Creating truly innovative products, rather than variations or relaunches, is a challenge for dairy field players.
Given the global impact of the pandemic and its unprecedented impact on consumers behavior, the future of food and beverages in general is currently difficult to predict, and the dairy category is no exception. However, there is room for strategic product development: functional immunity products, high protein, dairy alternatives, low sugar, lactose-free, clean label and sustainability are just a few of the major trends in the dairy market.
The «Greek yogurt revolution» can be truly called one of the biggest trends in the recent dairy industry. Appearing on the North American dairy market in 2007, Greek yogurt remained a niche product for quite a long time and occupied only 1%. By 2020, the segment had sales of nearly $ 4 billion — more than half of the country’s yoghurt sales, according to Technavio.
Occasionally this type of fermented milk products with high protein content is bought by 40% of the population who care about their health. They transformed Greek yoghurt from farm or ethnic food vendors to supermarkets — a marketing triumph that now occupies more than a third of American dairy store shelves.
Ellenos, a Greek yogurt brand based in the US Pacific Northwest, has launched Ellenos Milk + Fruit. The company picked a perfect moment when the consumer is ready to taste the flavored Greek yogurt. It contains 50% less sugar and is available in 156 ml (5.3 oz) cups. 4 SKU (pineapple with ginger, cherry-vanilla, figs and raisins, apple and cinnamon) are already available at Whole Foods
Greek yoghurts jars are already well-liked by consumers, but newly-invented products in this category can be a real breakthrough.
For example, Clio Less Sugar are the world’s first dark chocolate coated Greek yogurt bars. These snacks combine the benefits of high protein yogurt and billions of probiotics.
Each bar (Clio currently has 7 SKUs — Peanut Butter, Strawberry, Vanilla, Honey, Blueberry, Espresso, and Coconut) contains 100 calories, just 1g sugar and 8g protein. Currently, Greek yoghurt bars are available for purchase on the company’s website and at Walmart for $ 22 for a pack of 10. In early 2021, it plans to expand its operations to Whole Foods and some grocery stores.
The company clearly demonstrates how you can introduce new product into a growing category and open new possibilities in the leading segment.
This optimistic growth in the healthy Greek yoghurt category does not mean that the life cycle of classic fermented milk drinks has come to an end. On the contrary, their sales have grown up 62% over the past year. And even in such a classic segment, there was also a place for innovation.
Danone North America is fighting food waste. The manufacturer has recently announced the Good Save product line, released in partnership with Full Harvest.
The company uses surplus food or “ugly” fruit that stores refuse to sell.
The new line will hit stores in the second half of 2021; the first Good Save yoghurt is going to be flavored with Meyer Lemons’ “salvaged lemons”. Danone has not yet announced in which countries the yoghurts will be sold.
ANNOUNCEMENT: We are preparing an overview about the “circular economy” and products made from food waste, processed, imperfect or by-products (peel, seeds, etc.) that are used as fertilizers or get disposed of. In keeping with the growing Upcycled Foods movement, they are now being made into regular foods and are becoming a powerful trend.
In a 2019 study, global supply, pricing and financial services company Czarnikow indicated that the plant-based dairy alternatives industry would grow to $ 35.8 billion by 2026, which is a large figure while the global dairy market is currently estimated at $450 billion.
Plant-based milk continues taking more and more places on store shelves and in consumers’ hearts.
What is driving this trend? Plant-based non-dairy products are perceived as being “better,” and many are marketed with additional health benefits and clean label positioning. For this reason, the popularity of dairy alternatives might be seen as part of a broader movement: increased demand for food and beverages that consumers perceive as simple and healthy.
There are a number of factors contributing to the rise of dairy alternatives, many of which are stronger motivators in certain regions and among specific populations. For example, while lactose intolerance is less common in North America, Australia, and Europe, it is extremely common throughout South America, Africa, and Asia.
A study by TATE&LYLE found that in the US, even non-lactose intolerant consumers often cite digestive health as a motivation for buying alternative dairy products: 21% reported an interest in milk that is easy to digest, and only 9% reported an interest in lactose-free milk
Vegetable milk is no longer something exotic. Although soymilk was once the dominant product in the segment, the choices for today’s consumers are enormous. They can choose from a dozen different offerings, including milk made of coconut, cashew, oat, almond (the most popular product in the NOAM region), and rice (a hit in the APAC and EMEA regions). This is not even a complete list of plant-based varieties.
