Higher Prices but Lower Sales for Dairy

If you’ve spent any time in the dairy section of a grocery store over the past six months, you’ve probably noticed two things.

One is the high prices for milk, eggs, cheese, and other products found in those sections. Two is that dairy sections are usually pretty well stocked, especially compared to some other store sections.

The reasons for this are clear. Inflation has hit dairy products hard, hence the high prices. And consumers are buying less due to the costs, leaving plenty of supply in the stores.

Despite selling fewer products, dairy manufacturers are actually making more money, again due to high prices. Per usual, consumers are the ones who suffer. Either they pay more for dairy products or they do without.

Are Eggs Considered Dairy?

Let’s clear up one thing right now before continuing. If you’re thinking, “Wait a minute, Robert. Eggs are not technically a dairy product. They are an animal by-product.”

You are absolutely correct. Eggs are not by strict definition a dairy product. A dairy product refers to a product made from the mammary gland of mammals. Such as cows, goats, and sheep. As well as products made from their milk, like cream, butter, and cheese. 

However, because eggs are found in the dairy sections of stores, they are usually included in discussions about dairy.

And because the International Dairy Deli Bakery Association (IDDBA) and other dairy-related organizations include eggs in their dairy statistics, that’s what we’re going to stick with here.

Dairy Price Per Unit Soars

So, the dairy segment is experiencing higher prices despite lower sales. Several months ago, the price per unit for dairy products was $3.84. That’s a steep 26.2% increase versus 2021 and a 41% increase over 2019. Yikes.

Those price increases allowed dairy products to surpass meat products in overall monetary sales this past January. The refrigerated department of stores produced $7 billion in sales that month.

Dairy, which represents the majority of sales in the refrigerated department, generated sales of $71 billion from January 2022 to January 2023. 

Statistics Don’t Lie 

For you statistics lovers, here’s how this broke down per product in January, according to Supermarket News. The number of units of milk sold dropped by 6.3%, and yet its $6 billion in sales was an 18.2% increase from the previous January.

Eggs had an 8.4% decrease in number of units sold, yet accounted for $1.1 billion in sales, which was an enormous 83.6% increase over the previous January.

And cheese saw a decrease of 4.4% in units sold, but its $997 million in sales was a 4.7% increase from 12 months previously.

Whitney Atkins is vice president of marketing for the IDDBA. She said, “Virtually all areas within dairy experienced decreased unit sales in January 2023, especially eggs, yogurt, processed cheese and milk.”

Bird Flu Was a Factor

Now, there are other factors at play here besides inflation. Bird flu, for example, limited the number of eggs available for the public. This increased demand, which in turn produced higher prices. 

Chris Mentzer is director of operations at Rastelli Market Fresh in New Jersey. He said, “Eggs are a great example of how volatile the category can be. 

“Although we can blame a good portion of the egg price increases on the bird flu, there are also issues with how chickens are raised, which has decreased egg harvesting production.” 

Some consumers are choosing animal-free dairy milk for ethical reasons. But real milk still constitutes more than 70% of sales. 

“Aside from price, I believe that innovations like animal-free dairy and brands that emphasize humane/sustainable agricultural practices will continue to grow in popularity,” Mentzer said.

Raising Chickens in Response 

Some people are combatting the high price of eggs by buying chickens and raising them. This demand on hatcheries is strong, and some breeds have sold out. 

Meghan Howard is in charge of sales and marketing for Meyer Hatchery in Polk, Ohio.

“We’re already sold out on a lot of breeds – most breeds – until the summer,” she told the New York Times. “It’s those egg prices. People are really concerned about food security.” 

Ginger Stevenson is director of marketing at Murray McMurray Hatchery in Webster City, Iowa. She said, “When we sell out, it’s not like: ‘Well, we can make another chicken.’” 

Dairy Growing Globally

As Americans, are we too obsessed with dairy? I don’t think so. I believe we’re just used to consuming it from childhood through adulthood. And we enjoy it.

We also realize it’s a great source of protein. At the turn of the century, dairy products accounted for just under 11.5% of global protein consumption. Now it’s more than 13%, according to the National Milk Producers Federation. 

The United States is supplying a good chunk of these dairy products to the world. We had record dairy exports in 2020, 2021 and 2022. 

The demand is almost certain to rise around the globe, so we’ll see if America is able to keep up production to make it happen again this year.

Either way, dairy will continue to represent a desirable food group for us. Hopefully prices will drop before we have to cut our consumption even more.

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