butter category insights - wordpress.com

Butter Category Insights

October 2017

The Macro View

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Butter: Commercial Sales Through All Channels1

million pounds

Long Term Growth in Total Commercial Sales of Butter

Source: USDA ERS; University of WI

USDA commercial disappearance; includes civilian and military

purchases of milk and dairy products for domestic and foreign use, but

excludes farm household use and USDA donations of dairy products

1 Commercial Sales = Domestic Use + Commercial Export

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2016:1,881 mil lbs

1970:898 mil lbs

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Annual Domestic Use and Exportmillion pounds

Total Domestic Use Commercial exports

Domestic Sales Have Been a Reliable Driver of Butter Sales

Source: USDA ERS

USDA commercial disappearance; includes civilian and military purchases of milk and dairy products for

domestic and foreign use, but excludes farm household use and USDA donations of dairy products

Exports have played a more prominent part in total disappearance since 2007, but with variable contributions year-to-year

Commercial Export, % Share of Total

4% 2% 0% 0% 0% 0% 0% 0% 0% 1% 1% 1% 5% 10% 2% 6% 6% 5% 9% 7% 2% 2%

4

Butter Sales Growth Continues into 2017

YTD (thru Jul)2016 thru Jul 2017 thru Jul Growth YTD ‘17 vs ’16

Million Lbs. Mil. Lbs. % Chg.

Domestic Use 974.5 985.0 +10.5 +1.1%

Commercial Export 14.0 24.4 +10.4 +74.3%

Total Commercial Sales 988.5 1,009.4 +20.9 +2.1

Source: USDA ERS

USDA commercial disappearance; includes civilian and military purchases of milk and dairy products for

domestic and foreign use, but excludes farm household use and USDA donations of dairy products

2017 Year to date, domestic consumption and exports have contributed equally to growth in

total commercial sales

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Per Capital “Available” for Consumptionannual pounds per person

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2016:5.7 lbs

1968:5.8 lbs

2016 was the Strongest Year for Per Capita Butter Consumption Since 1968

Source: USDA ERS;

Per capita “available” for consumption is calculated by dividing domestic disappearance by the U.S. resident population plus armed forces

overseas. It is a proxy for actual consumption as it does not account for product waste and thus, tends to overstate actual consumption.

Use for cooking

Like it

Prefer butter’s taste

Healthier alternative

Prefer REAL butter

Made a diet change

Real/not processed/no chemicals

Butter’s Taste and Naturalness are Contributing to People Consuming More

Why consuming more butter?

“We only use real butter now versus non-butter from last year.”

“I cook more and butter is in a lot of ingredients.”

“Tastes better in and on certain foods, and is healthier than margarine.”

“It's because I'm making more grilled cheese sandwiches which I use butter on.”

Source: DMI Innovation Center Consumer Research 2015

“We stopped eating margarine, so butter is used more now.”

7

Mindset evolving from fat is

detrimental to fat may be beneficial

• Emerging science indicates consumption of milk, cheese and yogurt, including whole, reduced-fat, low-fat and fat-free, has either neutral or beneficial links to cardiovascular disease risk.

Fats seen by some people as

marker for quality

• Some consumers see some fats as more natural, enhancing flavor, providing satiety, and supporting wellness1

• While not all consumers are seeking higher fats in dairy, 22% adults report adding full fat dairy to their diet1

Additionally, Science and Consumer Mindset Toward Fat is Beginning to Shift Positively

Source: 1 The Hartman Group H&W 2017

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Butter at RetailNote: In this section “Butter” refers to Traditional Butter plus Butter/Vegetable Blend products

9

687.6727.2 723.5

750.8774.7

$3.06 $3.07

$3.60 $3.60 $3.74

$2.00

$2.20

$2.40

$2.60

$2.80

$3.00

$3.20

$3.40

$3.60

$3.80

$4.00

400

450

500

550

600

650

700

750

800

2012 2013 2014 2015 2016

Volume Sales and Price Trend

Volume (mil. lbs.) Average Price/Lbs.

