Six trends shaping consumer demand for dairy products

Growing demand for information about what is in food, where it comes from and ethnic diversification of the American diet continue to drive product development, capital investment and marketing efforts in the U.S. food industry.

Kasto, Bigstockphoto.com
Kasto, Bigstockphoto.com

Growing demand for information about what is in food, where it comes from and ethnic diversification of the American diet continue to drive product development, capital investment and marketing efforts in the U.S. food industry. A panel of dairy industry leaders discussed these consumer demands for food products and how to leverage them at the International Dairy Foods Association’s Dairy Forum 2017, February 1.

Panelists were Philippe Caradec, vice president of corporate affairs North America, Dannon; Jon Davis, executive vice president ingredients, Agropur Inc.; and Christopher Nolan, managing director, PwC Corporate Finance.

Brian Boyle, managing director, PwC Corporate Finance, moderated the panel discussion and presented research and case studies conducted by PricewaterhouseCoopers, related to trends shaping consumer demands for food products, especially those related to dairy products.

Boyle cited six trends shaping consumer behavior in the U.S.:

1. Health and wellness

Boyle noted health and wellness now is largely defined by ingredients – both those included and excluded. For the dairy industry, “We do expect cottage cheese to be a real bright spot going forward,” he said, given its simplicity and source of lean protein.

2. Income bifurcation

There are two income groups shaping consumer trends, according to Boyle: Survivalists and Selectionists. Survivalists (those buying on price) are focused on private-label products, while Selectionists (those buying specialty, gourmet and organic) are focused on craft products.

3. Ethnic diversity

Boyle said consumers are hungry for new flavor profiles, a trend he cited yogurt manufacturer Chobani as having picked up on.

4. Transparency

Boyle said consumers are demanding traceability across the entire supply chain. They’re looking for clean and clear labels, and certified and verified foods.

“The supply chain is very important,” said Caradec. “In order to achieve that … we engage now directly with farmers.”

5. Sustainability and social responsibility

Boyle noted consumers are focused on the social and environmental impact of food choices.

6. Convenience

Consumers are increasingly looking for foods that are easy and quick in today’s fast-paced environment, Boyle said. Single-serve yogurt products are one area that’s seen recent growth in the convenience arena.  

The importance of educating consumers

In terms of what consumers are demanding be removed from products, such as the hormone Bovine somatotropinhormone (BST), Davis said, “You have to react to [consumers], because if you don’t you’ll be boxed out of the market.

“But I also think that there has to be better education on what those products bring to the marketplace. Something like BST that so far the science would tell you it’s a pretty good product and adds value to the supply chain, and helps us feed the world ... that’s a good thing. We shouldn’t be scared of something that brings value to the marketplace. We have to … do a better job of marketing and educating the consumer,” he said.

The outlook for M&A

Nolan explained that mergers and acquisitions are focused on trying to compliment on-trend products, especially those focused on millennials. Large consumer packaged goods companies are often finding that acquisition of an existing product is more cost effective than the research and development required to create similar product.

Forecasting Trump’s impact on M&A and the food industry overall

“There [are] a lot of countries – and I think China is one of them – that we’re not going to be able to bully. [Trump’s] actions are going to have reactions, and he needs to be aware of what those reactions are,” Davis said, speaking of the Trump administration.

“For us – the dairy industry – I don’t think it’s a fight we want. Three percent of the population is in the U.S. We need to access those other 97 percent of the people to feed them dairy products. Trying to be a bully throughout the world in the marketplace is not going to win,” he said.

Boyle said some of clients have noted concerns about tariffs and other international trade repercussions with the new U.S. presidential administration.

“The supply chain has become very global and intertwined … and it’s clear that [Trump] hasn’t thought through all of the iterations of this complexity of the supply chain,” Boyle said.

Page 1 of 91
Next Page