Plant-Based Dairy Alternatives

Wednesday, September 20th, 2017

With consumers becoming increasingly health-conscious, more are opting for plant-based dairy alternatives to reduce their dairy intake, as well as to benefit from the multiple advantages they offer. By Aslam Shaikh, research analyst, food and beverage domain, MarketsandMarkets

Plant-based dairy alternatives can be defined as dairy substitutes that are similar to certain types of dairy-based products in terms of texture and flavour. They have the advantage of low-fat, low-calorie, and low-cholesterol content, which appeals to health-conscious, vegan, and lactose-intolerant consumers.

Dairy alternatives are a significant part of functional food and beverages that are dairy-free or do not contain lactose and have medical or health benefits especially, for the lactose-intolerant population. Globally, the multi-functionality of dairy alternatives has led to their large-scale adoption in numerous applications.

A dairy-free diet is adopted by consumers due to reasons such as rising concerns about lactose intolerance, allergy from milk or milk-based products, shift in consumption trend towards vegan diets and lifestyles, and growing awareness about animal rights. The nutritional benefits of dairy alternatives, along with increasing preference for vegan diets are the major reasons that stimulate market growth. The market for plant-based dairy alternative products, that are free of animal proteins, has witnessed a significant growth in the last couple of years, which is followed by a decline in dairy milk consumption.

A Growing Sector

The global dairy alternatives market is expected to mark a growth of 15.5 percent between 2015 and 2020 based on the strength of diversification in market. In 2015, the global market size of dairy alternatives was estimated at US$9.50 billion and the Asia-Pacific region was the largest market, at US$4.23 billion. China dominated the Asia-Pacific dairy alternative market and is projected to grow at a compound annual growth rate of 20.2 percent.

Soy milk is the most significant contributor to the overall dairy alternatives market, by type. Increase in health awareness, growing preference for vegan diets, and changes in lifestyles have stimulated growth in the dairy alternatives market. Intolerance to lactose and prevalence of milk allergy are also drivers of this market. However, the high cost and unavailability of raw materials are some of the restraining factors towards market growth.

In 2010, the National Dairy Council launched a new lactose intolerance microsite with the help of American dairy farm families and dairy importers to increase awareness regarding lactose intolerance symptoms and prevention measures.

According to a study by the US Department of Agriculture in 2011, dairy products are the major source of calcium, providing about 70 percent of the calcium available in US food. The American Academy of Pediatrics supports the use of dairy products as an important source of calcium and other nutrients to facilitate bone mineral health and growth in children and adolescents. If dairy products are eliminated, other dietary sources of calcium need to be sought. Due to these factors, companies offer soy milk beverages fortified with calcium and vitamin A and D, which are considered a part of the milk or milk products group, since they offer similar benefits.

Dairy alternatives are used in various food applications such as cheese, desserts, snacks, bakery, and confectionery. With the increasing awareness among consumers, the market for dairy alternatives is growing as consumers prefer balanced diets and food that not only satiates hunger but is also healthy.

The food segment dominated the dairy alternatives market compared to beverages, and is projected for higher growth. Considering the fact that health and convenience are a consumer priority in choice of food, several companies have diversified their food offerings with products containing almond milk, coconut milk, and soy, individually or in combination.

Plain-unsweetened non-dairy milk is the most popular formulation in the global dairy alternatives market. Plain-unsweetened products of dairy alternative brands such as Silk, Alpro, So Delicious, and others are available, globally in different flavours such as chocolate and vanilla. Furthermore, consumers are also inclined towards other formulations such as calorie-free, fat-free, and cholesterolfree dairy alternative products.

Therefore, the growing market for dairy-free products is opening up opportunities for applications in the dairy alternative food products market.

Alternative Dairy Sources

The sources of dairy alternatives include soy, almond, rice, and others such as coconut, hemp, hazelnut, oat, and cashew.

The most popular and recognisable one is probably soy milk, which is produced by soaking dry soybeans and grinding them with water. This bean extract of soybeans comes in sweetened, unsweetened, and flavoured varieties that are completely lactose free. It is a protein-rich alternative to cow’s milk, contains lower cholesterol, but is higher in omega-3 and omega-6 fatty acids and richer in vitamin B as compared to cow’s milk; the only limitation is it lacks in calcium.

Following in second is almond milk, which is naturally lactose-free and contains lower level of protein than dairy milk and soy milk, and is also free of cholesterol and saturated fat. It has a pleasant flavour and creamy texture similar to dairy milk. It contains a high amount of vitamin E and lower level of calories in comparison to dairy milk but lacks in other vitamins, minerals, and fatty acids present in dairy milk.

Rice milk falls under the category of grain milk that is prepared with filtered water, brown rice syrup, brown rice starch, and thickening agents. Rice milk also has a sweet taste, which is generated by a natural enzymatic process that converts the carbohydrate into glucose. Since it contains no animal products, it is suitable for both vegans and vegetarians.

Coconut milk and cashew milk are the closest milk alternatives with a texture similar to that of whole milk. They contain fibre and iron, but is higher in saturated fat and calories than cow’s milk.

Hemp milk is rich in protein, contains omega-3 and omega-6 fatty acids, vitamins A, E, B12, folic acid, and is packed with minerals, but lacks calcium.

Oat milk and hazelnut milk are richer in fibre as compared to other milk alternatives.

Today millions of people are opting for milk alternatives because of their perceived nutritional benefits ranging from high levels of protein and essential vitamins to healthy fats and antioxidants.

A Competitive Landscape

Companies are involved in research and development to formulate existing products to satisfy customer requirements. Rising demand for dairy-free products and dairy alternatives in different forms and formulation to suit consumer requirements drive companies to develop diversified products.

The key players in this market use strategies such as expansions and investments, new product launches, agreements, and acquisitions to strengthen their position in the market, out of which new product launches and expansion are the dominant strategies. Cashew and coconut milk are gaining popularity in US with major players launching new products incorporating these plant-based dairy alternatives.

Industry players are focused on developing new, improved, and innovative dairy alternatives in the market and extending the product offerings under their respective dairy-free product brands. While some of the major players also concentrated on expansions, which include developments of production plants, others aim at establishing distribution channels, research and development centres, and global service centres to help customers by providing product-based solutions.

Strategic acquisitions, agreements and joint ventures by major manufacturers have helped them in strengthening their product position and broadening their product portfolio with greater geographic presence. This approach has resulted in the industry’s growth, especially in the emerging markets of China, Japan, Australia, and New Zealand.