Retail Butter Volume has Grown Since 2014; However, Growth Rate Has Slowed

Source: IRI Unify, Total US Multi Outlet + Convenience, 2017 Through 9/10

% Chg. vs. Prior Year

Volume - +5.6% -0.5% +4.4% +3.2%

Price - -2.4% 18.9% -0.4% 1.9%

This growth follows a modest drop in 2014 vs. 2013 that accompanied a significant price increase in this period - largely due to tightened supply

2017 YTD volume up +1% vs 2016

Note: “Butter” includes Traditional Butter plus Butter/Vegetable Blend products10

Fourth Quarter Holiday Baking Provides Annual Boost to Butter Sales

234 251 253 257

274

-

50

100

150

200

250

300

Volume Salesmillion pounds

Q4 accounted for 35% of butter sales in 2016


2016 Holiday Season Strong -+7% over 2015

Note: “Butter” includes Traditional Butter plus Butter/Vegetable Blend products 11

Butter Blends are a Small Segment of Butter with Solid Growth


91.0%

9.0%

Traditional Butter

Butter Blends

2016 % Share of Total Butter

2016 2017 YTD (thru 9/10)

. Volume,

Mil Lbs.

Vol.

Growth vs.

PY

% Vol.

Growth vs

PY

. Volume,

Mil Lbs.

Vol.

Growth

vs PY

% Vol.

Growth vs

PY

705.98 20.26 3.0% 463.66 2.48 +0.5%

69.63 3.68 5.6% 55.34 3.04 +5.8%

Traditional Butter vs. Butter Blends


Private Label vs. Branded Butter

Both Branded and Private Label Butter are Posting Increases


2016 2017 YTD (thru 9/10)

Volume,

Mil Lbs.

Vol.

Growth vs.

PY

% Vol.

Growth vs

PY

. Volume,

Mil Lbs.

Vol.

Growth

vs PY

% Vol.

Growth vs

PY

405.76 13.33 3.4% 275.60 +1.74 +0.6%

368.97 10.61 3.0% 243.41 +3.79 +1.6%

52.4%

47.6%

Private Label

National Brand

% Share of Total Butter


Unflavored Butter99.5%

Flavored Butter0.5%

2016 Share of Volume:Unflavored vs. Flavored Butter*

2017 YTD (thru 9/10)VolumeMil Lbs.

Vol. Chg.vs PY

% Chg. vs PY

Traditional Butter - Unflavored 462.11 2.29 0.5%

- Savory Flavor 0.78 +0.01 +0.9%

- Sweet Flavor 0.31 +0.01 +4.1%

Butter Blends - Unflavored 51.77 +2.81 5.7%

- Savory Flavor 0.83 +0.18 27.9%

- Sweet Flavor 1.10 -0.13 -10.3%

Flavored Butter Holds a Tiny Share of Butter Sales Volume


2017 YTD growth favors sweet flavors for traditional butter, but savory flavors for blends

* Includes butter and butter blends


Butter/Blend Sales Are Growing In Nearly Every State

Regional Volume Growth

5% South Central

4% Plains

4% Southeast

4% Mid-South

3% West

3% Great Lakes

3% Total US

3% Northeast

0% California

Markets with Strongest Growth

8% Toledo

8% Little Rock

8% Memphis

8% Wichita

7% Peoria/Springfield

7% Mississippi

Weakest Butter Growth

-4% Milwaukee

-3% San Diego

-1% New York

-1% Los Angeles

-0.3% San Francisco/Oakland

1% Philadelphia

Source: IRI Unify, Total US Multi Outlet + Convenience, Latest 52 Weeks Ending 9/10/2017

Volume % Change 52 Wks. ending 9/10/17 vs. Year Ago

= Strongest growth (≥6%)

= Medium growth (≥3%<6%)

= Slowest Growth (<3%)

= Decline

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Butter’s Growth has Primarily been Driven by a Gain in Buyers

Butter/Blends gained+2.4 million buyers over

the past 52 weeks

Volume Sales836.7M+3.3%

Volume/Buyer9.3

+0.5%

% HH Buying73.3%+1.4%

Trips/Buyer6.7

+0.6%

Volume/Trip1.4

-0.1%

Butter/Blends Consumer Decomposition

Source: IRI Unify National Consumer Panel, Total All Outlets, NDB Volume Adjusted, Latest 52 Weeks Ending 9/10/2017

Note: “Butter” includes Traditional Butter plus Butter/Vegetable Blend products16

Overall, Butter Retail Volume Growth Has Occurred at the Expense of Margarine


5.6%

-0.5%

4.4%3.2%

1.1%

2013 2014 2015 2016 2017 YTD (9/10)

Butter

-5.8%

-3.8%

-6.7%-5.1% -5.2%

2013 2014 2015 2016 2017 (9/10)

