CHICAGO — The dairy alternative space is one of the fastest-growing plant-based categories, with non-dairy milk driving the market. This was communicated during the “Discover Dairy & Dairy Alternatives: Trends & Innovative Products” session at Natural Products Expo West Virtual Week on May 24.
Cheese alternatives are predicted to be the “next frontier” in plant-based innovation, said Adrienne Smith, senior food business reporter, New Hope Network, Boulder, Colo.
Advancements in ingredient technology and processing are fueling dairy-alternative innovation. Whereas early entries into the plant-based dairy space may have disappointed consumers, the next-generation products are doing a much better job of delivering on sensory expectations. They also have progressed into mimicking the value-added propositions that premium real dairy brands use to better connect with today’s health- and sustainability-conscious consumers. This includes the development of dairy alternatives for specific uses, such picky-eating children and home baristas, as well as premium craftmanship communicated with descriptors such as “artisan” and “small batch.” Dairy alternative formulators are trying to avoid the long ingredient labels and often unappealing Nutrition Facts that plant-based meat manufacturers have been scrutinized for. Clean and simple is the future in the dairy alternative space.
“A higher proportion of US shoppers value reducing animal-based foods in the diet over increasing consumption, though most make no specific effort,” said Arthi Padmanabhan, market research manager, New Hope Network. “Animal-based product avoidance indexes highest among boomers; however, Gen Z expressed the highest dairy avoidance rates.”
This is likely a result of product improvements over the past few years, along with Gen Z growing up and making their own purchase decisions. Ms. Padmanabhan said that alternative-dairy marketers should speak to younger consumers with products that meet their needs.
“Label claims are valuable real estate on the products,” said Scott Dicker, market data analyst, SPINS, Chicago.
The combined dairy milk, cheese, creamer and yogurt sector showed an uptick of 8% in label claims for the 52 weeks ended April 18, 2021, according to SPINS analysis of IRI data. The plant-based versions of these products had an increase of 18% in label claims.
“(In real dairy), labeled claims are not doing as well as the average (8%), except for labeled animal welfare,” Mr. Dicker said.
Animal welfare claims represented about $351 million during this time period, up 13% from the previous year. The other tracked claims — organic ingredients valued at $3 billion, non-GMO valued at $3.9 billion, grass-fed valued at $494 million and no-added hormones valued at $1.8 billion — all only showed an increase in use of 4%.
In the plant-based dairy space, the fastest-growing label claim is organic ingredients, which is valued at $555 million, an increase of 19% from the previous year. Non-GMO is the most popular label claim ($3 billion, +17%), followed by gluten-free ($2.7 billion, +18%) and vegan ($1.6 billion, +15%).
Dairy is meeting the needs of a number of trending diets, including low-FODMAP, keto and paleo. While most alternatives would be avoided on a low-FODMAP diet, an eating regime that eliminates fermentable short-chain carbohydrates found in many plants, alternatives are popular among paleo, Whole30 and keto dieters.
Mr. Dicker said that a growing number of dairy alternatives are making vegetarian claims versus vegan claims. This allows for products such as plant-based milk sweetened with honey and plant-based cheese that contains casein.
“Plant-based is no longer enough on its own with consumers now seeking more functional benefits in every sip.” — Adrienne Smith, New Hope Network
A closer look at the non-dairy milk category showed that while almond milk still dominates, oat milk is gaining market share. Oat brands are focusing on sustainability, nutrition and performance, allowing them to better compete with real dairy.
“Other grains to watch include hemp, flax and barley,” Ms. Smith said. “Applications for oat continue to expand beyond milk and into a wide variety of other plant-based dairy. Watch for more blends and a continued emphasis on clean ingredients and sustainability.”
She explained that plant-based dairy manufacturers are enhancing products with protein, adaptogens, immunity ingredients and added nutrients.
“Plant-based is no longer enough on its own with consumers now seeking more functional benefits in every sip,” Ms. Smith said. “Innovation in plant-based dairy is far from over, with brands seeking new and different ways to solve for the taste, texture and nutrition challenge, as well as creating more gourmet, artisanal and specialty items.”
This past year there’s been lots of activity in the plant-based cheese segment. It’s all about finding the right meltability and stretch. Beans, nuts and plant-protein fermentation are opening possibilities for new, more specialty formats, including soft, fresh and matured cheeses with simple ingredient lists.
“The real dairy category is innovating, as well,” Ms. Smith said. “There’s a strong social commitment by marketers in efforts to drive consumer trust in dairy. This includes clear messaging to consumers regarding sustainability, transparency and mission.”