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Consumer health concerns propel light dairy market to $25.7 billion.

As the public has become increasingly aware of the dangers resulting from cholesterol ad other fats in the diet, consumers have made heavy demands on the food industry for healthier products.

The dairy industry has responded with widespread efforts to meet these demands. Consequently, the light dairy market is expected to vastly outperform the overall diary market, according to a new report by leading research and consulting firm FIND/SVP.

"While a gap seems to exist between what consumers say they are doing to eat more healthful and what they actually are eating, progress seems to be under way," says Peter Allen, FIND/SVP's Vice President, Market Research Reports. "Americans are more vigilant than ever before in keeping down their intake of fat and cholesterol," he adds.

The light dairy market incorporates fluid milk, evaporated/condensed and dry milk, cultured products, cheese, butter, margarine, and other spreads that contain less fat, cholesterol, calories, sodium, and/or sugar than the regular product. New labeling requirements involving more specific definitions have bee mandated by the FDA for no later than May 1993. However, implementation of the new regulations may be delayed.

The market for refrigerated light dairy products accounted for 7.6% of sales, and light evaporated/condensed milk and dry milk contributed 6.8%. The light dairy market grew 6.3% between 1990 and 1991. Sales of light fluid milk rose only 1.7%; however, all other refrigerated light dairy products increased 24%. The light cheese segment jumped 50%.

Manufacturers' shipments of all refrigerated dairy foods declined from $46.9 billion in 1990 to $44.2 billion in 1991. Between 1987 and 1991, peer capita consumption of whole milk fell from 118.6 pounds to 110.4 pounds, while low-fat milk rose from 89 pounds to 99.2 pounds. Nonfat dry milk experienced a 10.7% annual rate of growth for that same period.

The total value of U.S. dairy product shipments is projected to rise 1% per year between 1991 and 1996, with reduced-fat milk and yogurt leading the increase. Higher-fat milks and cottage cheese should decline further. FIND/SVP forecasts that retail sales of refrigerated lights dairy products will grow at an average compound annual rate of 15.2%, from $25.7 billion in 1992 to $39.3 billion in 1996.

But the introduction of new light products and especially new labeling laws, is very likely to complicate things at the retail level. Products will be defined more narrowly than they are at present, so that manufacturers, in their labeling, positioning, and advertising, and retailers, in their stocking and shelving, will have to take into account the differences among products labeled "light," "reduced," "low," or "free," instead of dealing with the umbrella term, "light."

Acquisitions and mergers in the dairy industry have resulted in a consolidation of production. Although the total number of farmer-owned cooperatives decreased 31% between 1985 and 1990, co-ops continue to process 78% of U.S. milk volume. Major competitors who have been highly successful with introductions of light diary products include Beatrice Cheese Company, Borden, Dannon, and Kraft.

Exploitation of niches may be the key to future success in the light dairy market. "As the number of industry processors continues to decline and competition becomes concentrated in fewer and larger firms, opportunities for smaller operators to enter the market diminish unless they can find a niche in which to develop a new specialty item," notes Allen.
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Publication:Frozen Food Digest
Article Type:Industry Overview
Date:Oct 1, 1992
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