Trends in dairy beverages

SEVERAL trends impact the dairy industry today. According to Mark Driscoll, Associate Director for Sustainable Nutrition at the UK-based non-profit Forum for the Future, the key trends emerging in the global dairy beverage market include innovating products specifically for Millennials, developments in traceability and transparency, a circular economy, and a regenerative approach to dairy agriculture.

“Millennials in both the developed and developing worlds are increasingly seeking out natural foods that enable active and healthy lives,” according to Driscoll as he explained the major developments unfolding in the dairy beverage industry. He added that “some intriguing insights have emerged out of this trend, including, for example, research into the role of the gut microbiome in health.

Innovation in this area is evolving rapidly with an emphasis on the study of probiotics and how they can help with weight management, improve well-being, and reduce the incidence of heart disease and other degenerative illnesses.”

Consumer access to information

In terms of traceability and transparency, Driscoll said that buyers now require manufacturers to give them access to information such as sourcing policies, product nutritional information, and even policies on human rights. 

“At the same time, technologies such as sensors, data analytics and digital software are enabling companies to use data for making better decisions, as well as improve their supply chain traceability, logistical efficiency and visibility of supply chain risks,” he said.

He cited as an example the partnership between IBM, Walmart and Beijing-based Tsinghua University to develop blockchain technology designed to trace the pork supply chain in China to be able to deal with the lingering food safety concerns.

“Other companies, including Nestlé, use quick response codes on foods that allow consumers to scan and visualize production and nutritional information, aiding sustainable decision-making. If the technology goes mainstream, it would allow consumers to respond instantly to sustainability incidents, such as pink slime, the Rana Plaza disaster, or haze from palm plantations in Southeast Asia,” Driscoll said.

Mark Driscoll, Associate Director, Sustainable Nutrition, Forum for the Future

Circular economy

On the growing trend for a more circular economy in this sector, he explained that with the rising population and scarcer agricultural land there is a growing competition for the by-products of the food and drink industry. Many enterprises now see the value of repurposing waste as a source of new revenue streams.

Driscoll has also seen a move towards a regenerative approach to dairy agriculture.

“The growing global population is putting increasing pressure on the land to provide enough food, fuel and fibers. At the same time, key ecosystems – many of which are vital for a healthy dairy industry – continue to decline, partly due to climate change impacts.  The situation is so severe that we’re rapidly approaching a point of “peak everything” – from depletion of soil quality and water stress, to rapid rates of extinction.”

And also gaining momentum is the “beyond certification” concept whereby a more holistic, landscape approach is the preferred tactic over the farm-by-farm based approach when it comes to agricultural sustainability.

“Within a landscape approach, we look at how businesses can restore local ecosystems within a specific location whilst also improving livelihood and community outcomes. The most progressive businesses are now recognizing the need to be “net positive”, rather than “doing less bad.”

Nutrition as key issue

In South East Asia, consumers are said to be more health-conscious. Consumers also purchase beverages because they are a convenient source of nourishment in-between meals, and popular brands are affordable. All these are leading to the growth of the dairy beverage market.

“I expect to see a modest increase in demand for dairy beverages in South East Asia, spurred on by the growth of the middle class. In many parts of Europe and North America I suspect demand will plateau, particularly as consumers look increasingly for more plant-based alternatives,” Driscoll said.

He said that “the growing demand in South East Asia presents a real opportunity to focus on improving child nutrition and boost the livelihoods of the millions of smallholder farmers scattered across the region.

To make this happen, it is vital to ensure that these farmers, including the millions of women who contribute to the growing dairy sector, are adequately rewarded for their work and are given the opportunity to improve their incomes further by involving them in the processing of dairy products.”

Dairy beverages are among  convenient sources of nourishment in-between meals

Opportunities for innovation

Driscoll observes that the dairy sector offers many opportunities for innovation such as launching new healthier products to meet rising consumer demand. But he thinks that innovation is more than just product development.

“It is about coming up with new ways of thinking and doing, about finding different forms of collaboration and rewriting old business models,” he said. The industry is crying out for innovation so that it can thrive, not just now in the short term, but over the next 100 years and beyond.”

Driscoll said that to ensure the best possible outcomes, the dairy industry first needs to respond to some quite significant changes in the external world. He said Millennial consumers are increasingly driven by health and ethical-based concerns which results to a significant shift to more vegetarian and flexitarian diets. They reduce their meat and dairy consumption in favor of plant-based alternatives.

Sustainability challenges in Asia

Within the dairy beverage sector, the Asian region faces serious sustainability challenges which make it imperative to find novel methods to food supply chains.

In India, where more than 75 million dairy farms produce 20% of the world’s milk, spoilage and contamination are real problems that need to be addressed. As Driscoll explains, “milk needs to be chilled within the first four hours before it becomes unsafe to drink, and because of the dispersed nature of many of the country’s farms, this is often not possible.

New e-commerce models such as Supr Daily allow for localized production and consumption, shortening supply chains and linking farmers and producers.”

He also cited New Zealand as another country in the region facing sustainability issues.

“Dairy is a huge force in the New Zealand economy, with the country exporting almost all of its dairy products to China and other markets, many in Asia. Expansion of dairy farming across the country has led to a severe degradation of water quality and become a divisive political issue. At the same time, in a push to secure future production, Chinese dairy businesses have bought up land and installed farms throughout the country, competing with the local pasture-based models,” Driscoll said. “How New Zealand manages the water quality and foreign land ownership issues will have a big impact, not just on its economy, but on the path for sustainable dairy in the region.”