Butter's back

Dairy Field, Jun 2001 by Parlin, Sandy

Butter demand rises as consumers return to indulgence.

In the food industry today, the word is flavor! Low-fat and fat-free food sales are trailing behind foods that simply taste good. That bodes well for butter - consumers want the richer taste of the original product.

Chris Dinsdale, president of Tillamook Food Sales, a Tigard, Ore.-based division of Tillamook County Creamery Association, notes that butter consumption has been growing over the past few years as margarine declines. "People are looking for flavor," he says. "That's why we're not in the margarine business."

Tillamook County Creamery also sells yogurt, sour cream and some milk but its real focus is on butter, cheese and ice cream. Butter comprises 5 to 6 percent of its sales.

"We regionalize our programs to help our customers sell more product; we tailor programs to fit their needs," he explains. Tillamook's primary marketing area for butter lies in 10 western states, though the company sells cheese nationally.

"Our butter sales have outpaced the industry in general. We grew about 23 percent through April of this year," adds Dinsdale, noting that butter is price sensitive and that the market is fairly high now. "If margarine is quite a bit less expensive, that could have some impact [on butter sales]."

Grassland Dairy Products, Greenwood, Wis., specializes in butter production. Trevor Wuethrich, director of marketing, notes that Grassland is the largest family-owned butter producer in the United States. A private label manufacturer, the company sells to mainly foodservice customers.

Grassland manufactures a 60-percent margarine, 40-percent butter blend known as Golden Goodness. Wuethrich explains that the company produces the blend because when butter prices rise, butter sales decline and customers tend to choose a cheaper alternative.

"Rather than lose 100 percent of sales, we convince our customers to go to that product and we still retain the volume," he stresses, adding that Grassland's 2000 sales were up 4.2 percent over the previous year.

Wuethrich observes that the everchanging butter market is a reflection of milk production. "Hoof and mouth disease was thought to be a concern for later this summer, but it is thought to be under control now and not the concern it was," he says.

Crystal Cream & Butter Company, Sacramento, Calif., is a 100-year-old full line dairy. Mike Newell, vice president of marketing, reports that the company has recently added a little more flavor to its sweet butter. Overall, butter constitutes 5 to 10 percent of the company's sales.

Crystal sells one-pound quartered butter sticks through groceries, while restaurants use its products in onepound or larger solids for baking and cooking, as well as small individual pats for table use.

Newell says the company buys margarine for customers who need it, primarily the restaurant market. "When prices get high like they are now, there's always the danger that people will eliminate products or look for substitutes for recipes. Last time this happened, a bakery eliminated certain products that used a large amount of butter," he recalls.

John Whetten, president and chief executive officer of Challenge Dairy Products Inc., Dublin, Calif., adds that according to USDA, butter production between 1999 and 2000 increased 2.4 percent, and butter commercial disappearance (total butter sales) rose 1.6 percent.

Whetten, also president of the American Butter Institute, Arlington, Va., reports that in the year 2000 in retail, butter volume increased 8.3 percent, spreads were up 3.3 percent and margarine was down 22.8 percent.

Furthermore, he says that research has shown key selling points for butter: "Nothing brings out the taste like real butter; butter performs consistently and reliably; and butter is the only table spread that is 100 percent pure and natural."

Whetten points out that butter's weekly average at the Chicago Mercantile Exchange for the week of April 30, 2001, was $1.83 per pound, compared to $1.17 for the same week a year ago.

"There is not a lot of butterfat in the world, and we've never had prices as high this early in the year," he says, adding that the trend toward increased butter sales could turn around if butter prices get too high, adding that the National Dairy Promotion Board spends $350,000 year on a public relations program for butter, and individual companies are helping increase butter usage.

Comparing butter to margarine, he says, "I'd rather trust a cow than a scientist any day."

Currently, the butter market is robust and some companies are adding more fat to their butter. Whetten notes that a product on the East Coast called Plugra contains 82 percent butterfat; Challenge's European Style butter with 83 percent fat is available in 13 Western states; and Land O'Lakes' Ultra Creamy butter with 83 percent fat is sold nationally.

Lydia Botham, director of the Land O'Lakes Test Kitchens & Consumer Affairs, says, "With 83 percent butterfat, LAND 0 LAKES, Ultra Creamy Butter contains even more butterfat than European-style butters."