Natural Products Insider

JUL-AUG 2019

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16 INSIDER July /August 2019 Demand for dairy alternatives is giving conventional dairy a run for its money, and causing innovation and disruption in the marketplace. Increased interest in these products stems from many drivers, including the avoidance of dairy allergens; desire for clean label products; compatibility with vegetarian, vegan and fl exitarian lifestyles; and concerns about sustainability and animal welfare. Global sales of dairy alternatives reached nearly US$12 billion in 2017 and are expected to skyrocket to $41 billion by 2025, according to Grand View Research's January 2019 "Dairy Alternatives Market Size, Share, Industry Trend Report 2019-2025," which noted rising consumer focus on nutritional values such as low calories, and that high proteins and vitamins offered by milk substitutes or dairy analogs will likely have a positive impact on the market. Consumer Preferences Shifting According to Mintel's "The Protein Report - Meat Alternatives in the US," published January 2017, 46% of Americans believed plant-based proteins are better for people than animal-based proteins, and 76% said plant-based foods are healthy. Consumers purchased plant-based alternatives for several reasons, including their desire to avoid processed foods (39%), manage weight (31%) or promote muscle growth (16%)—all arguably health-related reasons that have the capability to boost dairy alternative sales. "While less than 10% of consumers identify as vegan or vegetarian, a growing number are pursuing 'fl exitarian' or 'lessitarian' eating habits," commented Pam Stauffer, global marketing programs manager, Cargill Inc. This shift in consumer preference is putting the spotlight on plant-based ingredients and driving innovation across a multitude of product categories at the retail and restaurant levels. In fact, Mintel's "Food & Drinks Trends 2017" reported a 25% increase in vegetarian product launches between 2012 and 2016, and a 257% increase in vegan options during the same time. "According to Mintel, in the last 12 months alone, there have been 4,662 new products launched with a dairy-free claim globally, and the U.S. accounts for just under 22% of these launches," noted Anne Marie Butler, Edlong Corp.'s research and development (R&D) applications manager, Europe. A 2018 Nielsen study commissioned on behalf of the Plant Based Foods Association (PBFA) found sales of plant-based foods grew by a whopping 20% in the 52 weeks ending June 16, 2018, reaching a total of $3.3 billion. With total food sales growing at just 2%, the data depict a picture in which plant-based products are no longer just a niche market. "The new data confi rm what we are hearing and seeing every day from our members: Sales are up, investment is increasing and new jobs are being created in the plant-based foods industry," Michele Simon, PBFA executive director, said in a statement. According to Nielsen data, plant-based milk continues to be a leading category, representing $1.6 billion in sales at 9% growth in 2018—up 3% from the previous year. Other plant-based dairy alternatives (excluding plant-based milks) including cheeses, creamers, butter, yogurts and ice creams are experiencing explosive growth, up 50%. Plant-based yogurts rang up $162 million in sales, up 55%, followed by plant-based cheeses at $124 million (43%) and plant-based creamers at $109 million, up an impressive 131%. However, improvements in plant-protein formulation options, coupled with greater formulation expertise, offer product developers the opportunity to capitalize on this consumer appetite for plant proteins in a variety of dairy alternative products, added Christine Addington, senior dairy technical service specialist, Cargill. "Plant-based milks certainly pioneered the category, and we see heightened interest now spreading to other dairy segments, including plant-based yogurts, cheeses and ice cream," she said. Michael Ivey, national sales director, Butter Buds Food Inc., agreed, noting he's seen increased demand for dairy alternatives in the snacks and seasonings, nutritional beverages/bars, ice cream and frozen yogurts categories that have been historically dominated by dairy. "Consumers want the same eating experiences they get with using dairy, only without the allergen," he said. | Global sales of dairy alternatives reached nearly US$12 billion in 2017 and are expected to skyrocket to $41 billion by 2025. | Plant-based ingredients can present challenges because they often lack dairy-based characteristics that affect mouthfeel and taste. | Dairy alternatives are popular in the snacks, seasonings, beverages, ice cream and frozen yogurts categories. Dairy Alternatives Sparking Innovation and Disruption in the Market by Judie Bizzozero INSIDER's Take Food & Beverage: Dairy Alternatives Milk Additives - Liquid Nondairy Creamers Plant-Based Milk - Oat Milk, Plain Yogurt - Nondairy Coconut Yogurt Yogurt - Nondairy Other Milk Additives - Flavored Liquid Nondairy Yogurt - Nondairy Almond Yogurt Cheese - Alternative/Nondairy Plant-Based Milk - Cashew Milk, Plain Plant-Based Milk - Other 1,012% 376% 368% 182% 168% 138% 110% 85% 71% Share Growth of Non-Dairy Alternatives from 2016 to 2018 Source: New Hope Network's NEXT Trend Database ** Based on a total market size of about 400 products representing the dairy alternative space at Expo West 2018 compared to Expo West 2016

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