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Dairy Milk - US - October 2017

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY 
The issues
The dairy milk category continues sales declines
Figure 1: Total US sales and fan chart forecast of market, at current prices, 2012-22
Habitual purchase patterns stall the category
Figure 2: Shifts in consumption of any dairy milk, July 2017
Non-dairy milks continue strong growth
Figure 3: Non-dairy milk purchase, July 2017
Skim/low-fat milks lack appeal to general population
Figure 4: Perceptions of whole and skim/low-fat milk, July 2017
The opportunities
Less traditional milks see increased purchase
Figure 5: Shifts in consumption, July 2017
98% of parents purchase dairy milk
Figure 6: Dairy milk purchase, by parental status, July 2017
Natural, nutritional value of milk increase importance
Figure 7: Purchase incentives, by dairy milk purchase, July 2017
Brands matter for milks with added value
Figure 8: Attitudes toward milk, by dairy milk type purchased, July 2017
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Dairy milk category continues to struggle
Whole, flavored milks’ growth can’t stop category loss
Price volatility, demand strains industry
Millennials reaching pivotal life stages for dairy milk consumption
MARKET SIZE AND FORECAST
Future of dairy milk to maintain a downward trend
Figure 9: Total US sales and fan chart forecast of market, at current prices, 2012-22
Figure 10: Total US retail sales and forecast of dairy milk, at current prices, 2012-22
Figure 11: Total US retail sales and forecast of dairy milk, at inflation-adjusted prices, 2012-22
MARKET BREAKDOWN
Skim/low-fat losing way to whole milk, flavored options
Figure 12: Total US retail sales of dairy milk, by segment, at current prices, 2015 and 2017
Category loss driven by skim/low-fat milk
Figure 13: Total US retail sales of dairy milk, percent change in sales, by segment, at current prices, 2015 and 2017
Figure 14: Total US retail sales of dairy milk, by segment, at current prices, 2012-22
Lactose-free offerings flourish at natural channel
Figure 15: Natural supermarket sales of dairy milk, by lactose free, at current prices, rolling 52 weeks ending 7/19/15 and 7/16/17
Animal welfare claims grow
Figure 16: Natural supermarket sales of dairy milk, by animal welfare label, at current prices, rolling 52 weeks ending 7/19/15 and 7/16/17
Sales split between supermarket and ‘other’ channels
Figure 17: Total US retail sales of dairy milk, market share by channel, at current prices, 2015 and 2017
Figure 18: Total US retail sales of dairy milk, percent change by channel, at current prices, 2016-17
MARKET PERSPECTIVE
Interest in non-dairy milk grows
Figure 19: Non-dairy milk purchase, July 2017
FDA approves ultra-filtered milk in cheese production
Dairy milk fights back against non-dairy alternatives
Heightened production, low milk prices, and demand strain industry
Figure 20: Milk production and average price per gallon by year, 2000-16
Perimeter of the store gains attention
Figure 21: Attitudes toward the perimeter, April 2017
Organic claims resonate stronger with fresh foods
Figure 22: Category preferences, April 2017
MARKET FACTORS 
Lactose intolerance higher among multicultural consumers
Millennials are parents
Figure 23: Households with own children under age 18, by age of householder, 2016
Loyal older generations shrink
Figure 24: Percentage of population by generation, 2012-22
Consumers experiment with plant-based food and drink
Figure 25: Attitudes toward BFY foods, by age and gender, June 2016
KEY PLAYERS – WHAT YOU NEED TO KNOW 
Private label brands dominate sales
Taste and nutrition win out
Skim, low-fat milks fail to keep up
Branding and added nutrition will excite the category
COMPANY AND BRAND SALES OF DAIRY MILK
Minimal shifts within the category
Figure 26: MULO sales of dairy milk, by leading companies, rolling 52 weeks 2016 and 2017
Figure 27: MULO sales of dairy milk, by leading companies, rolling 52 weeks 2016 and 2017
Private label brands dominate skim/low-fat and whole milk segments
Figure 28: MULO sales of whole and skim/low-fat milk, by leading companies and brands, rolling 52 weeks 2017
fairlife makes its mark in flavored dairy milk segment
Figure 29: MULO sales of flavoured milk, by leading companies and brands, percent change, rolling 52 weeks 2016 and 2017
Whitewave sees minimal growth amid declining shelf-stable sales
Figure 30: MULO sales of shelf stable milk, by leading companies and brands, percent change, rolling 52 weeks 2016 and 2017
WHAT’S WORKING?
