Wednesday, January 20, 2016

Cultured Dairy Products: Trends 2016

Growth in the cultured dairy products segment, which includes everything from cream cheese and sour cream to yogurt and its many variations, such as kefir, lassi and skyr, will come from specialty products, premium products with a purpose. This was very apparent at the Winter Fancy Food Show, which took place earlier this week in San Francisco. With enough cheese, chocolate and olive oil to fill four football fields, the show confirmed the growing popularity of specialty foods, which are defined as foods or beverages of the highest grade, style and/or quality in their respective categories. Their specialty nature derives from a combination of some or all of the following qualities: uniqueness, origin, processing method, design, limited supply, unusual application or use, extraordinary packaging, or channel of distribution/sales.

Sales of most mainstream cultured dairy products are flat, with growth for one brand, form or variety coming at the expense of another. This has been the same scenario in the ice cream category for a very long time. Yes, the Greek yogurt segment continues to grow, but has slowed.

According to data from Chicago-based IRI provided to Dairy Management Inc., Rosemont, Ill., and courtesy of the Midwest Dairy Association, Greek yogurt volume sales increased a mere 4.4% in the first 11 months of 2015, as compared to the same time frame in 2014. This is nothing compared to the multi-year, double-digit growths experienced just five years ago. Non-Greek volume sales are relatively flat.

The Chobani folks will say that the Flip line is providing them incremental growth, as use of culinary-inspired inclusions allowed the brand to move out of the breakfast daypart. Flip’s dual-compartment package brought new users to the Greek yogurt category, but these new users will soon all be on board, and then what?

The company believes Chobani Flip will soon be the next billion dollar yogurt brand, and is working very hard to make that happen. For example, just a few weeks ago, the brand made its boldest flavor statement with the rollout of two “heat meets sweet” varieties: Chipotle Pineapple and Sriracha Mango.

Indeed the company is onto something, yet the “heat meets sweet” trend will likely resonate best with the specialty food consumer, the consumer who shops the specialty food refrigerated case at higher-end stores, or seeks out hand-crafted/batch-produced products priced at a premium in the mainstream dairy case.

This is what you get with Noosa. Categorized as Aussie-style yogurt, the Colorado-based company produces its namesake yogurt in small batches using fresh local whole milk. This non-strained yogurt is lightly sweetened with honey. To kick off 2016, noosa yoghurt introduced four new flavors. Three of them--Key Lime, Salted Caramel and limited-batch Blood Orange—rolled out nationally, with the fourth flavor—Blackberry Serrano (blackberries and serrano chilies)—available in limited distribution in Colorado. 

To read more about the “heat meets sweet” trend, link HERE to an article I recently wrote for Culinology, the Research Chefs Association publication.

Heat complements the savory trend, which really is all about “less sweet.” I’m not talking less sugar, rather less sweet. Consumers' taste buds are changing, and heat, herbs, spices, etc., are finding their way into unexpected dairy foods, such as cottage cheese. Even bitter flavors such as coffee and tea are finding their way into cultured dairy foods. 

That’s one of the directions the folks at Good Culture have taken with their namesake single-serve line of cottage cheese. The company states that cottage cheese is an overlooked superfood, and I agree. I also believe that is changing by the number of queries I get from entrepreneur specialty food innovators. Read about cottage cheese being the original high-protein cultured dairy food HERE. Read how dairies can contemporize cottage cheese HERE.

good culture made its initial debut almost a year ago at the Natural Products Expo West Show, and at this year’s expo will reintroduce the product in a more contemporary package and now in a whole milk formulation (vs. the original line’s debut in 2% milkfat).

The line includes five varieties. In addition to classic cottage cheese, there are two savory varieties (Kalamata Olive and Sundried Tomato) and two sweet varieties (Blueberry Açaí Chia and Strawberry Chia). The single-serve containers come in convenient, on-the-go 5.3-ounce packs.