Earlier, dairy alternatives were mainly produced by small companies. However, some of the world’s largest food and beverage producers are now actively entering the market. Beyond that, drinks are no longer the only offer — dairy alternatives are popping up in different categories such as yogurt and frozen desserts.
For example, Nestlé said they are developing a wide range of plant-based alternative dairy products that are nutritious, taste great and have a beneficial effect on the environment.
Among these new additions is Nesfit Sabor Natural, a vegetarian yellow pea protein drink fortified with vitamins A and D and containing as much protein (7 g) and calcium as classic cow’s milk.
Nestlé already has some decent experience with dairy alternatives. The Ninho Forti+ oat and pea-based drink in a cardboard box with a paper straw was the first to be launched by the manufacturer for the Brazilian market at the end of 2019.
In January 2020, Nesquik GoodNes, an oat and pea-based drink with a Nesquik chocolate flavor, was introduced to the US market. It has 40% less sugar compared to similar products in this category. And the food giant is not going to stop.
Nestlé currently offers other products made from rice, oats, soy, coconut and almonds. Examples include Häagen Dazs non-dairy ice cream, Natural bliss coffee creamer (for the US market), Nesfit rice and oat-based drinks, Starbucks non-dairy creamer (for the US), and, since last September in the UK, a vegetarian alternative to Carnation condensed milk, and a range of non-dairy cheeses to complement existing plant-based burgers.
Seems like dairy alternatives will soon dominate the market. According to Nielsen Scantrack, sales of oat, almond and soy products in the UK increased 239% between February 2010 and February 2020. Nielsen analysts said that since the heyday of consumption in the 1950s, 60s and 70s, per capita milk consumption in Foggy Albion has fallen by a third in 10 years.
The coronavirus pandemic has slightly adjusted this direction. Czarnikow analysts noted that during the isolation regime, sales of traditional milk rose sharply (in the United States by 476%), and sales of, for example, oat milk, which briskly added 30% each before the pandemic, fell. The reason for that is simple — classic milk is good for the immune system, and modern consumers literally sweep any products that take care of it off the shelves. All because of the COVID-19 epidemic, which gave a «second life» to milk.
Now analysts are talking about the fact that the growth rate of plant-based alternatives will slow down, while classic milk will increase. While plant-based alternatives will continue to replace liquid classic milk, plant-based milk, which can significantly replace other dairy products (cheese, butter, etc.), is in for a major breakthrough.
Manufacturers reacted to changing demand quickly. Dairy Farmers of America has launched «hybrid» milk. Live Real Farms is a lactose-free milk made from a 50:50 blend of plant and cow’s milk.
With 6-8 grams of sugar and 5 grams of protein per serving (compared to about 13 grams of sugar and 10 grams of protein for regular milk), the new product promises the flavor and nutritional benefits of regular milk with less sugar and fewer calories.
Test sales of Live Real Farms are available at several Minneapolis retailers including Walmart, Fresh Thyme and Cub Foods. Retail price is $3.99-$4.69. The main goal is to be closer to the consumer.
Oato has struck a national deal that will sell its products in reusable glass bottles nationwide on dairy platforms alongside traditional bottled milk.
The Milk&More deal means Oato oat milk will now be delivered by 7 a.m. across most of England in reusable glass pint bottles — the iconic symbol of milk delivery to UK residents’ doorsteps for over 100 years. Each bottle is used an average of 25 times and then the glass is recycled.
Take Two Foods sells barley milk at retail stores and cafes in the Pacific Northwest and Los Angeles. It has 4 flavors — Original, Vanilla, Chocolate, and Chef’s Blend. It contains whole protein, fiber, calcium, healthy fats, and 50% less sugar than other plant-based flavored dairy products and is made entirely from processed barley left over from brewing, entirely in the Upcycled Foods concept.
While the trend towards decreasing packaging is quite noticeable in other food segments, the process is reversed in the dairy alternatives market. Plant-based milk consumption is growing at a decent rate, so Nutpods are the American line of sugar-free cream, said that in the coming months most of the major retailers across the country will increase their packaging volume from their current 4 SKUs of single pint 16 ounces (470 ml) to 25.4 ounces (750 ml). This move reflects a wide shift in the herbal product category towards larger cartons.
More information you can find in Part II