Margarine/Spreads

Volume Sales % Change vs. Year Ago


Since 2013 Margarine Has Lost Ground, Shedding 4% Of Its Share To Butter


Margarine

58%

Butter42%

2013 Volume Shareof combined Butter & Margarine sales

Margarine 54%

Butter46%

2017 YTD Volume Share of combined Butter & Margarine sales


Profile of Retail Butter Buyer

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Butter Has Regional Skews, With Strongest Development In Plains and Northeast

= High development index (>120)

= Average development index (80-120)

= Low development index (<80)Strongest Markets

229 New England

186 Albany

175 Syracuse

159 Buffalo/Rochester

149 Hartford/Springfield

147 Harrisburg/Scranton

Source: IRI Unify, Total US Multi Outlet + Convenience, Latest 52 Weeks Ending 9/10/2017

Note: “Butter” includes Traditional Butter plus Butter/Vegetable Blend products

Market Development* by State*volume sales per population compared to total U.S.

Regional Development

130 Plains

127 Northeast

113 West

112 Great Lakes

100 Total US

95 Mid-South

94 Southeast

68 South Central

61 California

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Butter Purchasing Increases with Age, Driven by both Percent of Households Buying and Volume per Buyer

67.1 70.3 72.2 74.7 77.2 75.1

7.2 8.3 9.2 9.8 10.1 9.6

33.04.7 5.4 2.2 1.7

-1.6

71 85 97 108 114 105

YoungerMillennial

Retirees & Senior

OlderMillennial Gen X

YoungerBoomer

OlderBoomer

Volume Index

% Chg Vol Per Household

% Households Purchasing

Volume Per Buyer


But Volume Growth is strongest for Younger Millennials (born after 1990)


Butter Volume Indexes Higher Among Middle and Upper Income Households, Relative to Lower Income

64.5 76.3 80.1

9.19.6

9.1

3.72.4

4.4

86 107 107

Lower Income Per Capita

Middle Income Per Capita

Upper Income Per Capita

Volume Index

% Chg Vol Per Household

% Households Purchasing

Volume Per Buyer


However volume is growing faster for lower and upper income households


New Product Trends at retail are driven by growing consumer desire for:

• Production and processing transparency

• Natural, simple, healthy ingredients

• Global and cuisine -based flavors

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New Product Development In Fats & Spreads has Shifted in Favor of Butter/Butter Blends

69

87

6872

18

35

2015 2016 2017

12 Months Ending August

U.S. New Retail Product Introductions:Dairy Category - Fats & Spreads Subcategory

number of product introductions

Butter/Butter Blends

Other Fats/Oils*

Butter & Butter Blends -share of total introductions

49% 83% 66%

* Primarily vegetable oil spreads

Source: Innova New Product Database24

Imports, a Visible Presence in Butter Introductions, Spurring U.S. Produced “European Style” Products

Number of New Product Introductions,2 Yrs Ending August

2015 2017

Import Butter Products 15 8

U.S. Produced “European Style” 10 19

“For this Graziers Salted Butter, Graziers-certified cream is cultured overnight and churned to produce a high fat, full flavor that is reminiscent of old world European butters.”

“a super premium butter that makes everything taste better… 82% milk fat”

“Imported Butter … Made with non GMO ingredients according to European standards… ”

Imported Butter Examples:

European Style Butter Examples:


Ghee has Accounted for a Growing Number of Product Introductions in Butter

2 Yrs Ending August

2015 2017

Number of Ghee product introductions 13 23

Source: Innova New Product Database

“Original ghee is clarified butter that has been cooked down for hours. Beautiful gold color and creates a sweet, caramel, nutty smell. Original ghee has a delicious, rich smell – it tastes just like butter, but a little better. Excellent alternative to butter without the disadvantages of processed margarines. Unlike other oils it is rich in butyric acid, a short chain fatty acid that is great for your overall health and digestion. Aside from its many health benefits, Ghee's buttery taste makes it an excellent addition to your every day cooking oils, is extremely easy to cook with and delicious simply spread on a piece of toast.”

“Purity Farms has been making ghee from Organic Valley butter for years, and when the original owners were looking to retire, they turned to Organic Valley to keep the ghee flowing. Honoring a traditional Indian method, pure Organic Valley butter from the pasture-raised cows is slowly cooked to coax out the water and milk solids. What remains is delicious ghee with a rich, buttery taste and aroma. Like you, Organic Valley care about how the food is raised, how it tastes and how healthy it is for all living things. Organic Valley Purity Faro Ghee is a delightful, semi-soft cooking oil from nature's kitchen-great for cooking, baking, or sautéing.”

