A number of starring themes are expected to influence dairy product development throughout this year, given rise by consumers’ appetite for new flavor experiences and emergent hero ingredients. In NPD wher these trends “collide,” a unique opportunity for brand storytelling is presented. The rising popularity of the category for fermented dairy blended with exotic ingredients, for instance, can be attributed to both claims of boosted gut health and opportunities for flavor discovery. It speaks to key players in the space to explore how traditional dairy is breaking out into novel segments.

Fermented milks are trending in the dairy space, particularly because of their probiotic virtues. That leads to the fast expansion of the “ethnic fermented milks” segment, such as lassi from India, ayran from Turkey, laban from Lebanon, skyr from Iceland and straggisto from Greece. “One of the advantages of these products is that they pair very well with exotic and ethnic flavorings, which are a growing trend – for instance, coconut, matcha and chai are popular tastes for Indian lassis,” remarks Kévin Bangratz, Marketing Researcher at Prova.

Today’s adventurous consumers are keen to seek explorative eating experiences. In line with Innova Market Insights’ number seven trend for 2020, “Hello Hybrids,” highlights that they are highly receptive to hybrid products. In this space, successful launches adapt the archetype “the crazier, the better.”

“There is a notable interest on the market in ‘hybrid’ solutions based on nuts, grains and seeds, which combine the benefits of dairy and plant-based products to create something delicious. One such example is a delicious porridge topped with protein-rich yogurt,” Eric Souza, Global Category Manager Dairy & Dairy Alternatives at Agrana.

Fifty-six percent of global consumers say that stories around a brand influence their purchase decision, according to Innova Market Insights Data. The market researcher has crowned “Storytelling: Winning with Words” as its Top Trend for 2020 expected to influence NPD across the board. “These food stories add authenticity and brand loyalty to a product, they just need to be communicated properly,” notes Lavanya Venkateswar, Product Manager at Univar Solutions USA.

“We’re building a portfolio of ingredients from suppliers with some great stories to tell, whether it’s organic seaweed sourced from the pristine waters of the Outer Scottish Hebrides or agave inulin from a co-operative of Mexican farmers,” she explains.

In the region of Europe, the Middle East and Africa (EMEA), Univar is seeking out suppliers with a story centered on sustainability. “Our new lactose-free milk powder supplier is set to be carbon neutral by 2035 through a number of specific practices including smart grass cultivation, using manure as biogas and offering plant-based packaging,” she adds.

Flavor trends and novel ingredients
Dairy consumers are growingly sensitive to flavor variations, particularly when these are positioned as premium offerings. “That is why single origin vanillas are increasingly used in dairy products, particularly in yogurts and ice creams: vanillas from Madagascar, Tahiti or Papua New Guinea are among the trendiest ones. These ingredients capitalize on the terroir, which is a good way to make more traceable and authentic products,” details Bangratz.

Other overarching trends in the dairy category are centered around health and wellness, leveraged by products touting a clean label. “This is taking shape as increased protein and functional ingredients for an added immunity boost. We are also seeing special inclusions in dairy beverages, such as matcha, fruit, cereal, vitamins/minerals; more indulgence and fun with creamier mouthfeel in yogurt and carbonation in dairy protein drinks,” says Anne Sinha, Director of Global Protein Segments at CP Kelco.

Agrana, meanwhile, is currently working on ways to further enhance the health benefits of yogurt. “One example is the strengthening of the innate immune system via botanicals and herbal extracts like Echinacea and green tea extract. To promote more natural formulations, we have products which are made only from fruits, and are free from added ingredients like stabilizers and coloring,” says Souza.

Regional trends and market challenges
FoodIngredientsFirst also speaks to the dairy suppliers about various regional trends of notable influence. “Since the early 2000s, the Chinese government has supported the consumption of dairy products for its nutritional content, namely protein. Recently, they issued new advice (called the ‘milk and milk-related products consumption guidelines for Chinese residents’) suggesting that dairy can boost immunity. This provides stronger momentum for the consumer to increase their daily intake of dairy products,” says Anne Sinha, Director of Strategic Segments at CP Kelco.

“In the US and Europe, we have seen sales surge in dairy alternatives. In dairy alternatives, the trend has become about what the product doesn’t have. ‘Free-from’ seems to be the most touted attribute so that is prompting formulators to seek out multifunctional ingredients, such as our gellan gum. Fermentation-derived gellan gum addresses protein suspension, stabilization, texture and mouthfeel in one nature-based ingredient,” she elaborates.

Different regions have their own set of challenges, but we have seen how they’ve turned them into unique solutions and developed products to adapt. “For example, China is poised to become the largest dairy market in the world. However, chilled chain infrastructure is not in place to cover the vast distances required. Manufacturers have solved this through the development of ambient products, especially ambient drinking yogurts that can be transported easily without refrigeration and have a long shelf life,” says Sinha.

Venkateswar of Univar comments that the dairy sector is “seemingly under siege” in many Western markets following the rise of “conscious consumerism.” “Increased availability of information around health and intolerance and changes in consumer beliefs around sustainability and animal welfare has seen certain segments of the dairy market suffer. While animal welfare is the most common concern regarding traditional dairy consumption, what shoppers want and what shoppers buy can be completely separate things,” she explains.

Also in Europe, the classic dairy product segment is reaching saturation. “Further development of standard products is being given added value through claims like high protein which is seen in Skyr or Greek yoghurt. Furthermore, products including probiotics have gained a lot of acceptance in this segment and consumers associate it with healthy food, even though there are no direct health claims,” says Sierk Weisser, Managing Director at DP Supply, a subsidiary of DMK.