Private Label
Figure 31: US number of entries per year of white or flavored dairy milk by branded and private label
Whole milk
Flavored milk
Lactose-free expands beyond the dietary restricted
Figure 32: Natural supermarket sales of dairy milk, by lactose free, at current prices, rolling 52 weeks ending 7/19/15 and 7/16/17
WHAT’S STRUGGLING?
Skim, low-fat milks
Figure 33: Total US retail sales and forecast of dairy milk, skim/low-fat milk segment, at current prices, 2012-22
WHAT’S NEXT?
Value-added dairy milk
Branded dairy milk
THE CONSUMER – WHAT YOU NEED TO KNOW 
2%, whole milks most popular
Flavored milks appeal to kids, consumed by adults
Purchase of dairy milk stalls
Taste drives dairy milk purchase
Despite sales growth, lactose-free milks not seen as healthy
Cereal drives dairy milk consumption, drinking a glass of milk and cooking secondary uses
Consumers begin to avoid dairy
Consumers willing to pay extra for milks less commodified
Skim, low-fat milks trail whole milk in associations that drive purchase
DAIRY MILK PURCHASE
2%, whole milks receive consumer preference
Figure 34: Dairy milk purchase, July 2017
Half of dairy milk consumers purchase non-dairy milk
Figure 35: Dairy milk purchase, by non-dairy milk purchase, July 2017
Non-dairy milk purchase encroaches dairy milk space
Figure 36: Dairy and non-dairy milk purchase, by age, July 2017
Specialty dairy milk purchase driven by parents
Figure 37: Dairy milk purchase, by parental status, July 2017
Black consumers dedicated to 2%, whole milk
Figure 38: Dairy milk purchase by race, July 2017
HOUSEHOLD CONSUMPTION OF DAIRY MILK
Milks lower in fat more for adult consumption
Flavored milk appeals to adults, too
Figure 39: Household consumption, July 2017
Parents purchase non-dairy for self, dairy for children
Figure 40: Household consumption, by dairy and non-dairy milk type, July 2017
SHIFTS IN PURCHASE
Purchase of dairy milk has somewhat stalled
Figure 41: Shifts in consumption of any dairy milk, July 2017
Traditional dairy milks making way for others
Figure 42: Shifts in consumption, July 2017
Dairy milk consumers also increasing non-dairy milk purchase
Figure 43: Shifts in consumption of any non-dairy milk, by dairy milk purchase, July 2017
Life stage determines milk habits
Figure 44: Shifts in consumption of any dairy milk, by age, July 2017
INCENTIVES FOR PURCHASE
Taste drives purchase of milk, dairy and non-dairy
Figure 45: Purchase incentives, July 2017
Consumers of dairy milk hold lower concern of nutritional factors than non-dairy
Figure 46: Purchase incentives, by any dairy and non-dairy purchase, July 2017
Vitamins, natural ingredients, protein drivers of growing dairy milk types
Figure 47: Purchase incentives, by dairy milk purchase, July 2017
Men, fathers swayed by protein content
Figure 48: Purchase incentives of dairy or non-dairy milk, by gender and parental status, July 2017
Hispanic and Asian consumers seek natural milks
Figure 49: Purchase incentives of dairy or non-dairy milk, by race and Hispanic origin, July 2017
HEALTH PERCEPTIONS
Whole milk leads ranking of healthiest milks
Figure 50: Health perceptions, July 2017
Non-dairy milk consumption shifts views of healthfulness away from dairy
Figure 51: Health perception, any rank, by any dairy milk purchase and any non-dairy milk purchase, July 2017
Females see more healthfulness in skim/low-fat, almond milks
Figure 52: Health perceptions, any rank, by gender, July 2017
Younger consumers mixed about healthiest milks, older stay loyal to dairy
Figure 53: Health perception, any rank, by generation, July 2017
USAGE OCCASIONS
Dairy milk still a go-to for cereal, drink, and ingredient
Figure 54: Usage occasions, by any dairy and non-dairy purchase, July 2017
Flavored milk used as a drink, post workout, on-the-go
Figure 55: Usage occasions, July 2017
Youngest consumers driving mealtime consumption
Figure 56: Usage occasions – Drink with a meal, part 1, by age, July 2017
Figure 57: Usage occasions – Drink with a meal, part 2, by age, July 2017
Urban consumers use milk for broad range of tasks
