Dairy Brands Ramp Up Variety, Innovation
What’s that saying about the only constant being change? The adage is true in every aspect of food retailing today, including dairy.
The landscape of dairy departments is changing, and some of it is due to actual landscapes, with the proliferation of products from plants and plant proteins in addition to those from animal sources. Those products may represent only a slice of the overall market, but the upward trajectory is having a ripple effect. For one thing, grocers are looking at and often altering their product mix to meet demand from consumers who are open to new products. In another sense, dairy manufacturers are finding ways to compete with these items, honing their own R&D. And plant-based brands continue to launch alt-dairy products or expand their current portfolios.
Key Takeaways
- Demand for plant-based dairy products will continue to grow quickly as more consumers seek alternatives to dairy items, based on the perception that nondairy offerings are better for health, the environment and animals than traditional dairy products.
- As an increasing number of shoppers include both dairy and alt-dairy items in their diets, more hybrid products, combining milk with almonds or oats, for example, will appear on the market, allowing greater innovation for dairies.
- Meanwhile, the traditional dairy space continues to offer inventive new products centering on health and wellness, transparency and sustainability, premium ingredients, and convenience.
According to information from Rockland, Md.-based Packaged Facts, plant-based beverages are set to comprise 40% of the total dairy and nondairy beverage market by the end of 2021. Data from IRI, a Chicago-based market research firm, reveals that sales of almond milk alone grew 5.6% to just over $1.3 billion in the last 52 weeks ending Feb. 23.
IRI also finds that sales of refrigerated milk substitutes, which encompass nondairy milks such as oat milks, rose a whopping 60.8% to $182,446,130 in that same time frame. That compares with sales of fluid milk, with whole milk rising 3.9% to top $4,970,721,837, and skim/low-fat milk dipping 2.1% but still ringing up $6,917,228,501.
The Rise of Plant-Based Products
“Demand for plant-based dairy products is going to continue to grow quickly as more consumers seek alternatives to dairy products,” predicts Cara Rasch, a Packaged Facts analyst. “In recent years, we’ve seen greater popularity for plant-based dairy products in general and a number of new plant-based product introductions. Like plant-based meat, plant-based dairy products are desirable due to common perception they are better for health, the environment and animals than traditional dairy products.”
Eric Richard, industry relations coordinator for the International Dairy Deli Bakery Association (IDDBA), in Madison, Wis., says that the advent of plant-based items is spurring a different kind of dairy case. “It’s definitely growing,” he says, adding that, for better or worse, many consumers perceive “plant-based” as a term that conveys health and wellness, even if plant-based beverages aren’t the same as true dairy milk from cows or other animals.
Companies that produce plant-based alternatives confirm brisk growth in their product lines.
“Our company has tripled in sales over the past five years, and that curve continues,” notes Greg Steltenpohl, founder and CEO of Los Angeles-based Califia Farms, which offers a line of plant milks, creamers and yogurts, in addition to new products like a soon-to-be-launched plant butter made from cashews and tiger nuts. He also points out that plant-based milks with a longer shelf life than many fresh dairy products will also be in demand during the crisis related to the COIVD-19 outbreak.
While dairy processors have fought hard to keep dairy products the only ones labeled as milk, and as the U.S. Food and Drug Administration (FDA) revealed it would review and update dairy labeling, it’s not an all-or-nothing proposition for many consumers who buy and consume both dairy and alt-dairy products.
Steltenpohl agrees that consumers generally have open minds that are reflected in their purchase choices. “It isn’t all about veganism — it’s about household units, families and even co-working spaces having a plurality of choices, with both dairy in the fridge as well as plant milks,” he notes.
Hybrid Items
In addition, dairy brands are setting themselves apart with products that exemplify consumer interest in transparency and sustainability. Danone’s Horizon Organic brand recently revealed plans to become the first national USDA-certified organic dairy brand to be carbon positive by 2025; Horizon also recently developed a line of Growing Years whole milk created for children between the ages of 1 and 5. Growing Years half-gallons will be the first of the brand’s certified Carbon Neutral products by the end of next year.
Packaged Facts’ Rasch agrees that this kind of messaging is important, especially as dairies contend with plant-based competitors.