Presentation from 42nd Annual Southern Dairy Conference, held in Atlanta, Georgia between 8 ~ 9 March 2016.

1. DAIRY PRODUCT
TRENDS
AND INNOVATION
Southern Dairy Conference
March 8, 2016
Cheryl Hayn

2. Checkoff Builds Demand for Dairy Products
Western Dairy
Center
• University of
Minnesota
• South Dakota
State University
• Iowa State
University
Wisconsin
Center for
Dairy
Research
Southeast Dairy
Foods Research
Center
Northeast
Dairy Foods
Research
Center
Midwest Dairy
Food Research
Center
• University of
Wisconsin
Madison
• Cornell
University
• North Carolina State
University
• Mississippi State University
• California Polytechnic
State University
• Utah State
University
California Dairy
Research Center
Fluid Milk
Yogurt/
Cultured Dairy
Products
Other Dry
Ingredients
Whey
Ingredients
Milk Protein
Ingredients
Cheese
• Six Leading Edge Scientific
Dairy Research Centers
Offer Comprehensive
Support
• Number of research projects
in the pipeline
• SEDRC headed up by Dr.
Mary Ann Drake

3. Agenda
Ø Macro U.S. Demographic and Societal Forces Driving Trends
Ø Consumer Trends
Ø Dairy Trends and Innovation
o Milk and Dairy Beverages
o Yogurt
o Cheese

4. MACRO DRIVERS OF TRENDS

5. Changing Demographics and Family Dynamics
Increased U.S. diversity
By 2030…
• 20% over age 65
• 22% Hispanic
• 13% African American
• 10% Asian/Other Race
• 16% Foreign-born
Single parent
Mom as breadwinner
Blended families
More households are:

6. use
smartphones
to
decide
whether
to
visit
businesses
Technology Explosion: Altered Paths to Purchase
own
a
smartphone
64%
say
mobile
payment
is
highly
important
for
restaurants
30%
of
shoppers’
journeys
start
online
67%
21%
Source:
Pew
Research
Ins1tute,
Technomic
Consumer
Restaurant
Brand
Metrics
6

7. Innovation: Demand for New Ideas on the Rise
Three in four Americans
Feel Innovation is ‘an easier/faster way of doing something’
YET, consumers feel new developments are
going too fast
• Testing isn’t adequate
• 54% consumers say greed/money is the real motivator
behind the innovation
Implications: Opportunities abound within
dairy as consumers become more and
more open to experimentation (taste/
flavors, packaging, usage, etc.)
Yet, it’s important to convey to consumers
“shared values”

8. Instant Gratification
We are connected
24/7
Feel ‘it is important to be
reachable wherever I am’.
2 in 3
Americans
Implications:
• From a product standpoint, think about dairy availability everywhere
• 24/7 access is imperative. Be equipped to give the information they
seek or need at all times.

9. Resources and Sustainability
As consumers face scarcities of resources
and increasing cost pressures,
68% of Americans expect “brands and
companies to be environmentally
responsible these days”.
Implications:
• Be transparent – ethical and environmental credentials
are increasingly being scrutinized by consumers.

10. A FEW CONSUMER TRENDS

11. Consumers’ Fascination with Food Is Growing
They value the food experience and want the world to know

12. Focus on Health & Well-Being
My most recent restaurant
meal was healthy.
It’s important to feel
good about the foods
and beverages I put
into my body.
54%
60%
2012
2014
of
consumers
agree
65%
Source:
Technomic
Consumer
Trend
Report
Series,
2015
1
2

13. Natural and Transparent Brands Win Consumers
68%
Socially
Responsible
71%
Environmentall
y
Responsible
84%
Product
Transparency
65%
Locally
Made
78%
Natural
78%
Brand
I’ve
Always
Used
How important is it that the retail brands you buy are. . .
Source:
Technomic
Food
with
a
Story,
2015

14. Protein Continues to Grow in Importance
54% Adults seeking
more protein in their diet1
69% Adults prefer to add protein
from foods that have it naturally1
25% Adults look for protein
on Nutrition Facts label2
1 Hartman Health & Wellness 2015
2 NMI 2014
ü Muscle
ü Energy
ü Weight

15. Free-From Foods Gaining Presence
FREE-FROM FOODS GAINING PRESENCE
GROWTH IN CLAIMS
gluten free
no allergens
sugar free
gmo free
+101%
+43%
29%
+17%
dairy free
+16%
no additives
+9%
fructose free +3%
Source: Innova

