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Power to the plants – the booming market of plant-based dairy

Source:Ringier Food

Date Published:9/6/2017 07:09:28 PM

Dairy alternatives have become a food industry category to be reckoned with.

OVER the last years alternatives to dairy products have become a category within the food industry to be reckoned with. Products based on plants, grains and nuts – and free from dairy in any form – is on the rise as health, variety and sustainability have become important issues for consumers across the world.

The base ingredients of plant-based dairy products vary greatly and include soy, rice, almond, coconut, cashew, hazelnut, and hemp. Soy milk was one of the first alternative dairy products before expanding into other categories, such as yoghurt, desserts and ice creams. Soy-based products have, however, seen a decline over the last couple of years with almond- , coconut- and cereal-based products becom­ing more popular with consumers.

Dairy alternatives have found a place in the food industry (Photo: AAK)

Dairy alternatives have found its niche in the industry (Photo courtesy: AAK)

“Dairy alternatives are picked up by more and more consumers and we’ve seen phenomenal growth in North America and in many European markets,”says David Jago, Director of Innovation & Insight at Mintel, one of the world’s leading market intelligence agencies. “It’s not so much about consumers following a strict vegan diet, but rather what we call ‘flexitarians’, consumers who opt in and out of dairy prod­ucts and dairy alternatives according to taste, variety and health.”

Aside from these factors, Jago explains, consumers are interested in dairy alternative products from a sustain­ability perspective. Consumers are increasingly aware of the dairy production’s environmental impact which is why they look for less impactful alternatives. “Consumers are recognizing the fact that plant-based alternatives are far more sustainable than dairy and meat production for example”, says Jago. “They are recognizing the lower carbon footprint that comes from plant-based alter­natives, and they are recognizing the more natural values that are typically associated with plant-based foods.”

The impact of millennials

Whereas consumers of plant-based alterna­tives earlier were limited to people who needed these types of products, for example vegans or vegetarians and people with special dietary needs, there is today an ever-growing number of consumers who want and actively choose these products. This general megatrend or what could nearly be described as a global movement has changed the market dynamics for dairy alternatives dramatically.

“While a general avoidance of products like red meat and dairy seem to be spread across age groups, the trend toward incorporating vegetarian foods into the diet is skewed to younger consumers in many countries”, says Jago.

It is quite common for younger consumers, often labeled millennials, to experiment with different styles of eating and the pattern suggests that there will continue to be a strong opportunity for dairy alternatives going forward.

“We expect to see considerable growth in the dairy alternatives market for the next few years, practically in all parts of Europe”, says Jago. “We also expect to see continued growth in North America, but maybe not quite at the same rate since it already has reached really good levels of penetration. This future growth is more likely than not to come from the added value segments, in other words from cheese, yoghurt, desserts, and increasingly, from ice creams.”

Market players and suppliers

Although the market is still dominated by a few major players in terms of taking the lead with new ingredients, it is far from saturated and there is certainly room for more brands to tap into consumers’ growing interest in plant-based alternatives.

Ingredient suppliers, among them AAK, have also paid great attention to the development and the potential of plant-based alternatives. With a growth for the plant-based dairy segment for the next three years estimated to 10–15% CAGR, AAK has made the segment a special focus area within The AAK Way, AAK’s company program for 2017–2019.

“We, of course, also want to be part of this global move­ment and we believe there is a huge potential for plant-based dairy products”, says Henning Villadsen, Marketing Director, Dairy at AAK. “Thanks to improved sensory qualities, an expanded availability and increased sustainability awareness the market is currently booming.”

To be able to provide consumers with sustainable, plant-based solutions that makes it easy and attractive to change to a more plant-based and healthy diet, close and progressive partnerships between suppliers and vendors are needed, a model that fits very well with AAK’s concept of customer co-development.

“In our co-development process we bring to the table our expertise, our sustainability commitments and our unique capabilities in oils and fats applications”, says Henning Villadsen.“But to really meet the demands from the market, we need to work side by side with each and every one of our customers to develop solutions that fit their specific needs. By doing so, both our customers and AAK have all the prerequisites to succeed within the market of plant-based dairy products.”

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