Commodity prices have plummeted since last summer, dragging dollar sales of many fresh food categories down with them. But, there appears to be a silver lining in the data reviewed here.

Take the natural cheese category, for example. Unit sales have been flat or down since 2006, but the category keeps showing strong dollar sales growth, as shoppers reach for the slightly pricier pre-sliced, pre-shredded or pre-grated versions of their favorites. Similarly, probiotic claims were one factor boosting the $3.7 billion yogurt category, where dollar sales were up 4% on a mere 1.3% increase in units.

And real, tangible volume and dollar growth was seen in a few highly discretionary categories like whipped toppings, premium salad dressings and refrigerated pizzas. Whipped toppings likely got a boost from Kraft's new Cool Whip aerosol can. The growth of refrigerated salad dressings ties in well with healthy eating trends, and refrigerated pizza is a happy medium between frozen and delivery. But, growth in each of these categories indicates that shoppers are cooking at home more often, and many are still willing to “trade up” for enhanced convenience and functionality.

KEY CATEGORIES

Milk

Dollar sales of fluid milk products fell more than 8% during the latest 52-week period, after farm-gate prices flirted with historic highs last summer, and then plunged to levels last seen in 2003 by the beginning of this year. The most pronounced declines were seen in skim and lowfat milk, which both dropped more than 9%. Last year's spikes and declines in the price of animal feed helped cause the current situation. As usual, in response to collapsing prices, dairy farmers have been culling herds of dairy cows this year in an effort to reduce supply and bolster prices.

Natural Cheese

Dollar sales of natural cheese rose almost 8% during the latest 52-week period, following a 12% increase in calendar 2008, and a 7% increase in 2007. However, unit sales have been flat or down since 2006, and declining U.S. exports, along with growing domestic inventories would seem to indicate that the category is headed for an eventual price correction. But the category sidestepped issues in the commodity markets that caused fluid milk prices to plunge this year. Convenience innovations have helped insulate the category from those fluctuations. Dollar sales of the shredded, sliced and string cheese subcategories have all risen about 8% since last summer, and refrigerated, grated cheese is up 22% during that period.