The huge increase in butter prices runs counter to the trend for other dairy products. According to the Bureau of Labor Statistics , the price index for dairy only rose 1.6% in the past year, compared to 6.4% for all food at home.
Butter prices rose 3.7% in the month of December, which is not unexpected since demand for the dairy item increases during the holidays as consumers ramp up their home baking, IndexBox analysts said, adding that the trend will only continue.
Betty Berning, an analyst with Dairy Market News, cited " tightening milk supplies, increased milk demand from other processors, especially cheesemakers, strong butter exports and domestic holiday demand, and ongoing supply chain congestion,” Dairy Herd Management reported. Similar to the nationwide cream cheese shortage, she said factory labor and truck driver shortages have led to dwindling amounts of product and delayed shipments.
According to the USDA report, cream availability has decreased, leading butter churners in the central U.S. to have to split cream with other dairy processors, such as cream cheese providers.
In its last quarterly earnings report in October, butter manufacturer Land O’Lakes highlighted rising input and supply chain costs for its round of price increases, and said that the brand’s net sales increased 12% throughout the year. Meanwhile, b aked goods manufacturers that rely on butter as an ingredient such as Grupo Bimbo, which owns Entenmann's treats and Sara Lee desserts, are weighing whether to pass along their increased costs.
At the start of the pandemic in 2020, sales of butter surged as consumers began cooking and baking more at home. That demand has remained high ever since, and with the omicron wave of COVID -19 leading people to spend more time cooking from home, it will likely persist.
The question is when and if consumers will eventually react to the higher prices. A recent survey by Ingredient Communications and Surveygoo found that when it comes to food staples, consumers tend to have a lower price elasticity. For example, 24% of U.S. respondents said that they would stop purchasing dairy milk if its price rose by 33%, while 21% would balk at a 10% increase.
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The beverage giant said new offerings attract younger consumers to its portfolio of brands before they transition into adult-targeted products like Coca-Cola Zero Sugar and Diet Coke.
The group dedicated June to educating consumers about the dangers of what it called “synbio dairy” — using genetically modified cells to create proteins identical to those in cow-produced milk.
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Topics covered: manufacturing, packaging, new products, R&D, and much more.
The beverage giant said new offerings attract younger consumers to its portfolio of brands before they transition into adult-targeted products like Coca-Cola Zero Sugar and Diet Coke.
The group dedicated June to educating consumers about the dangers of what it called “synbio dairy” — using genetically modified cells to create proteins identical to those in cow-produced milk.
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Topics covered: manufacturing, packaging, new products, R&D, and much more.