3 Ways C-Store Retailers Can Sell More Dairy

CHICAGO -- The dairy category is in limbo. Traditional products such as whole milk and yogurt cups are flagging as consumer demands for unique dairy items—ones that combine healthy benefits, portability and unique flavors—continue to rise. Drinkable yogurt, for instance, increased 20% during breakfast occasions from August 2017 to August 2018, according to the Breakfast: Retail Product Trends and Opportunities report from Packaged Facts, Rockville, Md. There’s hope for retailers who’ve seen their dairy section slip, and it lies in product innovation, merchandising and consumer marketing.

Here are three ways to boost the dairy section ...

Drinkable yogurt is still a small part of the convenience-store dairy category; according to IRI, sales totaled about $600,000 in the 52 weeks ending Dec. 30, 2018. But it has become a hit among consumers looking for healthy beverages to fit on-the-go lifestyles, said Rachel Kyllo, senior vice president of growth and innovation for Live Real Farms, a subsidiary of Dairy Farmers of America (DFA), Kansas City, Kan. “We’re seeing a lot of innovation in the drinkable yogurt segment focused on nutritional attributes like no sugar added, natural proteins and probiotic benefits,” she said.

Drinkable yogurts with a twist are at the forefront of innovation. Norwich, N.Y.-based Chobani LLC launched its portable Apple Cucumber Drink last year, while Leominster, Mass.-based Dahlicious Organic debuted its single-serve lassi, a yogurt-based drink that originated in India. Framingham, Mass.-based yogurt brand Pillars also launched its Pillars drinkable Greek yogurt, which is made with prebiotics and probiotics.

While most retailers dedicate a cooler or space near the back of the store for dairy products, they should consider placing portable, better-for-you dairy items such as single-serve almond milk, yogurt and string cheese in fresh open-air cases near the register, said Jim Whitaker, vice president of sales for Califia Farms, Bakersfield, Calif. These coolers are much smaller than traditional refrigerators and capture impulse purchases with their location near the front of the store.

Nondairy items, such as plant-based milks, are rising in the category and deserve attention from retailers, Whitaker said. Dairy-free yogurts and enhanced almond milks have reached 6,500 immediate-consumption c-store and drugstores to date, he says.  “People are becoming more comfortable with nondairy alternatives,” he said. “And that percentage is going up.”

Dairy alternatives are especially popular with millennials and Gen Z, who often purchase the items for both personal and environmental concerns, Whitaker says.

While flavor (48%) and price (37%) are the top purchase drivers for nondairy products, millennials and Gen Z are significantly more likely than their older counterparts to cite health and wellness, sustainability and animal concerns as reasons for consuming dairy products, according to a 2017 report by Comax Flavors, Melville, N.Y.