Dairy Products Stores

Industry Snapshot

Cheese, milk, butter, and other dairy products stores, as well as packaged ice cream stores, are the predominant types of retail establishments found in this group. Like other retail grocery segments during the first decade of the twenty-first century, dairy stores faced eroding market share from competition with supermarkets, convenience stores, and superstores. Throughout the first decade of the 2000s, for example, convenience stores and drug stores showed impressive sales of milk even though milk consumption continued a decline that began in the 1970s. These specialty stores struggled to keep a firm grip on their niche market by touting high-quality products and better customer service.

According to a 2009 D&B Marketing Solutions report, this industry had 4,545 establishments that employed 34,128 and generated revenues of $1.2 billion. Total dairy drink sales were down 1.9 percent in 2008. Overall fluid milk products expected to make inroads were value-added products, such as drinkable yogurt; fortified milk, such as the top-selling Muscle Milk; and specialty-favored milks. Also, the overall push toward healthier eating prompted many fast food restaurants to begin to include single-serving milk options on their menus, which is expected to be another growth segment for milk products.

Most stores in this classification are small, private companies with less than 10 employees. Approximately 80 percent had four or fewer employees. These establishments accounted for 57 percent of industry revenues. As the economy sunk into recession in the late years of the first decade of the 2000s, many of these small, private companies felt the pinch as consumers cut back on spending. Looking to slash monthly budgets, consumers increasingly picked up the cheaper, more convenient supply of dairy products at their supermarkets.

Larger firms in 2009 include family-owned W.H. Braum Inc., based in Oklahoma City, Oklahoma, which operates over 280 Braum's Ice Cream and Dairy Stores in Oklahoma, Kansas, Texas, Missouri, and Arkansas. North Aurora, Illinois-based Oberweis Dairy operated retail stores and franchises primarily in the St. Louis and Chicago areas. The company also delivered locally produced milk and milk products to 40,000 homes. Stew Leonard's, based in Norwalk, Connecticut, began as a small dairy store in 1969 with seven employees before gaining recognition as the "World's Largest Dairy Store," with 2007 sales of over $291 million and approximately 1,250 employees. Stew Leonard's was named to Fortune's "100 Best Companies to Work For." Stew Leonard's also has stores in Danbury, Connecticut, and Yonkers, New York. The company, which also maintains a strong e-commerce presence, also sells other products, including meats and wine.