By Madeline Schultz, content specialist, AgMRC, Iowa State University, schultz@iastate.edu.

Profile revised June 2010.
 

Overview
Only about one-third of the U.S. milk supply is actually processed into milk and cream products; the remaining two-thirds of the milk supply is used to manufacture a wide range of dairy products. Sales of these dairy products, such as butter, ice cream and yogurt, account for tens of billions of dollars annually in the United States. Producers can capture a part of that billion-dollar market by processing and selling their own line of value-added dairy products manufactured on their farms.

Processing
The United States has 1,178 dairy product manufacturing plants. With 211 plants, Wisconsin continued to support the most plants in any state. Other leading dairy processing states are New York with 112 plants and California with 107 plants. The number of commercial milk bottling plants continues to decline, reaching 319 in 2008.

Value-added Products
Butter
U.S. butter production in 2009 totaled 1.57 billion pounds, 4.3 percent less than previous year. California produced 33 percent of this butter. More than half of the butter now made comes from cream not needed when milk is used for fluid milk or cheese.

Cream and Cottage Cheeses
Cream and Neufchatel cheese production was 767 million pounds in 2009. When combined, production of curd, creamed and lowfat varieties of cottage cheese totaled 1.1 billion pounds.

Frozen Desserts
As of 2009, 352 plants in the United States processed ice cream, while only 156 made frozen yogurt and 173 made sherbet. That year, ice cream plants made nearly 930.7 million gallons of regular ice cream. Plants also made 78.5 million gallons of frozen yogurt and 57.7 million gallons of sherbet. In 2009, California led the United States in ice cream and frozen dessert production, followed by Indiana, Texas, Ohio, Pennsylvania, New York and Missouri.

Total U.S. ice cream and sherbet sales in 2009 totaled $4.2 billion. Regular ice cream accounts for 61 percent of the the frozen dessert market and lowfat/nonfat ice cream accounts for 25 percent, followed by frozen yogurt (4.8%) and sherbet (3.9%).

More than 90 percent of all U.S. households surveyed said they consume ice cream and related frozen desserts. According to the USDA, Americans consumed 21 pounds of ice cream, including lowfat ice cream, in 2008. Frozen yogurt and other dairy products accounted for 4.3 pounds per capita. 

U.S. Frozen Dessert Production

Source: USDA.

With 29 percent of the market, vanilla remains the most popular flavor of ice cream. Chocolate captures 10 percent of the market, followed by cookies n' cream with 4.4 percent and strawberry with 3.9 percent. 

Forty percent of the ice cream market is held by four manufacturers: Unilever, Ice Cream Partners USA, Dreyers Ice Cream and Blue Bell Creameries. Nearly 18 percent of ice cream sales are private label products. Regional and local companies comprise the remaining 40 percent of sales.

According to the USDA, per person ice cream consumption peaked at 23 pounds in 1946. Per person consumption from 1949 through 1987 was relatively constant. Since 1988, U.S. consumers have generally eaten less ice cream overall. They have also shifted to ice cream with higher milkfat and higher priced, in addition to frozen yogurt and other dairy products from the freezer.

Sour Cream
Total sour cream production in the United States was 1.1 billion pounds in 2009, a slight decline from 2008. Approximately 111 dairy plants throughout the country process sour cream. California is home to 19 of these plants while New York is home to 12. However, New York plants produced more sour cream, 267.9 million pounds, compared to California's production of 175.6 million pounds.

Yogurt
Yogurt production in 2009 was 3.8 billion pounds, a 7.3 percent increase over the previous year. In contrast, yogurt production in 1980 was 570 million pounds. California leads the United States in yogurt production, followed by Tennessee and New York. Per person yogurt consumption was 11.8 pounds in 2008, well below the 62.8 pounds of yogurt consumed annually in Sweden.

Yogurt is being touted as a healthy or functional food due to probiotics. According to Dairy Management Inc., probiotics “are key ingredients in any product promoting digestive health.” About 80 percent of the yogurt manufactured in the United States contains Lactobacillus acidophilus. The Bifidobacterium strain is also found in dairy products. A dairy consultant estimated the market of probiotics, including dairy products and dietary supplements, to be between $1.2 billion to $1.8 billion.

Yogurt is now being incorporated into other products. General Mills', Kellogg's and Quaker Oats sell cereals containing yogurt. McDonald's and Wendy's offer yogurt-based products on their menu. Purina has introduced dog and cat foods containing yogurt. Yogurt has also been added to toothpaste, mouthwash, facial masks and suntan products.

Exports
U.S. dairy exports totaled $2.32 billion, down 39 percent from 2008's record level. The volume of U.S. dairy exports was 2.18 billion pounds. While the bulk of U.S. dairy products is still consumed domestically, the percentage exported as dairy products was 9.3 percent in 2009. Dairy products that are exported include butter, cheese, ice cream, yogurt, whey, lactose, infant formula, milk powders and fluid milk and cream.

Primary markets for U.S. dairy exports are Mexico and Canada. Mexico purchased $636 million in U.S. dairy product exports while Canada purchased $484 million in U.S. dairy products. Mexico is the largest buyer of U.S. cheese, ice cream and yogurt. 

U.S. butter exports were 22,431 metric tons (MT) in 2009 valued at $61 million. Saudi Arabia was the top market for U.S. butter exports. The United States exported 25,530 MT of ice cream in 2009 valued at $59 million. Mexico purchased more than half of all the ice cream exports.

Imports
According to USDA, the United States imported $2.4 billion worth of dairy products in 2009. It was the smallest quantity and value of imported dairy products in the past five years.

Outlook
The dairy export forecast is raised slightly to 2.9 billion due to strong global dairy prices and expected recovery of milk powder sales. The Canadian dollar and Mexican peso are expected to appreciate against the U.S. dollar in 2010.

Sources
Dairy Foods magazine - The Dairy 100 is a list of top dairy processors based on sales. Look for the link in the left column.

Dairy Products Annual Summary, National Agricultural Statistics Service (NASS), USDA, 2010.

Food Availability, Economic Research Service (ERS), USDA.

Global Agricultural Trade System, Foreign Agricultural Service (FAS), USDA.

Innovate With Dairy

Just the facts: Ice cream sales and trends, International Dairy Foods Association.

Livestock, Dairy & Poultry Outlook: Tables, ERS, USDA.

Outlook for U.S. Agricultural Trade, ERS and FAS, USDA, 2010.

U.S. Dairy Export Council

 
Profile written November 2006 and revised June 2010.