COVID-19’s knock-on effects have rippled through the F&B industry, with dairy being no exception. FoodIngredientsFirst speaks to key suppliers, who underscore a shift in consumer behavior toward sustainability and healthier products, with immunity and convenience noted as key concerns.

For Morten Kaas Hansen, director SBU food at Arla Foods Ingredients, disruption to the supply chain and fluctuating purchase patterns have been the most significant developments in dairy this year.

“Sudden shifts in buying channels have been challenging, but also accelerated innovation,” he states. 

Hansen explains that while gyms and foodservice were closed, producers faced increased pressure to innovate new dairy formats with a greater focus on more mainstream markets rather than niche categories.

Meanwhile, Anne Sinha, director, strategic segment at CP Kelco, notes that omnichannel food ordering has led to the need for dairy products with a longer shelf life. This came as e-commerce blossomed and consumers increasingly valued stocking up at home. 

High-protein foods and beverages are moving into the mainstream.Premium dairy products go mainstream
With increased pressure to bring health and wellness to the mainstream, Arla Foods Ingredients launched its first organic product, MicelPure, last year. 

“A major focus this year has been in helping manufacturers to extend their portfolios with products that are both organic and packed with high-quality protein,” affirms Hansen.  

Innova Market Insights notes that high/source of protein claims have grown in Europe in particular with 47 percent growth F&B launches tracked with the claim in 2020, compared to 35 percent in 2016. 

The market researcher also notes an increased interest in health benefits associated with protein and fiber. In China, 73 percent of consumers agreed: “Food needs to be tasty and nutrient-dense with specific benefits such as protein and fiber.” At the end of March 2020, 81 percent agreed with the same statement. 

On-the-go convenience
Arla Foods Ingredients notes that the sports nutrition sector is continuing to reach a wide audience amid consumers’ increased focus on health. 

“A range of consumers, including those with little interest in sports, are looking to purchase products such as protein drinks as snacks or meal replacements,” says Hansen. 

“They’re quick and easy to consume, and because protein delivers satiety, they’ve become a popular tool for weight loss and overall wellness.”

Sinha also sees dairy moving into the healthy snack category and a convenient way to consume nutrition. 

“As such, long shelf life drinking yogurts, which can be carried around all day in a backpack or gym bag and ensure nutritional intake for children and athletes, are gaining ground globally,” she adds. 

“Ambient drinking yogurt offers global consumers the benefits of dairy or plant-based protein in a fermented beverage snack that is easy to consume on the go or at any time.”

Interest in immunity has created more opportunities for dairy.Boosting immunity
Consumers are also looking for food and beverage products that provide protective or preventative health benefits, note industry suppliers. 

Hansen shares that the immunity market was already increasing prior to the pandemic. However, it has “obviously intensified over the past 18 months.” 

“We expect to see continued demand for ingredients that combine immune system support with other benefits.” 

He relates that whey proteins, for example, are rich in the amino acid cysteine, which naturally boosts levels of the antioxidant glutathione, which can support the immune system.

The immunity trend is also being seen with the rise of ingredients like ginger, lemongrass and fruit high in antioxidants in dairy and dairy alternative drinks, says Haydee Carlos, global application manager at Palsgaard. 

Meanwhile, CP Kelco’s Sinha observes that immunity opportunities can also be found in gut health ingredients as research reveals their benefits to the immune system. 

“Probiotics, prebiotics and now postbiotics – the functional, bioactive compounds generated during fermentation – are an emerging trend in functional foods as consumers take a more active role in their personal health.”  

Better for the planet 
Innovation in the dairy category is also being impacted by increased importance on environmental sustainability. 

Arla Foods Ingredients relates the onset of COVID-19 to a jump in interest in sustainability and health. 

“A recent study showed that 52 percent of consumers said they would pay up to 10 percent more for food and beverages that are both healthy for consumers and the environment,” says Hansen. 

Plant-based and dairy hybrids are pegged for future growth.Looking to lower foods’ carbon footprint, Arla Food Ingredients has been working toward a sustainability strategy for many years, says Hansen. It has achieved CO2 savings of around 60,000 metric tons a year by using energy from biogas. 

The company has also been investing in its dry blend lactose production capacity, helping infant formula manufacturers cut their emissions by as much as 25 percent. 

Palsgaard reports similar findings in its survey that asked: “Since the COVID-19 crisis, have environmental concerns (e.g., the use of sustainably produced ingredients) become a more or less important factor for you when purchasing food products?” 

The company found that four in ten (41 percent) respondents answered “more important,” 55 percent said there had been “no change” and only 4 percent said environmental concerns had become “less important.” 

“Possible reasons for this include a more reflective international mood, a feeling that the tumultuous change caused by the pandemic represents an opportunity for belated action on climate change and a renewed awareness of the potential of government action,” affirms Carlos.  

Future of dairy 
With increased concern over sustainability and pressure from a growing population, the future of dairy could take many scenarios. 

Sinha at CP Kelco reports that plant-based protein alternatives are currently on the rise, with more interest in plant-based and dairy hybrids. 

“Additionally, it will be interesting to follow the innovation of alternative proteins as brands use fermentation to develop ingredients without relying as much on animals, crops and land usage.”

Precision fermentation could also benefit the dairy industry, she adds, by reducing the impact on the environment and eliminating lactose intolerance.

Palsgaard’s Carlos feels bullish about dairy in the coming decades. “As countries ravaged by the effect of the pandemic emerge from the economic downturn, there will be more new consumers of dairy products. There will be market expansion, and this will fuel the growth.”