The rise of dairy alternatives seems unstoppable. According to MarketsandMarkets, in 2020 the sector was valued at $22.6 billion and was projected to reach $40.6 billion by 2026, growing at a CAGR of 10.3%. Significant growth can be attributed to changing consumer lifestyles, sustainability awareness and rising levels of lactose intolerance.
In direct comparison, Mordor Intelligence predicts that the global dairy market will grow at a CAGR of 5% from 2020-2025. The dairy market continues to make somewhat smaller strides than its trendy plant-based sibling, driven by rising populations and health-conscious consumers seeking the nutrients and vitamins found in dairy products.
Innovation within the dairy alternatives category is rife and the variety of products now available has paved the way for diverse consumer choice. With many flexitarians opting for a combination of dairy and plant-based products at different times, there is potential for growth and development in both markets.
Here, the World Dairy Innovation Awards team compares market growth and innovations in both traditional and alternative dairy offerings.
Milk vs milk alternatives
The plant milk market is booming. From soy milk to almond, oat and cashew, most coffee shops now offer a wide range of plant-based milk alternatives.
The past year has seen many product developments in the plant-based milk sector, from global brands to small businesses and start-ups. Recent product releases range from plant-based Califia Farms’ new Protein Oat milk to dairy brands like Shaken Udder, which released plant-based milkshakes under its sister brand Shaken Other.
According to Global Market Insights, the plant milk market exceeded $12 billion in 2019 and is estimated to reach over 11% CAGR from 2020-2026. In comparison, Research and Markets’ 2020 report suggests that the milk segment of the global dairy industry is forecasted to grow at over 3.1% CAGR and reach a market size of $172.5 billion by 2027.
Many dairy brands are adapting their offerings to meet consumer demand for plant-based alternatives, sparking more innovation in the milk category. Nestlé, Danone and Fonterra are among the leading industry players to have embraced consumer demands with new alternative innovations. For example, Nestlé introduced non-dairy creamers to their Starbucks range last July.
A significant portion of the category is reserved for dairy/plant-based hybrids, such as Shamrock Farms’ chocolate milk, which blends dairy and plant-based ingredients. Hybrid products are aimed at those who are plant-curious yet still want the health benefits and taste of real milk.
Another key area of innovation is cell-based milk. In December 2020, biotech firm TurtleTree Labs secured substantial funding for proprietary technology that uses mammalian cells to produce milk. Praised for its ability to significantly reduce the industry’s carbon footprint, while meeting long-term issues surrounding food resilience, cell-based milk could offer a solution for consumers who want the taste and benefits of milk, as well as a product that meets their ethical and environmental concerns.
Cheese vs cheese alternatives
In 2019, the global dairy cheese market was worth $69.7 billion and is expected to reach $112.8 billion by 2025, growing at a CAGR of 8.4% from 2020-2025. In comparison, GrandViewResearch predicts that the global plant-based cheese market – which was valued at $1.01 billion in 2019 – will grow at a CAGR of 12.8% from 2020-2027.
Snacking cheese has been a key area of dairy cheese innovation, predominantly due to changing consumer lifestyles calling for more convenient on-the-go options. Some examples of new product releases include Kerry Foods’ Strings & Things seasonal-themed cheese snacks and Philadelphia’s single-serve cheesecake crumble cups.
From sharp tastes to creamy textures, recreating the sensory appeal of dairy cheese has long baffled plant-based innovators. That said, we have seen a plethora of new innovations hit the shelves in recent years.
Plant-based food company Forager Project recently unveiled a new line of dairy-free cheeses, made using cashew milk yogurt. Meanwhile, ParmCrisps entered the snacking market with their plant-based cheese crisps made from 100% dairy-free cheese.
In addition, dairy cheese market-leader Bel Brands USA introduced its first exclusively plant-based cheese brand Nurishh in March 2021. Such innovations give consumers varied plant-based options and help make cheese alternatives more accessible.
One of the main drivers of plant-based cheese innovation is the need to cater for those with lactose intolerance. According to the National Institutes of Health in the US, around 65% of the human population has difficulty digesting lactose, representing a huge target audience.
While the plant-based cheese market is currently worth significantly less than the global dairy cheese market, anticipated growth is high and the future looks bright.
Yogurt vs yogurt alternatives
The yogurt category has seen major strides in recent years. The global yogurt market was valued at $115.4 billion in 2019 and is expected to reach a CAGR of 10% during 2020-2027, according to Coherent Market Insights.
Products claiming functional benefits such as aiding digestive and immune health have been hot on the market. Last year Biotiful Dairy launched ‘light and fruity’ cultured kefir yogurts that claim to naturally support immunity and gut health and Rasio added a cholesterol-lowering vanilla yogurt drink to its Benecol brand.
Similar to the cheese category, the rising consumption of packed foods has also led to on-the-go snacking innovations in the yogurt category. For example, Clio Snacks unveiled a reduced-sugar yogurt bar line that the company says provides a guilt-free snack or better-for-you dessert. With busy consumers wanting to maintain a healthy lifestyle, low- and no-sugar offerings have been, and will continue to be, a major area of innovation in dairy snacking.
Meanwhile, according to Grand View Research, the global plant-based yogurt market was valued at $1.6 billion in 2019 and is expected to grow at a CAGR of 18.9% from 2020-2027. This growth forecast is higher than any other dairy or plant-based category and the potential for upcoming innovation is exciting.
Ensuring plant-based offerings meet the same functional demands of dairy yogurts has been a challenge for innovators. However, the category has witnessed many new product releases, from Nancy’s Probiotic Foods plant-based probiotic soy yogurt line to So Delicious Dairy Free’s cultured coconut yogurt line with toppings. Both of these innovations align with the rising demand for both functional foods and pre-packed convenient options.
In a similar trajectory to the cheese and milk categories, we are now seeing major dairy companies hopping on the plant-based bandwagon. Danone recently released Silk Kids Almondmilk Yogurt Alternative, which aimed to resolve challenges in children’s nutrition that were instigated by the Covid-19 pandemic.
World Dairy Innovation Awards 2021 is open for entries. This year, we have a ‘best dairy alternative’ category dedicated solely to the celebration of innovation within this fast-growing market. Check out our other categories and enter now!
© FoodBev Media Ltd 2020
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