Dairy Industry 2022: It’s not your daddy’s dairy anymore.

 

Dairy Processing’s inaugural State of the Industry shipped this week. It is an honor to be a part of the publication’s editorial team. Link HERE to the digital edition, which includes a comprehensive overview of all dairy product categories, as well as dairy alternatives. There’s also IRI branded sales data for the 52-week period ended June 27, 2022. 

With most dairy alternatives made on the same equipment as dairy products, and often in dairy manufacturing facilities, it is safe to say that “times are changing.” Ingredient companies have spent the past few years working diligently to improve plant-based dairy systems. The innovations entering the marketplace today are more sophisticated in terms of flavors, formats and nutrient density. 

Tastes are changing, too, especially in terms of sweet preferences. When decreasing sugar in the diet, most shoppers prefer to reduce rather than replace with non-sugar alternatives or other flavors, according to HealthFocus International’s new report “Sweetener Solutions: A Path Forward—New Sweetener Insights from Around the World.” The study shows that shoppers have a preference to products that taste less sweet to the taste/flavor of non-sugar sweeteners or other substitutes. 

Taste and health remain priorities for consumers, according to “Growth Opportunities in Dairy-2022,” a new global report from FMCG Gurus. In fact, 73% of global consumers say that taste is important when choosing what fresh dairy products to purchase. The report looks at changing consumer attitudes and behaviors towards dairy, examining consumption habits in 2022. The report also explores consumer need states and motivations that impact dairy consumption. 

FMCG Gurus insights show that across product categories, consumers have increased their consumption of dairy products during the past two years. However, there has simultaneously been a significant increase in the proportion of consumers who turn to plant-based products on at least a weekly basis, with the biggest jump being within the oat milk category. This aligns with the trend of the growing proportion of consumers who say that they are following a diet based on the avoidance or moderation of animal products, with most of these individuals identifying as flexitarian.

FMCG Gurus research also shows that “high in vitamins” is the most appealing functional claim within the dairy industry, with 64% of global consumers stating this. When it comes to sustainability, the research shows that 80% of global consumers favor locally made brands made with locally sourced ingredients and about 73% of global consumers also find sustainability pledges important when buying dairy products. 

Read about how California dairy processors are innovating to cut emissions and close loops HERE.

To more than a third of global consumers surveyed as part of NielsenIQ’s forthcoming report—The Brand Balancing Act—small brands represent local, independent and unfamiliar products. In fact, 40% said they prefer to buy small brands either exclusively or when the time and price is right, while 56% said they prefer to buy locally made products.

A recent annual survey conducted by Vericast, a marketing solutions company and expert in consumer behavior, just released its “2022 Grocery and CPG TrendWatch Report,” which shows how rising prices, supply chain delays and record-high inflation have affected retail behavior. Nearly 2,000 adults in the U.S. and more than 300 consumer packaged goods and grocery/drug/mass industry professionals were surveyed. Vericast found that consumers across key demographic groups are scrapping long-held retail behaviors and finding entirely new ways to shop for household essentials, creating new opportunities for savvy marketers. 

Notably, 61% of all shoppers say that one of their biggest challenges is rising prices and almost a third are regularly switching products because their preferred product is not available. This represents an opportunity to guide shoppers to stores where products are in stock, or to drive awareness of other products that meet the same need.

 

“Consumers across all key demographics are switching shopping gears in this economic environment,” says Aimee Englert, executive director-client strategy at Vericast. “Marketers who understand this and plan accordingly will be top of mind as buyers focus on value and saving. To successfully retain and acquire new shoppers, marketers must know how different segments spend, their unique behaviors and how to capture their attention quickly and effectively.”

Across the key demographic groups, top findings from the survey include:

• Baby boomers are the most sensitive when it comes to price. Eighty-three percent of baby boomers indicated that price increases are the biggest challenge when it comes to shopping for food, health and beauty, personal care, or household items online or in-store. As a result, baby boomers are most likely to make a switch; more than one-third have switched products because their preferred products are not available.
• Just over 40% of baby boomers say they are most influenced by coupons that arrive in the mail or newspaper. However, more baby boomers are searching for coupons both in print and online, proving that an omnichannel approach to offering deals will pay dividends when it comes to shoppers looking to save.
• Millennial parents crave convenience but struggle to balance it with cost. Over half (53%) of millennial parents struggle to afford essentials. And due to rising gas prices, 63% of millennial parents are more likely to shop at fewer stores, compared to 56% of consumers overall.
• Despite rising costs, this generation more than any other will pay extra for the convenience of a subscription service. However, they still rate the in-store experience higher than online (70% vs. 63%), so marketers should look for ways to invigorate the online shopping experience to help these consumers discover new products with increased convenience.
• Affluent households increasingly seek value online. Even higher-income households are cutting back on spending. In fact, 57% of affluent shoppers say the rise in prices is their biggest challenge when shopping for food, health and beauty, personal care, or household items online or in-store.
• Affluent shopper purchasing habits are changing as much as other consumer groups in a volatile economic environment. Forty-two percent are stockpiling products, 39% have switched to shopping more online and 23% are using cashback rebates or apps more often. Indexing toward a quality, convenient online shopping experience will attract shoppers with the most disposable income.
• Gen Z is purpose-driven and digital first. Members of Gen Z are most influenced by social media advertising to shop at a new store/website or try a new product. Further, 50% use their phones when shopping in-store and nearly half (48%) are interested in virtual reality to see how products can fit into their lives. While it’s still early, marketers should begin exploring how virtual and augmented reality, as well as the metaverse, can enhance marketing strategies for this demographic.  
• Additionally, Gen Z is looking for products that align with their social, environmental and/or political values. This is especially important when it comes to food products (21%) and beauty and personal care (22%). Brands should ensure messaging emphasizes their brand values to gain and keep loyalty.

You can download the report HERE.