The Resilience of the Dairy Sector Amid Rising Prices
Despite a 5.1% increase in overall dairy aisle prices for the 52 weeks ending January 26, the dairy sector stands resilient with unit sales growing by 2.6%, according to Circana, a Chicago-based market research firm. The ability to maintain sales stems fr om dairy products being staples for many consumers, who continue their purchases regardless of cost hikes, explains Melissa Altobelli, Circana's senior vice president.
The report highlights significant growth in several dairy categories: yogurt sales increased by 6.1% despite a 3.2% price rise, and the butter/margarine/spreads category saw a sales uptick of 1.3% against a 4.2% price hike. Even milk, the largest dairy segment, faced only a 0.1% sales decline despite a 2.2% price increase. The egg sector experienced substantial change, with sales rising 4.2% in face of a 25.5% price surge to an average of $5.08, partly due to avian influenza-induced shortages.
Consumers are adapting by shopping more frequently but buying fewer items per trip to manage their budgets, Altobelli notes. Shopping behavior is also shifting towards value channels like club stores and mass merchandisers, wh ere everyday low prices attract consumers seeking savings.
Melissa Altobelli points out that dairy drives more shopping trips than other food categories, with shoppers spending an average of $760 annually on dairy selections. The category is favored for its convenience, driving purchases through easy-to-shop locations and staple pairings like yogurt with fruit or milk with cookies.
Enhancing dairy sales can be achieved by cross-promoting with other store items for meals and snacks, Paul Ziemnisky of Dairy Management Inc. suggests. Promoting product combinations via digital platforms and instore signage is reported to boost sales, as demonstrated by an initiative in Dollar General stores.
An emphasis on SKU analysis is recommended for retailers, allowing the selection of products that align with customer demographics and trends. Offering bold new flavors and limited-time promotions could also stimulate consumer interest while maintaining a careful balance to avoid waste, according to Russell Zwanka from Western Michigan University.
