In the beginning, there was Dairy. Dairy held dominion over much of American food culture. And Wisconsin did rejoice.
But eventually, Dairy faltered.
First, the people looked to Low-Fat Dairy. And Low-Fat Dairy begat Non-Fat Dairy, which in turn begat Non-Dairy Aisle. And Non-Dairy Aisle begat Soy Milk, Almond Milk, Cashew Milk, Coconut Milk, Flax Milk and Hemp Milk, and those were all the issues of the Non-Dairy Aisle.
Then Non-Fat Dairy once again begat. And thus was born Non-GMO Dairy, which in turn begat Organic Dairy, Probiotic-Enhanced Dairy, Antibiotic-Free Dairy, Artisan Dairy, Local Dairy, Sustainable Dairy…
Heads spinning? Yeah, ours too. The dairy(-ish) sector has undergone near-Biblical upheaval over the past 20 or so years. Never has so much proliferation been accomplished by so many dairies to accommodate segments comprising so infinitely few.
But let's look at the overall market in context. What are the common factors in the denominator?
The Underlying Causes Of The Great Non-Traditional Dairy Proliferation
Dissatisfaction with "boring" traditional dairy products is certainly one. Millennials are taste-fickle flavor explorers. They'll pay handsomely for a pint of artisan Mexican Vanilla Bean or Old World Egg Nog gelato, just to be able to post an envy-inducing picture of it to their Instagram on a hot summer day.
Health consciousness is another. There's no denying that products that promise probiotic benefits, or that refrain from sourcing ingredients "tainted" with bovine growth hormone, antibiotics or GMO feeds, are incredibly hot sellers, especially among young adults and wellness-savvy Millennial parents.
Sustainability consciousness is arguably a big part of the puzzle, too. Consumers are realizing that trucking large quantities of milk and cheese hither and thither, producing dairy products on large, run-off inducing corporate farms and feeding all those animals is simply poor ecological practice. Local dairy, small dairy and dairy alternatives have thus made plenty of inroads into American consumers' grocery shopping consciousness.
So What Is Big Dairy To Do?
It's hard to say. It’s possible that many or even all of the alternative-dairy market lines will turn out to be fads that will soon fade. But it could very well turn out that generalized (albeit diffuse) grocery shopper dissatisfaction with the overall sector is an unstoppable trend.
The fact that dairy consumption has been steadily falling for the past two decades now would seem to indicate that the overarching downward trend has legs. Americans' per capita consumption of milk fell, or remained flat, for the better part of every year between 1993 and 2014, according to the Washington Post.
But should dairy companies diversify, or seek to specialize? Can specialty producers carve out large enough niches to survive? That's a big gamble.
Our short answer would be that dairy and dairy alternative producers should, on one hand, invest heavily in consumer research and predictive analytics to stay ahead of any developing food trends in (or lateral to) the sector and, on the other hand, spend resources on innovation, product incubation and flexible production capabilities, so that they can remain agile enough to revise their product lines as shifts in consumer preferences continue to occur.
There will inevitably be nexuses and nodes connecting the various niche markets within the Dairy/Dairy Alternative (maybe we should just call it "Creamy Foods?") sector. If producers focus on production capability along those identified nodes, they can quickly re-tool and modulate their product lines as preferences and tastes shift. With innovation and smart marketing, a few might even be able to start their own, self-sustaining food trends.
The Modern Grocery Shopper Faces A Dizzying Array Of Creamy Food Choices
So how can your products stand out? Even if you develop and test what you think will be a grand slam hit, poor placement on shelves or packaging that fails to stand out could sink your investment.
American food culture is right now united only in its tendency to continually fracture across product lines. Dairy and dairy alternative producers need strong R&D and marketing research to float above the Great Product Flood.