Examples:

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Flavored Butter Introductions Have Grown - In Number, Share and Options

2 yrs Ending Aug. 2015

Total Butter Intros 123

Garlic 5

Herbs, Not Specified 5

Sea Salt 4

Italian 2

Maple 2

Basil 1

Cheese, Gorgonzola 1

Cheese, Parmesan 1

Green Chili 1

Honey 1

Pepper, Black 1

Pesto, Green 1

Total Flavored Intros 25

2 yrs Ending Aug. 2017

Total Butter Intros 155

Garlic 9

Sea Salt 8

Herbs, Not Specified 7

Mushroom, Truffle 6

Chipotle Chili 4

Lime 4

Cinnamon 2

Lemon 2

Cheese, Asiago 1

Chili 1

Cocoa 1

Currant, Blackcurrant 1

Indian 1

Italian 1

Jalapeno Chili 1

Maple 1

Parsley 1

Vanilla, Madagascan 1

Wine, Sherry 1

Total Flavored Intros 53

Flavored Butters

accounted for

34% of New Products

Flavored Butters

accounted for 20%of New Products

Garlic and herbs top list of new flavors


Several New Butter Introductions Offer Convenient and Easy Way to Add Sophisticated Flavor

Epicurean Butter Black Truffle Butter“Chef created … Top grilled steak, fried eggs, finish risotto or dip for lobster. Take your cooking to the next level with this earthy delicacy. Fresh, decadent butter generously studded with dark, chewy nibs of the finest Italian black truffle…. This chef’s butter offers the musky, entrancing aroma and flavor you know and love. ”

Pasta & Co. Sherried Currant Butter“Sherried black currant butter … Also superb on vegetables and bread.”

HEB Chile Lime Finishing Butter“Flavor you can savor, first the lime then a smoky chilli taste that can liven up anything. Grill or broil seafood and top with this Chilli Lime Butter; from there make fish tacos or just serve on a bed of rice. Grilled chicken or pork finished with this spicy butter stand out. Add to rice or vegetables for a flavor sensation. ”

Examples:


Ethical Packaging Claims - typically refer to packaging recyclability

Ethical Animal Claims - Frequently “grass or pasture” fed cows

Ethical Human Claims - generally refer to farmers or supported causes

Ethical Environmental Claims – general mentions of environment or specific reference to wind, water, land, or air

Growing On Package Claims Include Ethical Environmental, Packaging, Animal and Human Claims

Ethical - Environment“Meets all USDA [organic]

certification requirements and produced with respect for the

environment”

Ethical – Animal & Human

“Made with milk from pasture raised, grass fed

cows …Produced by small American

family farms”

Ethical – Environment & Packaging

“Cartons are made using 100% wind energy”

Ethical –Human “Tava gives back”


13%

3% 3% 2%

25%

10%7%

4%

Ethical -Packaging

Ethical -Animal/Fish

& BirdEthical -Human

Ethical -Environment

Claim as Share of New Product Introductions

2 yrs Ending Aug. 2015 2 yrs Ending Aug. 2017

Examples:

29

Absence Claims are Also Growing in New Butter Introductions

There has been a decrease in the more general claim of “natural” in favor of these more specific absence claims:

Notable Recent Absence Claims:

Lactose Free“slowly cooked to coax

out water and milk solids … Lactose and casein

free”

Lactose Free“Butter clarified and

blended with canola oil to keep the flavor,

characteristics, and quality of real butter without

lactose”

All new products with lactose free claim in last 2 years were either butter/canola blends or Ghee products

20%11%

6% 10%

28%16%

9%

21%

Gluten FreeNo Additives/Preservatives Lactose Free GMO Free

Claim as Share of New Product Introductions

2 yrs Ending Aug. 2015 2 yrs Ending Aug. 2017


Examples:

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A Small Number of Recent Butter Introductions are Making Functional Health Claims

“… Butter is the most easily absorbed source of vitamin A, which is needed for the health of the thyroid and adrenal glands and is essential to a healthy immune system. The lecithin that is contained in butter assists in the assimilation and metabolism of cholesterol. Vitamin E, selenium, as well as vitamin A, are all found in butter and are vital anti-oxidants and protect against heart disease. Selenium contains more anti-oxidants per gram than herring or wheat germ. These all play a role in maintaining the functioning of the heart and cardiovascular system. Conjugated linoleic acid, which is an excellent protection against cancer. It reduces adipose hormone leptin which is found in the obese and cancer patients in high quantities. These both play a role in maintaining the functioning of the heart and cardiovascular system…”

