Dairy Demand Shifting Back to Pre-Covid Patterns
March 30, 2021
The coronavirus pandemic devastated the foodservice sector, which typically moves nearly half of all dairy products, but restaurant sales have started to pick up and it appears a full recovery might not be all that far off. Betty Berning, analyst with the Daily Dairy Report, says demand patterns for dairy products have already started to shift.
According to Fortune magazine, 110,000 restaurants closed in the United States last year and 2.5 million foodservice workers lost their jobs.
“One year ago, the world shut down,” Berning recalls. “Restaurants, salons, and even churches were closed in many states, all due to Covid-19. The rapid spread of the virus and the long stream of deaths that followed alarmed world leaders, who responded as best they could by asking people to quarantine as much as possible.”
An ongoing survey of 1,000 consumers conducted by the National Restaurant Association since February 2020 shows that prior to the pandemic, 59% of respondents went out for dinner at least once a week. At the height of the lockdowns, that number dropped to 16%. By February and March 2021, however, 37% of those surveyed were once again eating out each week.
“That’s the highest number since the pandemic began,” Berning notes. “It appears that as vaccines become more prevalent, consumers are more willing to dine out.” In addition, Berning notes that dining reservations made through Open Table were down nearly 100% at the start of the lockdown, compared to 2019. “While reservations last week were still lower than in 2019, they had improved significantly to down only 30%, and reservations have been steadily increasing since January,” she notes.
As more people get vaccinated and return to their old habits of eating out and the U.S. economy ramps up, the shift in dairy demand will become even more evident, Berning says. In March, cheese and butter manufacturers saw foodservice sales strengthen, with some butter producers saying order levels were nearing pre-Covid levels, according to USDA’s Dairy Market News. At the same time, retail sales of cheese have been steady and retail butter demand has been strong due to Easter sales and grocery promotions, she adds.
“It’s possible that the strong retail dairy demand experienced through the pandemic could soften as foodservice picks back up and consumers trade eating at home for dining out,” Berning notes. “That could mean an increase in sales of Italian-style cheeses, typically consumed more frequently away from home, while demand for retail-sized blocks, slices, and bags of shredded Cheddar could decline.”
Another sign that dairy demand patterns have started to return to normal is that manufacturers of whey protein concentrate (WPC) have been producing less WPC 34 and more WPC 80 and whey protein isolates. Both WPC 80 and whey protein isolates are used in sports nutrition, and now that gyms have reopened, demand for these products is also climbing. “As more schools and colleges resume in-person learning, demand for cartons of milk will increase, too,” she adds.