1. Global dairy product innovations
Kim Malley, Senior Retail Insight Analyst, AHDB
October 2018
AHDB Retail Insight Snapshot
1
2. Summary: Dairy product innovations
Dairy Performance
• In the last 52 weeks
ending August 18, dairy is
growing strongly in value
due to price increases but
remains relatively stable
in volume, showing an
opportunity for NPD to
drive volume growth
• Yogurt, cheese and milk
are growing in volume
• Fresh cream and butter
are declining in volume
due to higher dairy prices
Dairy innovations are focusing on
the consumer need for:
• Convenience/on-the-go
• Dairy snacking
• Healthier alternatives
• Free-from alternatives
• Higher protein alternatives
• Additional functional benefits, e.g.
mood and well-being
• More variety in flavours
Range Rationalisation
• The big 4 supermarkets are
rationalising ranges to
compete with discounters
• Range rationalising means
more competition for space,
meaning NPD needs to
stand out and meet
important consumer needs
• Dairy products now compete
for space with dairy
alternatives too, meaning
NPD needs to be strong
2
NPD
3. Dairy is growing in value, driven by price increases
In the last year, the dairy market remains relatively stable in terms of volume but value is in growth, driven by price increases. Volume stability has
been held up by good performance in milk, cheese and yogurts. This performance comes as we see an increasing number of dairy alternatives in
the market, together with a focus on greater convenience, as well as health, following media attention on this, which particularly impacts dairy.
3Source: AHDB/Kantar Worldpanel, 52 w/e 12 August 2018, figures for GB retail
YOY = year-on-year
According to Kantar Worldpanel data, in the year ending 12 August 2018…
Total Dairy* Volume
7bn
+0.2%
Value
£9.5bn
+5%
Value
£904m
+15%
Butter
Volume
154m
-6.6% Value
£370m
+12%
Fresh Cream
Volume
98m
-0.9%
*Total Dairy includes 5 sectors above and fromage frais (2% of total dairy value)
**Milk includes dairy alternatives *** Yoghurt includes yoghurt and yoghurt drinks
Value
£2.9bn
+3.8%
Cheese
Volume
444m
+0.8%
Value
£3.3bn
+4.7%
Milk**
Volume
5.5bn
+0.2%
Value
£1.8bn
+3.2%
Yogurt***
Volume
727m
+2.3%
4. In the future, NPD needs to stand out as ranges are rationalised
4
According to a study by SCALA*, the UK’s biggest grocers are
reducing their product ranges to compete with discounters. Currently,
discounters stock keep 7,500 units compared with 30,000 for a
traditional supermarket. This simpler and more streamlined approach
is coupled with market share growth for discounters.
Range rationalisation has a big impact on NPD, making it harder for
new products to gain shelf distribution and shorter time frames to
prove themselves. Despite this, NPD is key for retailer success as
innovation is news for a consumer and typically higher priced.
Therefore, it is essential NPD stands out and meets consumer
needs.
Recent global Dairy NPD has focused on:
• Convenience/on-the-go
• Dairy snacking
• Healthier alternatives
• Free-from alternatives
• Higher protein alternatives
• Additional functional benefits, e.g. mood and well-being
• More variety in flavours
*Source: https://www.kamcity.com/namnews/uk-and-ireland/supermarkets/leading-supermarkets-removing-product-lines-to-compete-with-discounters/
5. Ready-to-eat cereals & milk and yogurts &
granola:
Need: Convenience
On-the-go dairy breakfast options
47% of UK consumers state convenience and portability is important or very important when choosing products to consume at breakfast (GlobalData,
Q4 2016). This is because traditional breakfast cereals are time-consuming and require you to sit and eat, which does not suit the increasing need for
portable meal options.
