desserts were up 13.4% vs. October 2020 as volumes climbed 4.6%.

IRI team lead for fresh Jonna Parker said dairy desserts are an area of opportunity for retailers as busier consumers seek time-savers when it comes to meal accompaniments. "While at the onset of the pandemic homemade desserts and baked goods were extremely popular, we now see that extra effort move back to store-bought solutions, both in refrigerated and frozen," Parker said in IRI and 210 Analytics' monthly report. She added: "I recommend placing some refrigerated desserts and baked goods close to the deli-prepared takeout area for an incremental sale. I’m even seeing some retailers merchandise desserts in the checkout area and others tying the purchase of a rotisserie chicken meal to a complementary addition of a pie or other baked good—a great way to expand awareness of the store’s assortment."