16. DAIRY TRENDS AND INNOVATION
--- MILK

17. +27% IN SERVINGS
AT QUICK SERVE RESTAURANTS
(2010-14)
Milk Growing in Non-Traditional Ways
+58% IN OCCASIONS
AT HOME & AWAY
(2010-14)
+17% IN DOLLARS
IN EACH OF LAST 3
YEARS AT RETAIL
READY-TO-DRINK
SPECIALTY COFFEES

18. Milk has Growth Areas at Retail With Opportunity to
Further Leverage
When additional benefits are
incorporated into milk, sales grow
“VALUE-ADDED” MILKS GREW 20% OVER LAST
3 YEARS
Source: IRI custom DMI milk database;
milk concept tests
Lactose-Free
Protein
Glass
Refuel
Non-Homogenized
Grass-fed
Organic
Omega

19. Added Value Milk
• Higher
protein
• Less sugar
• Lower
calories
• Lactose-free

20. Tea Lattes Inspired by Coffeehouses
Celestial Lattes
• Dirty Chai –chai spiked with espresso
• The Godfather –chai with espresso and cocoa
• Mountain Chai –chai with ginger, cardamom and
cloves
• Matcha Green – matcha green tea powder
20
Argo Tea
• Chai
• Earl Grey Vanilla Crème
• Green Tea Strawberry Crème

21. QSR Chains Are Featuring Tea Lattes – Hot & Frozen
Chocolate Tea Latte
Tea combined with our Special
Dutch™ chocolate powder, steamed
non-fat milk and foam
Frozen Spiced Chai
Spiced Chai Is Mixed With Milk,
Ice Then Blended Smooth, and
Topped with Whip Cream

22. QSR Chains Are Adding RTD Iced Coffee Beverages
• Mocha, vanilla and caramel
• 10-ounce or 32-ounce plastic bottles
22
Similar to Starbucks RTD Iced
Coffee Beverages

23. Indulgently Flavored Milk
23
Prairie Farms
• Chef-inspired
flavors
• Dark Chocolate
Truffle
• Sea Salt
Caramel
• Vanilla Chai
Latte
Promise Land
• Mint Chocolate Chip

24. QSR Chains Feature Indulgent Lattes
24
Campfire Mocha
Cooler
Chocolate &
Marshmallow Choco Loco
Cookies ‘N Crème
Mint Chocolate Bomb

25. Innovative Milk Products Across the Globe
Japan
• Fragranced
milk for scent-
sensitive
consumers
• Subtle aroma
of apple or
peach but
without the
taste of either
Singapore
• Cereal and milk in one
beverage
25

26. DAIRY TRENDS AND INNOVATION
--- YOGURT
26

27. 27
Source: USDA NASS
4,757
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
198
199
199
199
199
199
199
199
199
199
199
200
200
200
200
200
200
200
200
200
200
201
2011
201
201
201
U.S. Yogurt Production (Million Lbs.)
USDA
NASS
Yogurt
Produc@on
2015
YTD
:
+3.2%
vs.
YA
Long-Term Growth in Yogurt Production

28. 0.2
3.5
6.3
7.3
11.4
14.9
15.0
15.8
18.3
18.3
18.7
23.8
23.8
26.2
27.1
28.6
29.5
36.3
38.1
44.0
46.4
47.3
48.4
51.0
57.4
62.7
India
South Africa
Japan
China
Russia
United States
Mexico
Taiwan
Australia
New Zealand
Greece
Norway
Czech Republic
Ireland
Germany
Turkey
Switzerland
France
Denmark
Portugal
Austria
Sweden
Saudi Arabia
Finland
Netherlands
United Arab Emirates
24.2
12.1
9.0
4.0
Europe Tot Americas Africa &
Middle East
Asia-Pacific
U.S. Yogurt Market has Room to Grow Relative to Other Countries
Source: Datamonitor Database
Annual Per Capita Consumption (lbs) 2014
Average per
person yogurt
consumption is
14.9 lbs in U.S.
28

29. Greek Still Expanding – Now 36% Category
3,171 mil
pints
3,199 mil
pints
3,367 mil
pints
3,337 mil
pints
3,239 mil
pints
TOTAL
YOGURT
GREEK
YOGURT
183 mil
pints
738 mil
pints
429 mil
pints
1,081 mil
pints
1,190 mil
pints
RETAIL YOGURT MARKET
2010 2011 2012 2013 2014

30. QSRs Are Now Offering Greek Yogurt
• Starbucks Offers 3 Greek Yogurt Parfaits
30
Dark Sweet
Cherry Fresh Berries & Honey
Strawberry