Breakfast drinks based on milk, oats and
flavours:
Ready-to-drink caffeinated ranges:
Vaalia in Australia – muesli & yogurt
Rachel’s Dairy in
the UK – granola &
Greek yogurt
Quaker Oats in the US –
morning ‘go kit’ including
yogurt, trail mix and breakfast
biscuitsLeft to right: Quaker Oats in the
UK, Nudie Foods in Australia,
Lewis Road in New Zealand, Arla
in the UK, DropKaffe in India, Life
Health Food in the UK
5
Left to right: Starbucks in the UK, Nestle Natural Bliss in
the US, Coca Cola Dunkin Donuts, Gold Peak and
McCafe in the US, Lion in Australia
6. On-the-go yogurt options: Cheese snacking:
Need: Convenience
Quick dairy snacking
Yogurt drinks – Danone yoothie range in Belgium, Matthew’s
Choice shakeable yogurt to go in Taiwan, Navanide L’instant
Exquis in South Africa
According to Mintel, the snacking culture in the UK is pervasive, with 96% of people reporting they eat between meals. This is a daily habit for 69% of
those people (Consumer Snacking, UK, May 18). Snacking needs to provide energy, fit in with time-poor lifestyles and, increasingly, be healthy,
following PHE’s (Public Health England) scrutiny of snacks.
A number of brands have innovated to pouches or tubes for
ease when on-the-go
Cheese crisp bars - Sonoma in the US
Cheese Bites - Liono in the US, Milde in France, P’tit Louis Escargolo in France, Babybel Mini Roules in France,
Dairyworks Edam Sticks in Singapore
Yogurt bites -
Mah! in
Columbia
(sweet) & iogo
in Canada
(savoury)
Cheese snacking boxes - Hormel Natural Choice in the US (includes deli meats, cheese and dark-chocolate),
Hillshaire in the US (includes meat, cheese, crackers, crisps and nuts) and Sargento in the US (includes cheese with
cranberries, nuts and chocolate)
In the US, Brandable Foods
has launched the super
snack time pizza in a bag
In the US, R!fRaf has
launched ricotta cheese
snack cups in sweet and
savoury flavours
6
7. Low fat claims:
Mary Anne Dairy, Dutch Mill Co and Bulgaria in
Thailand have introduced 0% fat milk and yogurt
Low calorie claims:
Need: Healthier alternatives
Low sugar/fat/calorie alternatives
7
According to Mintel, health is on the agenda when it comes to food for 63% of consumers all or most of the time (+5 percentage points vs. 2 years
ago). Of importance when looking for healthy food is low sugar for 52%, low fat for 45% and low calorie for 35% (Attitudes towards healthy eating,
UK, Feb18).
Low sugar claims:
Chocolate bars are seeing product reformulations following
recent media around the sugar tax:
Sugar free is also becoming more prevailant:
WheyHey sugar free ice cream in the UK and Simple Love
sugar free yogurt in China
Ice cream has had a big push globally for low calorie ice
cream alternatives:
Left to right – Cool Way in Canada, Chillycow in the US, Ben & Jerrys in the US,
Arctic Zero in Canada, Breyers in the US and Simple Truth in the US
Quark cheese is a type of fresh dairy product made by
warming soured milk until the desired amount of
curdling is met, and then straining. It is likened to yogurt
and cottage cream in texture but some quarks have the
added benefit of having less than 1% fat, making it a
healthier alternative for cooking.
As well as yogurts:
Arla Skyr yogurts and Danone Light & Free yogurts both market themselves as
lower calorie than standard yogurts
8. Need: Healthier alternatives
Help my gut
8
According to Mintel, 43% of consumers would, ideally, like their diet to support digestive health (Attitudes towards healthy eating, UK, Feb18). Kefir
milk is a cultured, fermented dairy product with the added benefits of probiotics, tapping into this increasing consumer awareness of gut health.
Bio-tiful dairy kefir milk and smoothies, Yeo Valley kefir yogurts, The Collective kefir drink and yogurt range & Milko kefir
9. Need: Dietary requirements
Need for lactose-free dairy
9
Lactose intolerance is a digestive problem affecting around 1 in 10 people where the body is unable to digest lactose, a type of sugar found in dairy products.