“We were tired of searching for great-tasting cottage cheese that wasn’t loaded with thickeners, stabilizers, hormones and high-fructose corn syrup sweetened flavors, so we decided to make our own,” says co-founder Jesse Merrill. “Grandma’s cottage cheese/pineapple combo just wasn’t cutting it.”

“Cottage cheese is filled with nutrition and loaded with protein,” says co-founder Anders Eisner. “It has more protein than most Greek yogurts on the market and it tastes delicious.”

The product is certified organic and contains non-GMO ingredients. Low-in sugar, the cottage cheese is made from grass-fed milk from respected cows on sustainable family farms in Wisconsin and has probiotics, according to the company.

In efforts to attract snacking consumers, Sierra Nevada Cheese Co., is now making its handcrafted Cultured Classics dairy products available in 2-ounce single-serve sizes. The line includes Créme Kefir and cream cheese in flavors such as Garlic & Herb, Jalapeno and Original. These organic products are made the old-fashioned way—batch style in small vats--using only simple ingredients: locally sourced organic cultured milk, cream and salt.

Less sugar, but still somewhat sweet, is a growing trend in fruited cultured dairy products.  B’more Organic produces Skyr Smoothies, a line of drinkable no-sugar-added strained nonfat yogurts. The cultured beverages come in 16-ounce plastic bottles, with an 8-ounce serving containing no more than 14 grams of sugar from inherent lactose. Organic stevia keeps calories and sugar content low.

To read more about reducing sugar yet maintaining sweetness in dairy foods, link HERE to an article I recently wrote for Food Business News on the topic.

There’s a recurring theme in a number of the new products just referenced and that is being made with whole milk. Fat is no longer the enemy, and in fact, research suggests that the fat found in cows milk can be beneficial when consumed in moderation…like just about anything that tastes good!

Whole milk tastes good. (Cream is even better!) It’s satisfying and delicious. When partnered with the complete protein (contains all essential amino acids in the proportions required by the body) found in cows milk, you’ve got yourself one powerful food.

The IRI data previously mentioned shows that whole milk yogurt (Greek and non-Greek) had 9.2% share of retail yogurt volume sales during the first 11 months of 2015. Compared to the same period in 2014, sales were up 26.7%. This is while fat-free yogurt volume sales were down 4.3%. This trend is expected to continue, with most specialty yogurt manufacturers entering the market with products made with whole milk, and mainstream players expanding product lines to include whole milk options.

For example, Stonyfield Farm introduced its new dual-compartment whole milk Greek line at the Fancy Food show. This is the first time the company has offered a product in this package format. The interactive package allows the consumer to mix in just the right amount of variegate—blueberry, cherry, honey or strawberry—into the yogurt.

In addition, whole milk plain and whole milk vanilla bean will roll out in 5.3- and 30-ounce containers, which represents another Greek yogurt trend: the multi-use, recipe-intended tub. This larger package size, which typically ranges from 16- to-32 ounces, makes up almost a fifth (18.6%) of all refrigerated yogurt sold through retail channels, with volume sales of tubs up 6.2% during the first 11 months of 2015, as compared to the same period in 2014.

A new Illinois company—1871 Dairy LLC--illustrates this trend. Named after the famous Chicago fire of 1871, when Mrs. O’Leary’s cow kicked over a lantern (It would have burned down my current home.) starting Chicago afire, the company uses local grass-fed whole milk to produce non-homogenized, cream-on-top probiotic yogurt. Sold in 8-ounce glass jars with hand-applied labels—the “use by date” is hand written in a black Sharpie—I found the product at Plum Market in the city’s Gold Coast neighborhood. I paid $3.99 for that jar, and savored every spoonful.
Introduced a few years ago, the time is right for Sosi’s Armenian Yogurt Dip, which was on display at the Fancy Food Show. This Colorado-based company uses a base of nonfat Armenian-style yogurt. The dips are enhanced with whey proteins and include olive oil, which yields a thick, rich dip that’s also loaded with probiotic cultures. The dips come in five varieties: Artichoke Dill, Garden Mint, Mediterranean Roast. Roasted Red Pepper and Spinach Jalapeno.