“Ghee is an ancient ‘health food’ that contains significant levels of vitamins A, D and E. Ghee is a clarified butter that is heart healthy and contains linoleic acid to help balance cholesterol levels. Known to reduce inflammation and increase energy”


Examples:

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Butter at Foodservice

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The Move Toward Natural Fats Has Led to Increase in Butter Mentions Across the Menu

+6.0%OVERALL

Mealpart Number of Items Percent Change

Add-on* 122 82.1%

Senior Menu 16 20.6%

Dessert 198 18.6%

Adult Beverage 37 12.1%

Kids Menu 147 8.9%

App/Starter 325 6.6%

Side/Extra 304 6.0%

Entrée/Main Dish 1,849 0.2%

Non-Alcohol Beverage 11 -21.4%

Total 3,009 6.0%

Changes in Butter MentionsQ1 2012-Q1 2017

Source: Technomic MenuMonitor

* Add-on = optional condiment

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17.5%

9.3% 8.7%

7.1%6.4%

5.4% 5.1% 4.8%3.6% 3.3%

Garlic Lemon Onion Tomato Cream Bacon Pepper Parmesan Mozzarella Sweet

At Foodservice, Top Butter Flavors on Menus Include More Traditional Flavors, Such as Garlic and Lemon

Top Flavors in Butter ItemsPenetration (% of menu items mentioning butter that include flavor)

of items that mention butter also mention garlic

Source: Technomic MenuMonitor34

Fastest-growing flavors in items mentioning butter range from spicy (Sriracha and chorizo) to herbs (thyme) to nutty (Gouda)

While Fastest-Growing Flavors Show More Creative Flavor Profiles That Feature Butter on Menus

56.3%

45.5%

37.5%

30.0% 29.4%26.7% 26.7% 26.3% 26.2% 25.0%

Source: Technomic MenuMonitor35

• Fast casual in Chicago• Signature dish is fried chicken

served with honey butter• Also features honey butter on

sandwiches, with biscuits and with French toast

• Part market, part café in Portland, Ore.

• Specializes in European-style butters with a higher fat content for “a richer and creamier experience”

• Flavors include Once Upon a Thyme, Chive Garden, Orange Honey and Cherry Blossom

• Supermarket from Niemann Foods in Champaign, Ill.

• Opened in 2016 with a USDA-certified butter-churning room

• Sells regular and flavored butters and features butter in its other departments, including bakery and prepared foods

Some Foodservice Operators are Making Butter a Central Component of Their Concept

Promoting their quality butter as a way for consumers to indulge

Source: Technomic36

Flavored Butters Are Being Used to Dress up Otherwise Traditional Items

• Crack Shack, a two-unit fast casual chicken concept in California, features a Senor Croque sandwich made with fried chicken, bacon, fried egg, cheddar and miso-maple butter on brioche

• Casual-dining vegetable-focused restaurant Bad Hunter in Chicago serves Charred Snap Peas with almond-wakamebutter

• Casual-dining chain Umami Burger offers the Sunny Side Burger featuring truffle-thyme compound butter, truffled arugula, truffled aioli, Parmesan frico and a fried egg

Or used alongside upscale ingredients and preparation methods, such as “rustic” and “hand-tossed” to elevate a dish

Maggiano’s Little Italy: N’awlins Shrimp sautéed peel and-eat shrimp served in a New Orleans inspired beer butter sauce

Tony Roma’s: New York Strip wood-grilled steak, served with bacon chive butter

Source: Technomic37

On Trend with Butter Coffee

• Health-focused fast casual in New York City

• Serves Butter Coffee made with La Colombe drip coffee, grass-fed butter and MCT oil

• Health-focused fast casual in Seattle

• Offers Sweetgrass Coffee featuring “gold-tip filtered” coffee blended with organic grass-fed butter and coconut oil

• The concept that started it all offers several versions of its signature Bulletproof Coffee (coffee blended with grass-fed butter and brain octane oil) at its cafes in California. Coffee flavors include Mocha and Vanilla, and Lattes and Cappuccinos are also available

Source: Technomic38

Key Takeaways

• Domestic use and exports have both contributed to butter growth

• Butter has growing appeal at retail and foodservice as a natural ingredient

• New science has built a more positive platform for manufacturers and culinary to build upon, resulting in -

o Innovation in flavor and style

o More menu items utilizing butter

39

butter category insights - wordpress.com

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