What does it take to be a leader in dairy innovation?

The top food company in the food category was The Compass Group.

Despite some challenges in the dairy category such as a global oversupply and the rise of plant-based alternatives, demand for dairy is expected to increase 2.5% globally per year through 2020, according to Deloitte’s annual report on challenges and opportunities in the global dairy sector.

Traditional consumer demands for food products have grown beyond price, taste, and convenience, and into higher-value needs such as health and wellness, social impact, and experience, according to Deloitte research.

This overarching consumer evolution has helped propel some brands into high growth as they fulfill each of these demands.
Chobani to have ‘an even larger next decade than its first’

After 10 years in business, Chobani managed to make an ancient food into a ubiquitous staple of the US diet, grossing nearly $2bn in sales in 2016, according to Forbes​.

“When you look at the category, Chobani is the only major brand that’s growing,”​ Chobani senior vice president of corporate affairs, Michael Gonda, told DairyReporter.

“A number of large brands are struggling as consumers are looking at values, they’re looking at taste, they’re looking at quality, and for Chobani that’s never been anything we’ve ever had to retrofit.”​

Chobani has managed to bump General Mills’ Yoplait from its No. 2 spot in the US yogurt category​ and much of that has to do with the company’s founder, Hamdi Ulukaya, who has changed how a modern food company operates by breaking down traditional business silos and embracing the habits of the digital consumer to create a close connection, Gonda said.

“As he (Ulukaya) sees these changes at retail, he really believes that there has never been a more important time for a brand’s values to come through because interaction is taking place in often digital spheres,”​ he said.

“We spend a lot of time thinking about how we tell the story of food and our company to reach people where they are, and that’s often on a device.”​

For example, Chobani redid its entire brand visualization​ last year, introducing new packaging to further differentiate itself.

The Greek yogurt maker is also developing a dedicated innovation hub​ to continue to drive new ideas forward in Twin Falls, Idaho, or as Ulukaya has said, ‘the next Silicon Valley’ .​

“We’ve never been concerned with replication, because we’ve always looked forward and not side-to-side,”​ Gonda said.

“We think that the Greek yogurt category, the yogurt category, and the dairy industry at large has a tremendous amount of room for growth in the coming years and that’s going to ultimately driven by brands that are providing options of values, of taste, and quality that consumers want.” ​

Freezing the competition

Low-calorie Halo Top ice cream grew its annual sales by 2,500% in 2017 and became the best-selling pint of ice-cream in the US last summer surpassing competitors like Ben & Jerry’s and Häagen-Dazs, according to IRI dollar sales data for the four weeks ending July 16, 2017.

Now a $100m brand​, CEO and founder Justin Woolverton credits its meteoric rise to its connection with consumers who have embraced the idea of a guilt-free pint of ice cream (240-360 calories and 20 grams of protein per pint).

“The reason we’ve taken the number one spot is simple: We have amazing fans. We are eternally grateful to them for even allowing us to exist, let alone thrive,”​ Woolverton said.

The company also said constant innovation of its flavor lineup has also been key to establishing itself as a formidable opponent in the ice cream aisle. Halo Top has 17 core flavors with new introductions multiple times a year including non-dairy options.

“Our promise to our fans is to maintain the quality they expect from Halo Top and, of course, to bring them some exciting new things in the near future.”​

Harnessing natural innovation

According to the a2 Milk Company (a2MC), it did not have to look far to introduce innovation to the declining fluid milk category. The company says its milk products, which contain only the A2 protein, are easier to digest than conventional milk because of the absence of the A1 protein.

“This is about a discovery of a core benefit that currently exists within the dairy structure,” a2MC c​hief executive of the USA region, Blake Waltrip, told DairyReporter.

“Forever in this country, we’ve been blending all dairy milk thinking it’s the same and what the a2 milk company has clearly shown is there is a difference, and the difference is in the protein.”​

Using a proprietary method, a2MC is able to determine which dairy cows carry A2 milk and is working with US dairy farmers to identify those herds.

The company points to its success in Australia, where a2MC products account for 10% of the overall milk sales in the country. Looking to the US, where it has been sold regionally starting with California in 2015, Waltrip believes the same growth is possible.

“All the advertising and marketing that has been done has at best, been able to stem the decline of the industry and that’s because you have an awful lot of people that have a dairy intolerance and are not having a very good experience with milk,”​ he said.

“Here in the US, the way that it’s going to start is when someone in the household has a dairy intolerance and they try this product first.”​

Waltrip predicts that there will be consumers that come over from conventional milk, lactose-free milk, and plant-based alternatives.

By: Mary Ellen Shoup

Source: Dairy Reporter

Link: https://www.dairyreporter.com/Article/2018/02/26/What-does-it-take-to-be-a-leader-in-dairy-innovation

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