From The Spring 2004 Issue of Natural Grocery Buyer

Milk Organic Dairy’s Health Benefits

Carol Radice

When it comes to sales of natural dairy products such as organic milk, yogurt and cheese, three key consumer concerns are driving growth: use of antibiotics, growth hormones and pesticides in conventional products. On the flip side, the creation of national organic standards, many say, has increased consumer confidence in refrigerated organic dairy products.

“As consumers continue to link food and health, they are developing growing concern over what is in their food,” notes Jay Orris, product manager at Horizon Organic Dairy, based in Longmont, Colo. Researchers, too, are finding food-safety concerns and trust issues are steering more consumers to natural and organic products. “Today’s consumers are concerned about the detrimental effects of some foods and the questionable safety of other products,” says Daniel Bone, an analyst with Datamonitor. “A loss of faith and confidence in the conventional packaged foods industry is contributing to the growth of natural foods.”

Gary Hirshberg, president of Londonderry, N.H.-based Stonyfield Farm, sees growth in dairy foods in particular. “In addition to food-safety concerns, the interest of the everyday consumer in natural dairy has been fueled to a large extent by the medical community, who are endorsing the use of dairy products as part of a healthy diet.”

As observers look ahead, they predict that continued interest in wellness and food safety, coupled with the oncoming slew of product introductions, will help keep demand and excitement for natural and organic dairy products at an all-time high. The Organic Trade Association anticipates that organic dairy sales will grow nearly 70 percent by 2005. By 2007, the category is expected to reach $5.4 billion in annual sales.

For Horizon, the core audience for yogurt continues to be moms and kids. “Yogurt in tubes gives teens and kids grab-and-go convenience for their active lifestyles. It allows parents to provide their children with fun, organic snacks that taste good and are healthy,” says Orris. Given that consumers indicate they prefer to purchase natural and organic products in mainstream grocery stores, naturals retailers will need to assure assortment and availability, and stay on top of new-product launches to ensure success with natural dairy, says Orris. Consumers also are likely to be influenced by European food trends.

Stonyfield Farm reports that interest in smoothies and organic yogurt desserts remains strong. Hirshberg believes part of the attraction has to do with the need these products address. “Today’s consumers want it all—they are looking for indulgent snack and dessert options that taste great but are healthier than the average candy bar.”

Integration is paramount, notes Hirshberg, but he cautions retailers against playing price games. “To a large extent these are price-unconscious consumers. If the entire shelf becomes a competition with Wal-Mart’s discounting strategy, then retailers will lose their quality edge.”

Industry watchdogs also suggest retailers keep an eye on the up-and-coming functional dairy segment.

The International Dairy Deli Bakery Association’s executive director, Carol Christison, says that as additional research is published touting dairy’s benefits, retailers would be wise to champion these products and their benefits for hypertension, colon cancer, weight and osteoporosis. “Organic, natural and soy-based dairy products free of chemicals and additives should be emphasized in their own section to call attention to the fact that there are products in the dairy case for every need,” according to “What’s In Store 2004,” a recent IDDBA report.

Clearly there is a future for natural dairy products beyond niche status. But there are some obstacles to future growth, notes Bone, including consumer perception of high prices, poor taste and quality. “Consumers must be better educated about organic foods and their benefits to their health and the environment. Only this will impact perceptions of and attitudes toward these issues,” says Bone.

Carol Radice is a free-lance writer in Vermont. Contact her at cradice1@earthlink.net.