MSU Extension

The pure, natural image of butter offers appeal to a growing segment of consumers. There is an opportunity to capitalize on this consumer preference as butter moves away from being the dietary villain it was once perceived to be. If consumer trends continue in this direction there may be additional market opportunities for dairy producers and processors.

Butter is made exclusively from milk and or cream and must contain at least 80% milkfat by weight. Coloring or salt may be added. The quality of butter is based on its body, texture, flavor, and appearance. The United States Department of Agriculture (USDA) assigns quality grades to butter based on its score on a standard quality point scale. Grade AA is the highest possible grade; Grade AA butter must achieve a numerical score of 93 out of 100 points based on its aroma, flavor, and texture. Grade A butter is almost as good, with a score of 92 out of 100 points. Grade B butter is based on a score of 90 points, and it usually is used only for cooking or manufacturing.

Consumers who are looking for foods with less artificial ingredients are beginning to gravitate to butter. Mintel, a large consumer marketing and research firm recently completed a sector analysis on butter, margarine and spreads. Their research demonstrated that 68% of consumers surveyed think that butter substitutes such as margarine, spreads and spays contain too many artificial ingredients. Mintel research also documents that the younger generation of consumers between 18 and 34 years old are using more butter than a year ago.

The average price for a pound of butter increased from $2.60 in 2009 to $3.21 in 2011. Despite the increase in price the number of pounds of butter sold has increased slightly. At the same time the price of a pound of margarine only increased a penny from $1.69 in 2009 to $1.70 in 2011 but sales have dropped from 864 million pounds in 2009 to 792 million pounds in the past year.

There were 45 new butter product launches in 2010 in the United States. Most of these were private label products. Private label butter products accounted for 30.8% of butter sales in the last year compared to 27.8% in the previous year.

Butter made from grass-fed or pasture raised cows has gained the attention of consumers. These are likely the same group of consumers who have been seeking out pasture raised meats in recent years.

Goat butter is a relatively new product that is also being seen in the market. The lower melting point of goat butter is a plus that makes it more spreadable at cooler temperatures. One brand of goat butter has seen a 55% increase in sales in the past year.

Another new trend is European style butter that is favored for its higher butterfat content. Cultured butter is also making its way into the market and is being touted for its slightly tangy flavor. Clarified butter and its ethnic counterpart Ghee are also making inroads into the market.

Farmstead or artisan butter is also desired by consumers seeking out locally produced food products. Being able to trace the source of milk that the butter is made from can be a selling point in some markets. Processors are likely to do well by enhancing this image by displaying photos of cows and farmstead scenery in their advertising. This type of advertising can be particularly effective when utilized with social networking sites.

Flavored butters are also a potential area of opportunity with consumers looking for time savers in home cooking. Butters flavored with savory additions like garlic or herbs or fresh citrus flavorings could prove to be popular. Honey has historically been paired with butter in a sweet spread. One large dairy cooperative is launching a new Cinnamon Sugar Butter Spread that is likely to be a favorite of consumers on their morning toast.

Changes are also being seen in the packaging of butter. Butter sold at the retail level has historically been marketed in one pound packages of four individually wrapped sticks. One major brand is now offering butter in half pound packages as well as half sticks individually wrapped. Butter with more of a farmstead image such as that of Calder Dairy in southeastern Michigan is being marketed hand packed into one large container.

Dairy producers or processors who are interested in creating new butter products may contact the MSU Product Center for assistance. Innovation counselors working across the state can provide assistance in business planning, marketing and navigating the regulatory maze in launching a new value added product. For more information about the MSU Product Center, Brenda Reau.