There is no doubt the plant-based space is booming with many opportunities to develop innovative dairy-free alternatives. From oat-based milk to vegan cheese and plant-based chocolate, the alt-dairy arena is packed with exciting NPD. Besides, the dairy alternatives space has also seen some major acquisitions and investments of late, demonstrating its future growth potential.

It is fair to say that demand for dairy alternatives is disrupting the conventional dairy industry. Although animal-based dairy is still popular, plant-based products are hitting retailers’ shelves at pace and are becoming a more significant part of foodservice menus. 

It is no longer simply about the avoidance of dairy allergens. A perfect storm of factors drives the success of the dairy-free alternative space.

FoodIngredientsFirst examines the key trends in the plant-based dairy-free space right now and looks at several companies making alternative dairy a major part of their portfolios. 

What is driving dairy-free?
While lactose intolerance remains a significant driver of alternative dairy products, there is a wealth of much broader themes that have become vital to conscious consumers demanding more from their food and beverages. 

Speaking to FoodIngredientsFirst, Catherine Bayard, global product manager, Dairy and Dairy Alternatives, at Givaudan, delves into some consumer trends and the market dynamics driving them.

“There are a number of converging trends influencing the plant-based dairy-free alternatives space that is centered around consumer interest in doing good for their bodies and the planet, while still enjoying a delightful food experience,” she notes. 

“When it comes to ‘does good’ food experiences that address consumer well-being, the ‘food as medicine’ trend is rapidly growing. We’re seeing a rise in plant-based cultured dairy, which appeals to consumers who appreciate probiotics.”

“Looking forward, new processes and scientific methods for crafting the ideal micronutrients and gut health bacteria will be highly coveted trade secrets. Some brands are even going so far as to add ‘super ingredients’ to plant-based dairy for personalized health benefits.”

“Plant-based brands also pander to nostalgic audiences by leveraging well-known ‘health’ cues from the dairy industry. The “nostalgia meets nutrition” trend taps into both emotional and functional promises and the desire to provide balanced, wholesome meals for ones family. Brands can convey this wholesomeness by positioning plant-based products as complete nutrition.”

Eco-and-animal-friendly dairy
Plant-based dairy-free alternatives are attractive to consumers looking to protect the environment, and they can negate animal welfare issues in one fell swoop. 

The slowing of climate change remains a key factor in purchasing decisions, as does the ongoing challenge of cutting down carbon emissions. 

Mix in the fact that health and wellness trends are a key motivator and the desire for clean labels is as significant as ever; then it is not so difficult to see why dairy-free plant-based alternatives are enjoying their place in the spotlight. 

As ever, consumers are the driving force here. They demand to know more about the food they eat, its journey in the supply chain, how it was made, precisely whats in it and the story behind the people involved. 

As Innova Market Insights’ Top Ten Trend for 2021 “Transparency Triumphs” underscores, being open, authentic and using good storytelling to market products is key. Agile companies and brands are increasing transparency to meet evolving ethical, environmental and clean label consumer demands from conscious consumers emerging worldwide. 

Cultivating crops for plant-based NPD
In IFF’s recent webinar “Cracking Growth in Plant-based Beverages and Dairy Alternatives,” the company highlights the enormous environmental, economic and nutritional potential here. 

While some crops are familiar to producers and consumers alike, others may have significant future potential that has not yet been explored. Insights from The Economist Intelligence Unit and IFF highlight which plant-based proteins have the greatest future potential so that food and beverage producers can source sustainably while satisfying consumers’ need for delicious plant-based beverage and dairy alternatives.

“It is not anymore about the vegan and vegetarian; the journey has now been adopted by more consumers, the flexitarians. This consumer reduces their animal-based intake,” says Sonia Huppert, global marketing leader, Plant-based Health, IFF Nutrition & Biosciences, Nourish.

“This is really wher the challenge comes for the F&B industry, as it is really now about everyone, which means new consumer expectations.”

Oats boom in dairy-free milk
One of the key ingredients that is synonymous with the dairy-free alternatives beverage space is oats. Sustainable, plant-based, healthy, nutritious, oat-based milk is rapidly rising in popularity in markets all over the world. 

The growth in oats is evidenced by vegan milk maker Oatly which is on track to build one of the world’s largest plant-based dairy factories to be based in the UK. It’s expected to produce 300 million liters of oat milk per year, rising to 450 million liters annually. 

Moreover, Oatly Group has just commenced an initial public offering of 84,376,000 American Depositary Shares (“ADSs”), each representing one ordinary share offered by Oatly and certain selling shareholders. 

The underwriters of the offering will also have a 30-day option to purchase up to an additional 12,656,400 ADSs from the selling shareholders at the initial public offering price. 

The initial public offering price is currently estimated to be between US$15 and US$17 per share, and Oatly has applied to list its ADSs on the Nasdaq Global selec Market under the ticker symbol “OTLY.”

Future-proof ingredient?
As Bayard stresses, plant-based dairy also has a strong appeal for those looking to protect the environment. 

“While plant-based dairy is better for the environment than traditional livestock agriculture, the environmental impact of certain plant-based ingredients is still questionable. 

The “ingredients of the future” trend address these concerns with plant-based milk innovations that leverage future-proof ingredients such as peas, hemp and oat. These ingredients are poised to prevail in the long run, she says. 

Pea protein prevails
Just last week, Nestlé launched Wunda, a new pea-based beverage that the company says is “epic in everything” you would otherwise use milk for. Wunda will launch first in France, the Netherlands and Portugal, before rolling out in other European markets. 

The Swiss giant markets its latest alt-dairy product as a go-to alternative source to dairy from everything to being consumed straight from the carton, poured over cereal and used in hot beverages and cooking.

What is coming next?
Bayard believes that for consumers to embrace plant-based goodness fully, companies will have to navigate the complexity and variety of plant sources to find the right mix of nutrition, taste and mouthfeel. 

“Our ongoing research and new technologies will further enable the consumption of products from diverse plant-based sources. From grains such as oats to legumes such as peas to nuts and seeds such as almonds and sunflower, by increasing the variety of food choices, we can help support both body and planet,” she says.

“To meet these needs, our three main innovation areas, which relate most strongly to consumer preferences regarding taste and health, are focused around masking, mouthfeel and nutrition as they represent the most significant challenges and opportunities for our customers,” Bayard concludes.