Developments in the market have led to lactose-free dairy alternatives to meet this dietary need. However, 25% of global shoppers agree that lactose-free
products are healthier (GlobalData, Q1 2017), meaning it is not only lactose-intolerant consumers who are buying in to these products.
Lactose-free: Ghee is a type of clarified butter that contains fewer dairy
proteins and has less lactose than regular butter:Arla in the UK – full range of lactose-free covering milk,
yogurts, butter and cheese
Dairy Milk – Chiang Fresh Milk Ltd in Thailand, Mary
Anne Dairy in Thailand with flavoured milk alternatives
Yogurt & Ice Cream –
Little Freddie in the UK,
Vemondo in Austria and
Peters in Australia
A2 Milk has been reported to be better
for those with lactose intolerance
because it is the A1 proteins that have
been closely linked with stomach
discomfort
Ghee butter (Fushi organic ghee, Ghee Easy,
Pukka organic ghee and Na’Vi organic ghee)
Ghee as a base for sweet spreads (Gold
Nugget & Chocti chocolate spread and
Lee’s & Farmtrue maple flavoured ghee)
Ghee flavoured butter (4th &
Heart garlic ghee butter, Ghee
Me More spicy pepper, Pure
Indian Foods tumeric superghee,
Gourmet Ghee Co cardamom
ghee and Golden Ghee with
added turmeric)
10. Need: Dietary requirements
Higher protein diets
10
Protein continues to attract consumer interest and innovation, thanks to its health halo and perceived benefits in terms of weight maintenance and
muscle gain. According to Mintel, 25% of consumers claim high protein content is an important factor when looking for healthy food (Attitudes
towards healthy eating, UK, Feb18).
A number of brands have used dairy to promote the unique selling point of protein levels to consumers:
In the UK, Arla Protein range covers milk, yogurt, butter and
cheese with the grams of proteins communicated clearly on
pack, e.g. 20 g of protein in one yogurt pot
In the UK, Eatlean has
introduced a range of high
protein cheeses, which
markets its protein content
versus other cheese types
(above)
In the US, Yoplait
has released a
YQ branded
yogurt range
described as “a
protein packed
product” featuring
17g of protein per
yogurt
In New Zealand, Pro-Yo
position themselves as an
on-the-go high protein
yogurt option featuring 11g
per pouch
In New Zealand,
Anchor has
expanded its
Protein+ product
range to include
flavoured milk
drinks, each
containing 20g of
protein
In the UK, Koupe has introduced a new range of high
protein and fibre ice cream, catering to health-
conscious consumers who are looking for dessert
alternatives
11. Energy drinks have been a growing market. However, they have
come under pressure from negative health perceptions, opening
the doors to alternatives beyond soft drinks.
Need: Product benefits
Aid my mood
11
In Australia, consumers can now purchase a dairy energy
drink launched under the Nestle Milo brand. The product
is flagged as a good source of calcium, vitamins and
minerals, which ‘gives the confidence, energy and spirit to
succeed in an active life’.
In the US, Dairy Farmers of America, a
national milk marketing cooperative, has
just helped launch ‘Live Real Farms
Energy Drink’ using lactose-free
skimmed milk, fruit juice, whey protein
isolate, a vitamin boost of B12 and green
tea extract to help boost energy.
According to Mintel, 49% of consumers would, ideally, like their diet to support boosting energy and 27% would like it to improve mood, e.g. help
relax (Attitudes towards healthy eating, UK, Feb 18). Dairy products are therefore tapping into these two ends of the spectrum
Natural drinks that help consumers relax and sleep will resonate with
consumers who are seeking natural remedies to help induce sleep.
In Ireland, Lullaby Milk has launched, which is
high in naturally occurring melatonin because
the cows are milked before dawn when the
natural hormone is at its highest level.
In the UK, Sleep Well, which is Jersey milk with
added honey, vanilla and valerian, a well known
sleep aid, has launched.
