Five trends shaping dairy products and their alternatives

Soaring inflation is leading to positive growth in the present value of dairy products and alternatives in 2022, although there has been a slight decline in retail sales volume. This growth is attributable to the significant increases recorded in retail prices in the industry over the past 12 months, with a variety of contributing factors, including the increase in the price of milk. Additionally, plant-based dairy products continue to boost growth as consumers associate these alternatives with health. Product innovation around functionality, durability and elevated experiences will provide additional room for growth. Five key trends will shape global dairy products and alternatives through 2027.

Inflationary pressures force changes in business strategies and consumer buying behavior

Driven initially by increased consumer demand in the wake of COVID-19, milk inflation is compounded by rising input costs. After already strong growth in 2021, farmers are facing rising costs to produce dairy products, including fertilizer, feed and fuel, supply chain bottlenecks and rising costs. transport costs.

One of the ways consumers deal with inflation is to look for a private label. Turkey has been experiencing significant inflation for more than a decade, this trend being linked to the increasing share of private label in dairy products and alternatives. The growing demand since the pandemic and the resulting economic fallout are driving sales of existing private label products and encouraging supermarket chains like Migros and Carrefour to invest in new launches to meet this strong demand. In 2022, the share of private label should reach nearly 30%.

Source: Euromonitor International Passport Dairy Products and Alternatives and inflation data

Plant-based dairy exhibits healthy growth, driven by plant-based cheese

Plant-based dairy products are expected to achieve healthy growth of 9.4% in 2022 in current terms. Plant-based cheese is the main driver of this trend with growth of 21% in 2022 in current terms, but from a low base as it is still in the early stages of its development. Major players such as Groupe Bel and Upfield are expanding their distribution and launching new variants of plant-based cheese in 2022. However, there are challenges for plant-based cheese, as many of these products have some type of vegetable oil as an ingredient. key. , which is another reason for the growth in the category’s value. All types of oil are experiencing a significant increase in price due to shortages due to the war in Ukraine, resulting in a significant increase in the average unit price.

Plant-based dairy products.pngSource: Euromonitor International Passport Dairy Products and Alternatives

Functionality remains at the center of innovation, with new frontiers targeting states that need it

Consumer interest in fortified dairy products and alternatives with function claims is growing, as many people seek to supplement their diets with immune-boosting nutrients and improve gut health. At the same time, consumers are increasingly attracted to functional products positioned to help relax, promote sleep and improve mood to deal with ongoing uncertainty, stress and anxiety. Additionally, there is dynamic innovation in the craving space using different functional ingredients, with plants being one of the most popular. So Delicious Dairy Free, a company owned by Danone North America, launched a new line of yogurt alternatives in 2022, featuring vibrant botanical extracts that aim to facilitate mindful micro-breaks throughout the day.

Growing awareness of the broader health benefits of a healthy gut that go beyond digestion, in relation to the gut-brain axis, is also driving interest in this space.

Sustainability remains at the heart of the dairy industry’s long-term strategies

Environmental concerns about the future of the planet are changing perspectives on dairy products and alternatives. Dairy and ingredient players are constantly working to improve their long-term sustainability credentials, from the fight against carbon neutrality to food waste. For example, dairy company Neutral claims to be the first carbon-neutral food company in the United States by measuring, reducing and offsetting its carbon footprint. Additionally, ingredient player IFF has developed a new line of bioprotective cultures called HOLDBAC, to keep the quality of fresh dairy products intact at the end of their formal shelf life, so they continue to look, the taste and the feeling of freshness.

Home-centric experiences persist post-pandemic

The recovery from pandemic-related shocks in consumer foodservice volume for dairy and alternatives continues in 2022. However, sales volume remains below pre-pandemic levels and consumer incomes continue to decline. be compressed due to the inflationary environment. As consumers engage in fewer out-of-home activities than pre-pandemic and reduce lifestyle spending, dairy and alternatives positioned for elevated consumption experiences at home are growing. For example, Kikkoman is promoting new dining occasions and experiences for its soy beverages in Japan. By freezing its soymilk bricks, the product can be consumed as ice cream, or as a sweet pudding by adding gelatin and placing it in the refrigerator.

To dive deeper into these trends, please see the upcoming report: Global Dairy Products and Alternatives Market.

About Thomas B. Countryman

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