Dairy alternatives are on the rise as consumers are increasingly going dairy-free, particularly when it comes to fluid ‘milk’ used on things like cereal or in coffees.
More recently, biotechnology has entered the arena, brewing milk proteins through biofermentation.
The time is right for the dairy sector to reflect on the success of alternative dairy products and to consider applying those lessons to dairy, according to the latest RaboResearch global dairy report Dare Not to Dairy: What the Rise of Dairy-Free Means for Dairy, and How the Industry Can Respond.
Dairy alternatives have competed in the dairy space for decades, but competition has intensified as dairy alternatives broaden in types, styles, and categories of product.
Global retail sales growth for dairy alternatives has soared at a rate of eight per cent annually during the past 10 years.
With retail sales valued at US$15.6billion, dairy-free ‘milk’ represented 12 per cent of total fluid milk and alternative sales globally in 2017, according to Euromonitor.
Nutrition, price and flavour tend to favour dairy, but changing consumer perceptions around health, lifestyle choices, curiosity and perceived sustainability are increasingly drawing more people to select ‘dairy-free’ products.
‘‘Global demand for dairy is expected to grow by 2.5 per cent for years to come, with demand for non-fluid categories offsetting weak fluid milk sales,’’ RaboResearch senior dairy analyst Tom Bailey said.
‘‘While it’s not essential to diversify into dairy alternatives, it would be wise for the dairy industry to at least learn one thing from the success of dairy alternatives, which may be putting the consumer first and trading in the old grass-to-glass model for glass-to-grass,’’ Mr Bailey said.
The challenge for dairy lies mostly in fluid milk.
Euromonitor said retail sales in western Europe (US$18.6billion) and the United States (US$12.5billion) declined at an annual rate of five per cent and three per cent respectively, in the five years to 2017.
The results during the past five years have favoured dairy players who have invested in milk alternatives across the supply chain — from planting almond trees to buying brands.
The investments in dairy alternatives have shown returns above standalone dairy.
The largest segments of population not consuming dairy beverages were found to be Millennials and Generation Z.
Their perceptions of animal welfare and sustainability were driving their choices.
According to a study by Comax Flavours, the largest dietary practice driving dairy-free sales has been ‘flexitarian’.
These consumers are described as those who try to eat fewer animal products, but are also happy to occasionally deviate and consume animal products.
More specific health-related concerns, such as lactose intolerance and milk allergies, also play a role in the growth of dairy alternatives.
One positive development identified in the Rabo-Research report is the resurgence of interest in incorporating fat into a balanced diet — and many dairy alternatives do not have that advantage.
Another interesting development identified in the report is the use of the words: milk, cheese and yoghurt.
The European Court of Justice in 2017 found that dairy alternatives could not use those words when not applied to dairy products.