Dairy giants invest in plant-based alternatives

Dairy alternatives stir up the beverage market

From spooning coconut ‘yoghurt’ onto cereal, to steaming oat ‘milk’ for coffee, consumers are lapping up plant-based dairy alternatives. The trend is particularly strong in the US, where sales have leapt in recent years.

In the last five years, the value of plant-based dairy alternatives in the US has grown by 35%, according to Euromonitor. This contrasts with a 10% decrease in dairy milk sales over the same period.

At first glance, the trend defies logic; compared to the alternatives, dairy is cheaper, more nutritious, and – many argue – has a superior taste. Despite that, more than a third of Americans are actively trying to incorporate more plant-based foods, including meat and dairy alternatives, into their diets. The attraction of these product groups obviously extends beyond vegetarians and well into the mainstream.

Is the taste the thing?

Recent surveys by Comax Flavors and Nielsen indicate that when people consider switching to plant-based proteins, they consider health and wellness factors, including a perceived need to consume less animal-based products. These factors are intriguing. The United Nations’ Food and Agricultural Organization continues to endorse dairy products as an important source of dietary energy, protein, fat, vitamins and minerals.

Several studies suggest that some plant-based ‘milks’ do not perform as well as conventional dairy products in taste tests, and that these alternatives are generally less nutrient dense, cost more than conventional dairy products, and have relatively long ingredient lists.

“Consumers are increasingly looking at food labels”

- Tom Bailey, RaboResearch

“This is reassuring for the dairy industry,” notes Tom Bailey, Executive Director, Dairy for RaboResearch. “These challenges are not easy for dairy alternatives to overcome, and consumers are increasingly looking at food labels.”

An expanding range of plant bases

Soy, almond and coconut currently dominate the US market for alternatives, with oats becoming more prominent in Europe. An increasingly popular choice is pea ‘milk’. In 2015, Ripple Foods released a range of liquid plant-based ‘milks’ made from yellow peas. The company claims that their product provides more calcium and vitamin D and the same amount of protein as dairy milk, but only half the sugar.

This diversity in potential plant bases gives consumers access to a wide range of alternative products. They can exercise a lot of flexibility in purchasing, based on the taste, mouth-feel, price, and nutritional profile they are seeking.

Almonds destined for ‘milk’ not marzipan

Alternative acquisitions

Some dairy operators are positioning themselves to take advantage of the forecast growth in the plant-based alternatives to their traditional product.

French dairy giant Danone added several categories of alternatives to its product line when it acquired WhiteWave in April 2017. Ironically, US anti-trust legislation required Danone to divest itself of its organic yoghurt business to finalize the deal.

At around the same time, Dean Foods, one of the largest dairy companies in the US, acquired a minority stake in Good Karma Foods. The acquisition allowed Dean to add flaxseeds-based dairy alternatives to its product line, complementing its existing soy range.

Valio, the largest dairy cooperative in Finland, has announced that it will be launching an oat-based beverage and yoghurt in Finland and Sweden later in 2018.