In 2023, global retail sales of plant-based dairy were estimated to be
worth $23 billion. Milk is currently
the most widely consumed and
favored plant-based dairy product
by consumers; in 2023, its global retail
market was valued at $18.8 billion.
There has been a noticeable increase
in the category on a large scale as
consumers use plant-based dairy
substitutes to make other products like
yogurts, ice creams, coffee creamers,
and puddings.
Veganism is becoming more and more
popular worldwide, and consumers
are demanding clean-label products
with labels like “non-GMO,” “cruelty-free,” and “lactose-free.” Companies
are taking steps to meet the growing
demand and make plant-based dairy a
mainstream food option. For example,
Starbucks recently discontinued
charging an additional fee for plant-based milk at company-owned stores
in the United States and Canada, which
can be viewed as a significant step
toward addressing price parity issues
in the plant-based dairy industry.
Regional plant-based dairy
market
Plant-based dairy products such as
ice cream, yogurt, and cheese are
not widely consumed in Asia-Pacific.
However, plant-based milk is very
popular in APAC; its retail market was
around ~$9 billion in 2023, with a
total market of ~$13.5 billion. In 2023,
yogurt’s retail market share in the
region was valued at $78 million, and
ice cream stood at $65 million. APAC
accounts for 40% of the global market
share for plant-based dairy products,
primarily because consumers in China,
Japan, and South Korea have long used
plant-based milk (almond, rice, and soy)
in their diets.
~36% of Americans are lactose
intolerant, a number that has
significantly increased in recent
years and contributed to the growing
popularity of plant-based dairy
products in North America. As of 2023,
North America holds the second-largest
market share, with 25.6% of the global
retail market, valued at $5.83 billion. At
$4.1 billion, milk holds the largest share
among dairy products. In 2023, the
market for plant-based dairy ice cream
was ~$0.8 billion. This is somewhat
surprising given that in other regions,
yoghurt is the second largest market
and ice cream is far down the list.
When compared to meat alternatives,
plant-based dairy substitutes are
becoming more and more popular in
Europe. The EU accounts for about 25%
of the global market for plant-based
dairy products; of these, milk is the
most popular, with a market share of about $3.8 billion, while yogurt comes
in second. This is only because now
customers are looking for products
with additional functional benefits,
like probiotics and improved health, as
they grow more health-conscious. With
a market share of about ~$0.4 billion
as of 2023, plant-based cheese is also
gaining popularity in Europe. However,
since 2018, the price of plant-based milk
has increased by nearly 15% and nearly
doubled in Europe, reaching about
$2.21 per pack.
Plant-based dairy sources
and the role of sustainable
value chain
Oats, soy, almonds, and quinoa are
common plant-based dairy sources
due to their easy accessibility, allowing
lower production costs. Additionally,
studies have shown that these sources
are the most effective at mimicking the
flavor and texture of dairy products.
The varieties and usage of these
sources, however, vary by region. In
China, soy milk is widely used, whereas
in the United States, almond milk is
preferred. Almond milk sales have,
however, somewhat decreased in terms
of both quantity (down 9.4%) and
revenue (down 8.5%). In contrast, oat
milk has remained popular, seeing a
0.2% increase in volume despite steady
sales. Revenue from soy milk has also
slightly increased (1.1%), despite a
3.6% drop in volume.
Since these dairy substitutes are not
produced chemically, their source is
unquestionably sustainable, as is their
whole supply chain. Compared to dairy
products, which need to be pasteurized,
homogenized, and refrigerated for
storage, dairy alternatives are made by
soaking, blending, and filtering milk,
which uses less energy and produces
fewer greenhouse emissions. For
instance, soy milk produces 0.21 kg CO₂
equivalent per 250mL, which is roughly
63% less than dairy milk, which
emits the highest GHG at 0.56 kg CO₂
equivalent per 250mL.
In order to create dairy substitutes,
businesses are also experimenting with
interesting new sources. For instance,
the Chinese company Protoga Biotech
has created milk made from microalgae
that is high in protein and lutein and
free of lactose and cholesterol. This
microalgae-derived milk will soon be
commercialized and available in the
market.
