Developments in the dairy and non-dairy sectors
3 Jan 2023
Copyrights: Innova Market Insights
Milking local knowledge and global concerns
In milk and yogurt innovation, dietary requirements, health boosts and free-from benefits are among the leading positionings for new products. However, there are, within this overall picture, noticeable differences across nations. While no additives/preservatives is the leading claim for launches in Germany and Russia, for France it is organic leading the way. Meanwhile, in the UK, 35% of launches over the last three years promote low, no or reduced fat, with a similar number focusing on protein content. On the other hand, half of new milk and yogurt offerings in Spain push a gluten-free message.
Country-specific trends and demands are proving equally important in dairy alternative drinks. A vegan positioning is proving popular in Slovenia and Germany, but less so in France. Meanwhile, The Netherlands and Italy strongly over-index Europe as a whole in plant-based launches. Over in the UK, consumers are less likely to see new products making no added sugar or lactose-free claims.
Beyond broad positionings and national differentials, global environmental issues impact innovation as much as ever. Over recent years consumer interest in local sourcing has risen consistently. A desire for greater sustainability is a key contributory factor in this. Innova Market Insights’ 2021 Trends survey saw a clear majority of respondents across 11 countries state that sustainability was a very or extremely important factor in their dietary choices. And 73% agreed or strongly agreed that they always go for the sustainable option. The lesson for brands – especially in the dairy alternatives market – is to emphasize environmental benefits with evidence-backed product stories.
A look at consumption
Consumption of dairy alternative drinks is far below that of traditional milk-based products. But per capita consumption of alternatives is forecast to rise at +4.6% CAGR (2021-2023) against +1.5% for milk drinks. In Europe, this is especially driven by patterns of consumption in the UK and Serbia. The 2021 Innova Category Survey found that 1 in 5 Europeans consume non-dairy milk drinks daily. That figure rises to over 50% for once-a-week use across every one of the 12 countries surveyed. Again, some countries buck the trend. Finland and Switzerland are forecast to see slightly greater dairy growth, showing once more the importance of local, as well as global, trends and preferences.
The overall pattern, though, fits with the growth in awareness of dairy alternatives. Europeans are most familiar with almond- and soy-based options, leaving scope to increase knowledge around other ingredients. Meanwhile, non-dairy milk is being normalized among younger consumers who have grown up in a world where these are more available and accepted. This points to long-term growth opportunities for the sector.
There are differences in flavor preferences for milk and alternatives. With dairy milk, unflavored is more desired but flavor is the second most important influence after freshness. Chocolate, unsurprisingly, comes out top for number of launches, with strawberry, vanilla and banana the other popular choices. There is also a growing variety of fruit flavors, with smooth tastes and nut options providing innovation in premium and indulgent products. For dairy alternatives, chocolate and vanilla dominate, with cocoa also appearing in a selection of new offerings. Activity in fruit flavors has declined, but caramel and coffee are leading the launches of added value blends. With yogurts, there is a shift toward fruit flavors in dairy launches, while brown flavors and vanilla are showing growth in the alternatives sector.
Overall, beyond the stability of this extremely well-established sector, the opportunities for growth and innovation are more than healthy. Whether milk-based or dairy-alternative, products in this arena tap into global areas of interest and concern. Health, wellness and sustainability are at the heart of many consumer drivers. At the same time, detailed knowledge of local markets allows a more targeted approach to new product launches. Combining the key elements of global and local influences leads to a wealth of openings to further develop an ever innovative and permanently popular category.
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