Dairy sales have made a substantial shift away from brick-and-mortar locations toward ecommerce purchases, and yogurt and cottage cheese sales are dominating the physical and virtual dairy aisles, according to a new report from data analytics firm Circana.
Ecommerce dairy sales are driving growth for mass merchandise outlets like Walmart and pure-play grocers like Kroger and Albertsons, according to Circana’s recent webinar, Rising to the Top in Dairy: What Are the Opportunities to Connect with Consumers Now and in the Future.
Online dairy sales growth is up in almost every store format, including dollar stores and value grocers like Aldi and Lidl, the report noted.
Ecommerce carries dairy growth
Ecommerce sales make up 13% of dairy product growth, according to Christine Boule, vice president for Client Insights, Food & Beverage, at Circana.
“But the number that really pops is that share of growth,” she said. “Ninety-one percent of [non-dairy edible food] dollar growth is coming from ecommerce, and 113% of dairy dollar growth is coming from ecommerce, so that indicates that brick-and-mortar is down in sales, overall, for dairy.”
The compound annual growth rate for dairy sold online has been around 20% for the last four years, revealing that the sector has a long runway for future expansion, Circana found.
Most online shoppers fulfill their orders through delivery, which shows consumer sentiment has changed concerning a once-held belief that perishable foods were not a viable delivery option, Boule noted.
“Delivery is where most people are going with their e-commerce purchases, and dairy is actually growing faster than edible [foods] at this point,” she said. “And in fact, Amazon put out a notice that their number of monthly active perishable consumers has increased 50% since the beginning of the year, and people that are including perishables in their purchases are averaging three times more units per order.”
That means new opportunities for dairy-related CPG companies, Boule explained, calling the trend a “compelling reason to get those perishable items that we have in our portfolios into those digital baskets.”
Dairy winners in ecommerce
Cheese snack kits had the highest percentage of ecommerce sales among all dairy subcategories. More than one in five (22.4%) of cheese snack kits were sold online, while the remaining 77.6% were sold in-store.
Deli cheese was the dairy product consumers were least likely to buy online. More than nine out of 10 shoppers (91.8%) who buy cheese from the deli counter purchase it themselves at a brick-and-mortar location.
Ice cream was the only other category to come in at single digits (9.1%), due to what Boule described as “delivery meltdown risk.”
“I have a feeling that will be overcome, especially as delivery windows become tighter and companies are getting more and more savvy, but that could be a factor,” she said.
Roughly 12.7% of the $19.7 billion reported in milk sales was online purchases, Circana noted.
Yogurt, cottage cheese carry dairy
Circana tracks the top 15 categories within dairy, which it refers to as the Dairy 15. This includes: milk; butter, margarine and spreads; cottage cheese; cream cheese; natural cheese; processed cheese; cheese snack kits; creams and creamers; refrigerated desserts; refrigerated whipped toppings; sour cream; yogurt; deli refrigerated dips, deli cheese; ice cream and sherbet; and frozen novelties.
John Crawford, Circana principal of Client Insights, Dairy, called cottage cheese and yogurt prime categories in dairy because of double-digit growth for both products.
Refrigerated yogurt drinks do not hold their own category in the Dairy 15, but might eventually, considering the category experienced the highest year-over-year growth in dairy, up 22% in dollars and 14% in volume, Crawford said.
“Yogurt and yogurt drinks are driving the majority of the Dairy 15 growth,” he noted. “Yogurt is driving 56% of the growth, and yogurt drinks are driving 21% of the growth. So 77% of the growth in Dairy 15 is being driven by yogurt.”
Cottage cheese also continues to outperform in dairy, with 16.9% year-over-year dollar growth and 13.6% volume growth.