Trends and new
innovations in plant-based
dairy
The growing plant-based dairy market
is seeing significant innovation, new
product launches, performance-enhancing ingredients, and the rise of
startups as key industry players across
the value chain.
Many innovations have occurred in and
around cheese. For instance, ADM (US)
has developed a plant-based cheese
that functions similarly to traditional
cheese. The cheese was created by the
company using Texperien® starch, a
unique ingredient system that makes
the cheese smooth, easy to slice, and
able to melt like real cheese. Armored Fresh (US), which specializes in plant-based cheese alternatives, recently
introduced Grated Parmesan and the
world’s first Grated Kimchi Parmesan.
The company mimics the texture and
flavor of traditional cheese by using
specialized technology to replicate the
traditional grating process for hard
cheeses. A food technology startup
called Faerm (Norway) uses traditional
fermentation methods to create plant-based cheeses that have the texture and
flavor of dairy cheese from plant-based
ingredients like soy milk. Ingredion
(US) created NOVATION® Indulge 2940,
the first functional corn starch that
is ideal for making dairy alternative
cheese.
Previously, the plant-based drinks
trend was centered on innovations for
adult demands; however, the focus has
shifted to children, with numerous
new launches this year. Kids-focused
plant-based dairy products are being
introduced by companies to meet
the growing demand from parents
regarding the nutritional value of
their children’s diets and for products
with additional functional benefits.
California Farms (US) has introduced
Complete Kids, a plant-based milk
designed especially for kids. It includes
fava beans, chickpeas, and peas as
sources of protein. Together, two
Brazilian companies, Nude. and Mãe
Terra (Brazil), have introduced the
Zooreta line of kid-friendly oat-based
drinks. Protein shakes called “Shake
Ups” have been introduced by Ripple
Foods (US), specifically designed to
satisfy the dietary requirements of
teenagers. Three Robins in Scotland
has introduced two fruit smoothies for
kids that are made with oat milk and
include vegetables for increasing the
fiber content (24–45%). Oatly (Sweden)
and Little Spoon (US) have introduced
unique overnight oat smoothies for
kids that are free of gluten, GMOs, and
other allergens. Oatly also launched
Oatgurt, a new plant-based yogurt, and
like traditional dairy yogurt, it contains
live bacterial cultures to give it a tangy,
fresh taste. This launch came in just
after the success of Oatly’s Organic Barista line in Germany.
In addition to advancements in plant-based dairy products, a new trend in
the market is the use of plant-based
dairy products with low or no added
sugar. The USDA recently announced
plans to limit added sugar in school
meals, capping it at 10% of weekly
calories by fall 2027. This will require
packaged items like milk and yogurt
to be low or zero sugar. This is largely
due to the stricter regulations on
sugar reductions, which are causing
companies to launch products with no
or low sugar claims. 50 other countries
have also introduced sugar taxes to
reduce the consumption.
Recently, Forca Foods (US) made an
interesting innovation by launching
watermelon seed milk, branded as
MILKish, free from soy, nuts, sugar, and
artificial additives. Sproud, a Swedish
pea milk brand, has introduced Barista
ZERO, a new product that has no added
sugars or sweeteners. Their products
are free of common allergens and are
made from yellow split peas. NotCo
(Chile), a plant-based food startup,
has introduced sugar-free Not Shake
Protein. Meurens Natural (Belgium) has
launched two oat bases with extremely
low sugar content: Sipa-Oat 17 (organic)
and Natu-Oat 17 (natural). NewMoo
(Israel) is developing casein protein
using molecular farming technology for
plant-based dairy alternatives.
Conclusion
Even though plant-based dairy is
gaining popularity and is a viable
option, it cannot overtake traditional
dairy products as of now. Major
economies have recently experienced
and continue to experience inflation,
and the cost of plant-based milk is
nearly double that of dairy milk, causing
customers to seek out more affordable
options. Plant-based dairy products are
said to have low nutritional efficiency,
and the body is unable to fully absorb
all of the nutrients they contain.
Although there is a clearer need to
overcome the obstacles, the market
and the number of such products are
growing at an unprecedented rate. It
would be fascinating to observe how
technology and trends influence the
developing future of plant-based dairy
products.
***
This article was originally published in December issue of Food and Drink Industry Magazine.
