Nov 13, 2018

Dairy Alternatives Emerging as a Potent Alternative to Milk

by Team Fact.MR

Growing popularity of dairy alternatives, especially plant-based nutrition, is creating disruption and opportunities in the food & beverages landscape. Demand for dairy alternatives has been led by growing lactose intolerance and a growing appetite among consumers to experiment with non-milk products.

Global dairy alternative sales have expanded to include a range of products not limited to milk alone. Consumers are now experimenting with non-dairy toppings, non-dairy whipping cream yogurts, and non-dairy ice creams. Manufacturers have been quick to respond, launching and marketing their dairy alternative offerings with much aplomb and fanfare.

The information presented here is based on a new research study by Fact.MR. A sample is available upon request.

“Almond, soy, and coconut have emerged as crowd favorites, with almond-based dairy alternatives accounting for the bulk of demand. Positive consumer experience, combined with functional aspects of dairy alternatives have led to an exponential rally in demand,” states Fact.MR in its report on the subject.

Innovation Outside of Almond, Coconut, and Soy

Food and beverage companies are aware of the opportunities emerging in the dairy alternatives segment. Innovation remains the key to stay competitive in this segment, as consumer inclination towards functional and healthy is a key driver of this segment. “Manufacturers will be looking outside the top three – almond, coconut, and soy – to create product differentiation and appeal to wider audience. It will be unsurprising to see more F&B companies foray into the market with a new range of plant-based offerings,” says the Fact.MR report.  

The decline in real milk sales and exponential rise in plant-based products continues in 2018. This is not to say that dairy-free has truly arrived – it still accounts for a miniscule share of the US$ 500+ billion dairy market. However, the rate at which demand for dairy alternatives is growing, especially in North America and Europe, has created opportunities few players can afford to miss.

Fact.MR opines that dairy alternatives may be the David in comparison to the Goliaths of dairy industry, they seem to be winning the perception battle. With dairy alternatives industry positioning their products as sustainable and vegan, conscious consumers are paying attention. Combined with sustainable packaging and transparent labelling, manufacturers are focusing on maintaining a perception that consumers have built in their minds about these products.

According to Fact.MR, managing a diversified product line remains a key challenge for manufacturers. Although the rally in dairy alternatives market has led many cow milk companies to join the bandwagon, maintaining a presence that’s completely organic remains a challenge.

The milk industry has been able to keep prices low, owing to the mass-production and simple packaging and distribution process. In case of dairy alternatives, such as almonds, soy, coconut, and rice, the manufacturing process is complex and raw material availability is uncertain.

According to Fact.MR, dairy alternatives demand is currently concentrated in the US and Europe, however, China and India remain important markets because they have a large consumer base which can be penetrated. Awareness and inclination towards dairy alternatives may be lower in Asia Pacific, however, the opportunities in these markets are influencing stakeholders to take a head-start. “At the end of the day, it is still a revenue-based business, and dairy alternative companies know China and India, with over 2 billion consumers, are too important to be ignored,” concludes Fact.MR.