Market Update: April 2005

At first glance, the just-released U.S. Department of Agriculture's (USDA) February statistics on total fluid milk sales seem to illustrate a continuance in the decline of sales that started in 2004. However, factoring in the effect of last year's extra day for leap year (February 29) produces a very different impression of fluid milk sales in February 2005.

In its report, USDA estimates that the February 2005 total volume was 4.3 billion pounds, down 2.2% from February 2004 and leads to a year-to-date (YTD) change of -2.3%. It is important to note that February 2005 had one fewer day for selling milk than the same month last year. Therefore, looking at an average daily sales basis, February 2005 fluid volume was actually up 1.3%, improving the YTD on an average daily basis to only a -0.6% decline.

The stronger sales were driven primarily by fat-free and lowfat white milk. Fat-free milk volume sales were up 4.4% over last February, at 0.5 billion pounds, while lowfat sales were up 3.3%, at 0.6 billion pounds. These products combined represent one-third of total white fluid sales; they have been the best selling categories for the past eight months. Since July 2004, lowfat and fat-free white milk volumes have each increased 2% (see chart below). The remaining two-thirds of total white milk volume is almost evenly split between reduced-fat (up 1.6% over last February, at 1.4 billion pounds) and whole (down 2.7%, at 1.3 billion pounds).

While a smaller market category, flavored milk also contributed to growth in February 2005. After adjusting for leap year, flavored milk volume is up 4.6% YTD. The market share represented by flavored milk is slightly less than 10% of total sales.

Posted April 25, 2005