Dairy alternatives are on a rise as consumers are increasingly going dairy-free, particularly when it comes to fluid ‘milk’ used on things like cereal or in coffees. More recently, biotechnology has entered the arena, brewing milk proteins through biofermentation. The time is right for the dairy sector to reflect on the success of alternative dairy products and to consider applying those lessons to dairy, according to the latest RaboResearch dairy report Dare Not to Dairy — What the Rise of Dairy-Free Means for Dairy… and How the Industry Can Respond.
Dairy alternatives have competed in the dairy space for decades, but competition has intensified as dairy alternatives broaden in types, styles, and categories of product. Global retail sales growth for dairy alternatives has soared at a rate of 8 percent annually over the last ten years. With retail sales valued at USD 15.6bn, dairy-free ‘milk’ represented 12 percent of total fluid milk and alternative sales globally in 2017, according to Euromonitor.
Nutrition, price, and flavour tend to favour dairy, but changing consumer perceptions around health, lifestyle choices, curiosity, and perceived sustainability are increasingly drawing more people to select ‘dairy-free’ products.
“Global demand for dairy is expected to grow by 2.5 percent for years to come, with demand for non-fluid categories offsetting weak fluid milk sales,” says Tom Bailey, RaboResearch Senior Analyst – Dairy. “While it’s not essential to diversify into dairy alternatives, it would be wise for the dairy industry to at least learn one thing from the success of dairy alternatives, which may be putting the consumer first and trading in the old grass-to-glass model for glass-to-grass.”
The challenge for dairy lies mostly in fluid milk, where retail sales in western Europe (USD 18.6bn) and the US (USD 12.5bn) declined at an annual rate of 5 percent and 3 percent, respectively, in the five years to 2017, according to Euromonitor.