What will the dairy case in your local supermarket look like in 10 years? Think premium.

“Fluid consumption is down, but dairy itself is up — whether it’s cheese, ice cream, yogurt — and still growing. There is premiumization. Think Tillamook in certain products or categories; Fairlife in fluid,” said Niel Sandfort, chief innovation officer at Chobani, at the recent Grow-NY Summit in Binghamton, N.Y. “It’s kind of like, there’s no ground in the middle left. It’s either very affordable in bulk, or it’s a premium-value proposition. But the middle is tough.”

Sandfort, along with Nicholas Adamson, chief technical officer at Fairlife, and Cara Itle, a farm owner from Enon Valley, Pa., gave their insights into the future of dairy products and the processes they use to come up with new products.

Julie Goddard, professor of food science at Cornell University, said product innovation is key to maintaining and sustaining dairy farms and growing the industry in the future.

For Itle, who grew up on a 500-acre, 200-cow farm in western Pennsylvania with all Guernseys, her journey has taken her from being just a farmer to now leading her farm’s business — Naturally Golden Family Farms — making new value-added products from milk.

She majored in animal science at Penn State, where she met her husband, who was a food scientist and whose family had a processing facility. The two put the family businesses together and started processing milk for a co-op they established.

"I always thought that I would be milking cows growing up, but things have definitely changed, and I'm more in the processing and marketing realm," Itle said.

She entered her farm’s coffee creamer product into the regional Dairy Innovation Program, a sort-of precursor to the larger Grow-NY Program, open to participants who make value-added products using milk or dairy ingredients produced in the Northeast. Ten are selected to get $20,000 in support, and three are selected to get an additional $55,000 and the chance to present at the Grow-NY Summit.

Itle thinks dairy product diversification will continue. “So, I think what we’re going to see in the rural areas or at the local stores is more niche opportunities,” she said. “I think that the smaller guys are getting help from organizations like this and having different opportunities, and farmers are becoming more aware of what they need to do to sell more milk or to help position their farm a little bit better. Really, it’s going to become more niche, and you’re going to have more options.”

In comparison to large companies such as Chobani or Fairlife, Itle and her family have a much different process of bringing a new product to market.

“When we’re looking at a different product, I have the ability to go to my husband and his team and say, ‘You know, I really like this. What are we doing with our extra cream? Maybe we can do something like this to complement our product line,’” she said. “We come with an idea and then we have a family dinner, and everybody tries it. If you made it through the dinner or you are asking for more, then we continue working on it, go for different tweaks."

They also have a small on-farm store where they can try products. "Things are a little bit more throwing it out there and see if they like the idea, if it’s something we can work with in terms of price and the ingredients that we have," Itle said.

Even at Chobani, the first test of a new product is simple: “It’s still us just tasting,” Sandfort said. But scaling it up can be grueling and complicated. The misses can cost big money.

“Until we love it, absolutely love it, we won’t launch,” Sandfort added. “We are still giving it to our kids. The founder gives it to his kids. We won't launch it until we want to eat it. We're a $2 billion company now, but it's still the same group of people doing it where it was just us at Hamdi’s [Ulukaya, the company’s founder] apartment at one point and saying, ‘Hey, why don't we have pineapple on the bottom? Nobody's done pineapple yogurt before.’ That's how we got to $1 billion.”

Adamson said Fairlife is more cautious about launching new products. At this point, he said, there is so much demand for current products that they focus on refining those flavors. “And if we try to launch something very new, we spend a lot of time on it,” he said.

Case in point was the company’s failed launch of creamers and lactose-free milk. He admits the company didn’t put enough money behind those projects, and ultimately, they failed.

“Generally speaking at Fairlife, we feel like we can make a great product, but unless you’re going to really flood it and pay for it, you’re probably not going to get there … which is why we have so much valuable line time. We can’t be making small runs of stuff. So, we’re trying to balance scale and efficiency,” Adamson said.

Finding new customers

Itle said her farm has a dedicated base of customers that have become loyal to the farm’s products, new or old.

For Chobani and Fairlife, finding new customers is a much more extensive process.

“We do quite a bit of questioning consumers up front,” Adamson said. “If we feel like it has enough legs. we’ll go to other groups. We’ll launch test markets where we’ll just launch in this state and see how it goes.”

Outside the U.S., he said, it gets a bit more complicated. People have different tastes and may be used to something quite different than what is popular in the U.S. He pointed to Fairlife’s attempt to introduce ultra-filtered milk in China.

“Fairlife is all about making a great milk that lasts 120 days,” Adamson said. “But that’s not good enough in China. They have lived on reconstituted UHD [ultra-high temperature] milk for a long time, so as a sign of wealth, buying milk fresh is what’s required, and that means within three days. It’s a perception, it’s a sign of, I can afford this.”

One thing the company has learned about selling Fairlife, no matter where it is being promoted: Science doesn’t sell. “And we've learned that the hard way in Fairlife,” Adamson said. “You have to have a pitch that isn't about casein or whey. It just doesn't work.”

Sandfort said it is about taking all available data and getting as close to the consumer as possible.

“There are segments that are larger than a lot of countries in Europe,” he said with a laugh. “What we’ve learned is, OK, who are we talking to here? Then you can drill in and ask, what are they looking for exactly?”

Selling the tech

Those in agriculture may have a particular interest in the way Fairlife creates its milk, or the way Chobani makes it yogurt. But outside of agriculture, consumer perception is a real thing.

“It's still the protein story,” Adamson said. “It's based on around something that is very solid. The technologies, if you started getting really complicated, people will start to get worried. Ultra-filtered just sounds nice. At the end of the day, people want protein, and it tastes awesome.”

Greek yogurt is actually strained yogurt — the whey strained out for a thicker consistency — and there is a lot of debate about where it actually comes from.

But from Sandfort’s point of view, the marketing of the product is simple: “Greek yogurt sounds a lot better than strained yogurt.”