31. Greek Yogurt Adds Seeds/Grains
Yoplait Plenti
• Oats, flax and
pumpkin seeds
31
Chobani Greek
Yogurt Oats
• Up to 10 grams
whole grains
• New flavors added
in Aug 2015
Powerful Yogurt
• Fruits, grains and
seeds
• Targets males
Stonyfield
Farms
Super Seeds
• Softened Flax
Seeds

32. Chobani Adds Chocolate Added to New Yogurt
32
Vanilla Yogurt with Honey Roasted
Nuts, Peanut Butter Clusters and Milk
Chocolate Chunks
Coffee Yogurt with Biscotti
Pieces and Chocolate

33. Greek Yogurt Incorporated Into Other Foods
33

34. Yogurt with Vegetables Found Around the World
Australia
Yummia Yogurt
• Layered yogurts with fruit and
vegetable pieces at the bottom
• Carrots, Beetroot and Sweet
Potato
34
U.S.: Stonyfield Farm
• Kids’ yogurt with vegetables
• Beets and Spinach

35. Yogurt with Innovative Flavors
35
Stonyfield Farm
• Gingered Pear
Canada: President’s
Choice
• Drinkable caramel coffee
yogurt shots
Chobani
• Pumpkin Spice
• Plum (limited edition)

36. DAIRY TRENDS AND INNOVATION
--- CHEESE
36

37. Per Capita Cheese Consumption has Nearly Tripled
Since 1970
37
33.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total Cheese – Per Capita Consumption (Lbs.)
Source: USDA NASS
2013 data is preliminary.
11.4

38. Source: IRI DMI Custom Cheese Database,
Total U.S. Multi-Outlet + Conv.
57.8
55.6
53.8
53.6
52.2
46.5
46.1
45.9
43.4
42.8
42.3
39.9
39.0
37.7
36.6
35.9
35.3
33.7
33.3
26.7
France
Iceland
Luxembourg
Germany
Finland
Switzerland
Italy
Estonia
Sweden
Netherlands
Austria
Cyprus
Norway
Israel
Czech Republic
Lithuania
Latvia
Belgium
United States
Canada
26.0
25.4
25.1
24.7
24.7
22.3
21.2
21.2
20.7
20.5
17.9
15.9
14.8
14.8
14.6
13.2
10.4
9.3
7.9
6.8
Australia
Hungary
Poland
Argentina
United Kingdom
Slovakia
Portugal
Croatia
Egypt
Spain
Chile
Turkey
Ireland
New Zealand
Russia
Uruguay
Iran
Ukraine
Brazil
Mexico
Cheese
Per
Capita
ConsumpRon
by
Country
(Lbs.)
–
2012
Asian countries such as China and Japan are listed at under 5 pounds of cheese per capita.
Room to Grow U.S. Per Capita Cheese Consumption
Room to grow

39. New Forms of Snacking Cheese
U.S.
Burnett
Dairy:
Spaghetti-
style
format of
low-
moisture
part-skim
mozzarella
U.S.: Mr. Cheese O’s
• Crunchy on-the-go real cheese snack
• Four flavors

40. Snacking Cheeses Packaged In Side-by-Side Containers
Borden
• GOOD2GETHER snack trays
combine real, natural cheese and
crunchy mini-twist pretzels
Sargento
• Pairs cheese with
roasted nuts and dried
fruits

41. Snacking Cheeses Found at Starbucks
Cheese & Fruit Bistro Box
Creamy Brie, bold Gouda,
two year‐aged Cheddar
Protein Bistro Box
White Cheddar cheese
Pinwheels Bistro Box
Prosciutto and mozzarella are
swirled together

42. Retail Cheeses Get Fiery!

43. Japan Introduced a Cheese To Improve Liver Function
after Beer Drinking
• Cheese snack that helps
liver function recovery after
drinking alcohol, specifically
beer
• Two flavors — ginger and
soy sauce
• Enhanced with the amino
acid ornithine

44. In Summary
• Consumers are constantly looking for new and different
• How can we tap into technology trends?
• Make dairy beautiful and easy at mealtime
• Value-added milk products are getting the attention of
consumers
• Transparency, food safety key
• We all must tell the farm story
• But best told by dairy farmers themselves

45. Asian Food Regulation Information Service is a resource for the
food industry. We have the largest database of Asian food
regulations in the world – and it’s FREE to use.
We publish a range of communication services (free and paid), list
a very large number of food events and online educational
webinars and continue to grow our Digital Library.
Feel free to contact us anytime to talk about your specific
requirements, offer comments, complaints or to compliment us.
We look forward to hearing from you soon!
www.asianfoodreg.com
adrienna@asianfoodreg.com