While some dairy products have seen dramatic gains in purchases due to COVID-19 and other products such as yogurt have seen consumers curtail buying, butter has been somewhere in the middle. Consumer purchases have been steady through grocery outlets, but the limited seating and even close of many food service establishments have cut back use in those channels.

Those limitations, paired with the COVID-19 driven flux of excess milk, led to a lot of butter being allocated for storage. In fact, September’s USDA cold storage report pegged butter inventory at 343.9 million pounds 18.3% larger than the same month last year. Fortunately, butter is down 7.4% from storage levels in August.

While this has set the framework for the production side of butter, the aforementioned consumer side has dealt with both excess and need.

“It was extremely tight during peak COVID-19 to get packaging, and what happened a lot was inventories got depleted so we had to not only sell in a strong market, we had to replenish supplies,” explained Mike Brown who serves as the dairy supply chain director for Kroger Co. during the October 21 Hoard’s Dairyman DairyLivestream sponsored by Diamond V.

Packaging was a bottleneck

Butter was one of the dairy products that struggled with a shortage of consumer directed packaging given its high percentage use in food service. As Brown explained, they had plenty of inventory, but a lack of consumer packaging capacity.

“Our saving grace was that one co-op had put in two retail butter lines since last June,” Brown detailed. “Another large cooperative expanded capacity in August.”

Brown and his purchasing team relied on those avenues to get enough butter for sale and have worked ahead now to help meet fall demand.

While consumers continue to flock to butter in the grocery store as they rediscover and explore baking, Brown and other dairy experts predict direct consumer purchasing will be higher this holiday season. The question, however, will remain . . . Can consumers buy enough butter to bring the market back from the price doldrums experienced in 2020 . . . price doldrums that have not been a reality since 2013 in the butter category?

An ongoing series of events
DairyLivestream will air twice each month for the remainder of this year. The next broadcast “Taking a position on milk prices” will be on Wednesday, November 4. Each episode is designed for panelists to answer over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering once registers you for all future events.

The author and her family own and operate a 130-cow dairy and crop 1,500 acres. She also is a former associate editor at Hoard’s Dairyman.

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(c) Hoard's Dairyman Intel 2020
October 26, 2020
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