Probiotics are being included in all types of cultured dairy foods, while their health- and wellness-claims are cautiously being promoted. The good news is that a growing number of consumers understand the positives of consuming probiotics and continue to seek them out…as they are now found in all types of foods. Cultured dairy should own probiotics, or at the very least, be a significant player.

On a global basis, Dannon continues to invest in its probiotic Activia brand, which is designed to improve digestive health. The most recent introduction is Activia Fruit Fusion, a layered product of reduced-fat yogurt with fruity combinations. In the U.S., the line will be available in Blueberry & Blackberry, Cherry & Vanilla, Peach & Mango and Strawberry & Raspberry.

This fusion of flavors is a bit different in the U.K., where the new line comes in Blueberry & Acai, Mango & Passionfruit and Raspberry & Lychee.

Probiotics will likely be one of the key attributes in making drinkable cultured dairy a reality…once again, but hopefully for the long term, in the U.S.

Here’s the deal. Cultured dairy drinks, which include kefir, lassi and yogurt, have experienced ups and downs since the turn-of-the-century. This is likely due to consumer confusion with how to include such products in the daily eating regime. With the recent rise in all-day healthy snacking, coupled with consumers’ distaste for sugary soft drinks, the time might finally be right for drinking yogurts and fermented beverages.

According to my friends at Innova Market Insights, drinkable cultured dairy products accounted for 8.5% of total global dairy launches in the 12 months to the end of October 2015. “The drinking yogurt market has enjoyed mixed fortunes in recent years,” says Lu Ann Williams, director of innovation at Innova. “A positioning that falls between traditional spoonable yogurts, milk drinks and other soft drinks has proven to be a mixed blessing, with high levels of competition in all these areas.”

After a period of strong growth in the first half of the 2000s, driven by rising interest in healthy and convenient options, the market also found itself split into two separate areas--single-serve dose-delivery active health drinks and traditional drinking yogurts--with the latter increasingly coming under pressure from the former. This position has tended to reverse with the regulatory changes preventing the use of probiotic claims in key markets, perhaps most notably Europe, which accounts for more than half of launches in the sub-category.

Despite the use of the term “probiotic” being disallowed in the European Union, the association of yogurt with digestive/gut health has clearly been made. It is the most popular claim globally, used on more than half of drinking cultured dairy launches.

There are now indications that the market is moving forward, with a particular focus on yogurt and fruit blends in a smoothie format, while there has also been the rising interest in yogurt-style fermented drinks that has brought products such as kefir and lassi into mainstream markets in non-traditional regions.

One of the most high-profile recent arrivals has been the Icelandic yogurt-style fermented dairy product Skyr in countries such as the U.S., the U.K. and mainland Europe, in drinkable and smoothie formats. It is offered in a range of fruit flavors, as well as trendy options such as coffee and vanilla. There has also been a focus on offering liquid yogurt products for the breakfast market, both in-home in cartons and for on-the-go replacements in resealable plastic bottles.

One of the attributes that makes drinkable cultured dairy attractive to consumers—especially in the U.S.—is not calling it drinkable yogurt. When consumers think yogurt, they think spoon.

Using specialty probiotic cultures described at kefir cultures, my neighbors and friends at Lifeway have done an incredible job of making kefir a household name in the States.

The folks at Maple Hill Creamery want a piece of the action. This artisan dairy is rolling out 100% Grass-Fed Whole Milk Kefir made with milk sourced from small family farms in upstate New York. With 9 grams of protein per serving, the organic kefir comes in plain (no sugar added), strawberry and vanilla varieties.

There’s no doubt in my mind that the cultured dairy foods category has room to grow…it’s up to the players to produce quality product that speaks to the needs of today’s consumers. As I said in last week’s blog, which can be accessed HERE, nobody wins when you attack your dairy foods partner.

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