Should You Consider Producing Flavored Milk?

By Sarah Cornelisse, Sr. Extension Associate, Dept. of Agricultural Economics, Sociology, and Education, Penn State University

Source: http://www.hugheslink.com/blog/?m=201412

As we move into the holiday season, we traditionally see an increase in the purchases of dairy products - cheese, milk, etc.  Eggnog tends to be the popular beverage at this time of year.  However, non-eggnog drinkers may be wishing for a festive alternative.  This is where developing flavored milks may be an alternative for dairy processes to consider.

For lovers of baseball, you may have seen Missouri's Shatto Dairy capializing on the successful playoff run by the Kansas City Royals.  Shatto Dairy produced a special edition french vanilla flavored, blue-colored milk (turned just blue-colored by the time the team made it to the World Series).

Source: http://www.berryondairy.com/Milk.html

Shatto Dairy isn't alone in producing flavored milk.  As consumers turn away from soft drinks and sports drinks, many are returning to milk for its nutritious properties while expressing a desire for more varied flavors beyond the normal flavor and traditional flavors of chocolate and strawberry.  We now see flavors from grape to cotton candy to black cherry to banana and blueberry.

A 2014 Mintel survey showed that 61% of respondents agreed with the statement "Flavored dairy milk is a healthy alternative to soda."  Additionally, 39% of respondents indicated that they were interested in "sophisticated" flavors for milk such as hazelnut, dark chocolate, etc..  This interest was most pronounced with the Millennial generation, with 50% indicating such interest.  As consumer age increases, the interest in flavored milk decreased, with only 12% of those aged 69 and above interested in flavored milk.

Source: http://www.smilinghill.com/Dairy_Store_milk.html

For dairies that already bottle milk, flavored milk is something that they may want to consider as a way of drawing in younger consumers interested in a healthy, but flavorful, drink.

Looking at Yogurt Trends: Emerging Flavors and Styles

by Sarah Cornelisse, Sr. Extension Associate, Dept. of Agricultural Economics, Penn State University

 Yogurt continues to enjoy strong consumer interest and demand.  Retail sales are expected to continue to grow, though at a slower pace than years past; with sales from 2013 to 2014 showing an increase of 3.3% compared to an 11.3% increase from 2010 to 2011.  Spoonable yogurt continues to dominate yogurt sales, at 93% market share, with consumers saying they are turned off from drinkable yogurts by the thick texture.  However, yogurt drinks are still expected to see an 8% sales growth in 2015 (Mintel). 

Flavors


While sweet fruit flavored yogurts will likely to remain dominant, savory, herbal, and floral flavors are emerging in the marketplace.  Blue Hill produces a line of savory flavored yogurt that includes carrot, parsnip, and butternut squash.  Other new flavors on the market include green tea, rose petal, cucumber mint, and savory shallots.

Photo: bluehillyogurt.com

Styles

Photo: http://siggisdairy.com/products/

For the past few years, Greek style yogurt has been in a growth stage.  Having now reached near maturity, new styles are entering the marketplace, enticing customers to try something new and different, yet the same.  French, Bulgarian, Australian, and Icelandic are some of these "new" styles.  As reported by research firm Mintel, one Icelandic yogurt brand experienced a 110% growth in sales from May 2014 to May 2015.

This is an exciting time in the yogurt industry, both for consumers and producers.  Farmstead and small processors have a great opportunity to carve out a niche and generate a consumer following by exploring these emerging trends.

Results from a survey on success factors for value-added dairy enterprises

by Sarah Cornelisse, Sr. Extension Associate, Dept. of Agricultural Economics, Sociology, and Education.

A Journal of Dairy Science article from 2013 reports out findings from a survey conducted by researchers at the University of Kentucky aimed at identifying "indicators of success for those considering on-farm processing."  The researchers sent out a 12 question survey to 120 value-added dairy processors across the U.S.  Thirty-one of those survey recipients responded, providing answers and comments on a range of questions, including; cash flow, products produced, information sources, and challenging aspects of starting the enterprise.

Cheese is the most popular value-added dairy product to process.

Of those who responded to the survey, 64% had been involved in their value-added processing enterprise for fewer than 10 years.  Cheese and milk were the two primary value-added dairy products.  And while 74% of farms were using milk only from their own dairy, 22% were using a combination of their own and an outside supply of milk.

An important consideration when starting a value-added enterprise is the length of time expected before you attain positive cash flow.  Of the respondents for this particular survey, the majority (32%) reached this point between 1 and 3 years after launch.  It is important to note however that while only nine percent of the respondents have been involved in on-farm processing for less than a year, 12.5% had not yet achieved positive cash flow and for another six percent, it took between five and ten years; giving weight to the fact that a value-added enterprise is not a quick solution to profitability issues for a dairy.

"Do not plan to get rich and support a dairy that is not making a profit."               - respondent advice for other farmers

Other additional findings from the survey include:

• Sources of funding to finance the value-added business primarily came from loans, personal savings, and family,
• Commodity milk price was a driving factor for the majority of respondents to start the new business, and
• Regulations, product marketing, manufacturing, and funding ranked as the top four most difficult aspects of starting the business.

When asked for advice that they would give to other dairy producers considering on-farm value-added processing, most responses fell into the following general categories (ordered by number of comments that fell into each category):

• Business planning
• Marketing research & planning
• Understanding regulations
• Time management
• Having a support system
• Entrepreneurial thinking

To end on a positive note, 97% of survey respondents indicated that they were either "extremely satisfied" or "satisfied" with their decision to start on on-farm value-added dairy enterprise.  If you are passionate about the value-added enterprise and well-researched and planned, you have increased your likelihood of success.

If you are considering a value-added dairy enterprise, our publication "Get More for Your Milk," has valuable planning information.