12. Need: Functional benefits
Help my well-being
12
Consumer expectations around what benefits they would like from their diet is becoming more demanding, covering elements such as strengthening
bones, building or maintaining muscle mass or improving skin. Innovations can tap into these growing needs.
In the UK, Waitrose and Ocado have started distributing vegetable-
flavoured yogurts, high in vitamin D, to help keep bones, teeth and
muscles in good shape
In Finland, Roberts Berrie has launched a +Beauty yogurt
variant, touted to help support healthy skin
13. 13
Need: More variety
I need adventurous flavours
According to GlobalData's 2017 Q1 global consumer survey, 54% of consumers mentioned that they like to experiment with new and unusual
flavours when choosing food products to purchase.
Milk-based drinks:
In New Zealand, Lewis Road
Creamery introduced gingerbread
spiced milk
Yogurt: Cheese/spreads: Ice Cream/Desserts:
Butter:
In the US, Kraft Philadelphia is expanding its
range of deli spreads to include smoked
salmon, spicey jalapeno and brown sugar &
cinnamon
New in Thailand, Meiji cola-flavoured yogurt. In
the US, avocado citrus yogurt. In the US, Dannon
peanut butter yogurt
New in New Zealand, Flavour
Fiend finishing butter includes
Indian spice and chipotle & lime
In the UK, Tyrrells crisps have made an ice
cream using crisps to achieve the brand’s
signature crunch. Flavours include strawberry &
black pepper and chocolate & sweet chilli
In Australia, Barista Bros’ latest flavoured milk
is inspired by desserts including toffee almond
panna cotta and butterscotch brownie
Alcohol has inspired brands such Arctic Buzz in
US (vodka), Speakeasy in the UK (rum) and
Haagen-Dazs in Canada (vodka)New in the US, Shindigs
beer cheese dip
New in Romania, Meggle
truffle butter
New in the US, Great
Value garlic, parmesan
and basil seasoning
butter
New in the US,
Arla pineapple
creamed cheese
and strawberry
cream cheese
spread
In the UK and
France, burger
slices are
innovating
Desserts and colours have inspired brands such
Magnum and Cornetto
In the US, The Farmers Cow
has re-launched their limited
edition root beer milk
14. Innovations for dairy are imperative as dairy-free alternatives grow
14
Milk:
Estimated at £718 million in 2017, the UK free-from market* more than doubled its size over 2012-17 and is projected to grow by 25.2% over 2017-22.
52% of the market is dairy/lactose-free which is growing faster due to media buzz on health and ethical grounds (Mintel, Free-From Food, UK, Dec 17).
Rude Health in the UK has 10 plant-based
alternatives, covering nuts, rice and oats,
Innocent in the UK offers oat, almond and
hazelnut milk, Good Hemp in the UK produces
hemp seed milk and Califia Farms in the US
produces coconut milk
Yogurt: Butter: Ice Cream/Desserts:
Plant-based yogurt alternatives are increasing
shelf space in UK supermarkets
Cheese:
Angel Food in New Zealand has launched a
range of dairy-free cheese alternatives, including
mozzarella, parmesan and cheddar
Halo Top dairy-free
ice cream in the UK is
made with coconut
milk
Booja Booja in the
UK is made from
cashew nuts,
sweetened with
agave or coconut
syrup
Dragsbaek in
Germany has
developed a vegan
spread using organic
quality oils
88 Acres in the US has
developed a seed
butter (pumpkin or
sunflower) Helsinki Heaven
Oy in the US has
extended its
chocolate range
to include an oat
milk dairy-free
chocolate bar
Unilver Pure Blends in
the US has developed
an avocado oil-based
butter
GoAvo in the US has
introduced an avocado-
based spread
Baileys in
Canada, US and
the UK has
introduced an
almond version
of their milk
liqueur
*Free-from foods are defined as foods that are manufactured and targeted specifically at consumers who suffer from food intolerances and/or food allergies or who are following avoidance diets, e.g.
gluten-free, wheat-free and dairy-free
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