Figure 58: Usage occasions of any dairy milk, by type of area, July 2017
ATTITUDES TOWARD DAIRY CONSUMPTION 
One in five adults is consuming less dairy to stay healthy
Figure 59: Attitudes toward dairy, July 2017
Non-dairy milk consumers limit overall dairy for health reasons
Figure 60: Attitudes toward dairy, by any dairy and any non-dairy purchase, July 2017
Low-fat, organic milk consumers more likely to limit dairy consumption
Figure 61: Attitudes toward dairy, by dairy milk purchase, July 2017
Young consumers starting to look outside of dairy for health benefits
Figure 62: Attitudes toward dairy, by generation, July 2017
ATTITUDES TOWARD BRANDS 
Brands may catch the eye, but for the right price
Figure 63: Attitudes toward milk, July 2017
Brands matter less to dairy consumers than non-dairy
Figure 64: Attitudes toward milk, by any dairy or non-dairy milk purchase, July 2017
Less traditional milks ignite more brand loyalty
Figure 65: Attitudes toward milk, by dairy milk type purchased, July 2017
Brands appeal regardless of age, older not as willing to pay
Figure 66: Attitudes toward milk, by generation, July 2017
ATTITUDES TOWARD FLAVOR
Innovative flavors appeal to niche audiences, not overall consumers
Figure 67: Attitudes toward milk, July 2017
New flavors draw in non-dairy consumers, less so dairy
Figure 68: Attitudes toward milk, flavor innovation, July 2017
Fathers intrigued by flavor innovation in milk
Figure 69: Attitudes toward milk, by gender and parental status, July 2017
Flavor sparks interest among Hispanics
Figure 70: Attitudes toward milk, by race and Hispanic origin, July 2017
MILK ASSOCIATIONS
Associations with dairy milk link to purchase
Figure 71: Perceptions of dairy and non-dairy milk, July 2017
Skim/low-fat trails whole milk in nearly all areas
Figure 72: Perceptions of whole and skim/low-fat milk, July 2017
Milk’s association with drinking is lessening
Figure 73: Perceptions of whole and skim/low-fat milk, “good to drink with a meal,” July 2017
White consumers more likely to see benefits of skim/low-fat milk
Figure 74: Perceptions of whole and skim/low-fat dairy milks, by race and Hispanic origin, July 2017
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
Abbreviations and terms
Abbreviations
Terms
APPENDIX – THE MARKET 
Figure 75: Total US retail sales of dairy milk, by segment, at current prices, 2015 and 2017
Figure 76: Total US retail sales and forecast of skim/low-fat milk, at current prices, 2012-22
Figure 77: Total US retail sales and forecast of skim/low-fat milk, at inflation-adjusted prices, 2012-22
Figure 78: Total US retail sales and forecast of whole milk, at current prices, 2012-22
Figure 79: Total US retail sales and forecast of whole milk, at inflation-adjusted prices, 2012-22
Figure 80: Total US retail sales and forecast of flavored milk, at current prices, 2012-22
Figure 81: Total US retail sales and forecast of flavored milk, at inflation-adjusted prices, 2012-22
Figure 82: Total US retail sales and forecast of shelf stable dairy milk, at current prices, 2012-22
Figure 83: Total US retail sales and forecast of shelf stable dairy milk, at inflation-adjusted prices, 2012-22
Figure 84: Total US retail sales of dairy milk, by channel, at current prices, 2012-17
Figure 85: Total US sales and fan chart forecast of skim/low-fat milk, at current prices, 2012-22
Figure 86: Total US sales and fan chart forecast of whole milk, at current prices, 2012-22
Figure 87: Total US sales and fan chart forecast of flavored milk, at current prices, 2012-22
Figure 88: Total US sales and fan chart forecast of shelf stable dairy milk, at current prices, 2012-22
APPENDIX – KEY PLAYERS 
Figure 89: MULO sales of skim/low-fat milk, by leading companies and brands, rolling 52 weeks 2016 and 2017
Figure 90: MULO sales of whole milk, by leading companies and brands, rolling 52 weeks 2016 and 2017
Figure 91: MULO sales of flavoured milk, by leading companies and brands, rolling 52 weeks 2016 and 2017
Figure 92: MULO sales of shelf stable milk, by leading companies and brands, rolling 52 weeks 2016 and 2017

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