Plant-based dairy alternatives are certainly nothing new. Soy “milk,” for example, has been available commercially for years and years — ever since Li Yu-ying (aka Li Shizeng) opened up the first factory (in Paris) to produce it about a decade into the 20th century.
What is new in recent years, however, is the high interest on the part of consumers in such alternatives. Allied Market Research notes that the global dairy alternatives market generated $13.0 billion in 2018, and forecasts that the segment will reach $35.8 billion by 2026, registering a compound annual growth rate of 13.6% between 2019 and 2026.
A look at the drivers
“Plant-based products are booming, and within the dairy space, there are many motivators for consumers looking for dairy alternatives,” says Eric Eddings, president and CEO of Eugene, Ore.-based Oregon Ice Cream Co. The company produces traditional ice cream and novelties, as well as plant-based frozen desserts, under the Alden’s Organic brand.
Consumers with allergies to dairy products and consumers who follow a vegan lifestyle are helping to drive demand, but Eddings also points to another influencer group: what Alden’s Organic calls the “dairy-free curious.” This group of consumers typically purchases dairy products, but also is seeking dairy-free options “the whole family will love, without having to compromises on taste and texture.” In addition, this group gravitates toward quality, trustworthy brands and certifications such as vegan or organic.
Sheryl Kesey, co-owner and vice president of marketing for Eugene, Ore.-based Springfield Creamery (Nancy’s Probiotic Foods), notes that millennials are driving the dairy alternative trend. Her company produces cultured probiotic dairy and nondairy products under the Nancy’s brand.
“The data suggests that 30% of millennials are trying to eat an increasingly plant-based diet,” she says. “Consumers are turning to a plant-based diet for many reasons. Taste is at the top of the list for many, but choices for their own health is also a major factor for consumers.”
Greg Steltenpohl, founder and CEO of Los Angeles-headquartered dairy-alternative producer Califia Farms, adds Generation Z to that demographic, referring to the combination as “GenZennials.” This group prioritizes the planet’s health and supports brands that embrace “action-oriented causes.”
Speaking of planet health, Domenic Borrelli, president of plant-based food and beverages and premium dairy for White Plains, N.Y.- and Broomfield, Colo.-based Danone North America, points out that it requires 80% less water to produce a half gallon of one of his company’s Silk brand dairy-alternative beverages in comparison to a half gallon of milk. The figure is based on a 2013 water footprint assessment conducted by the brand for its original “soymilk,” “almondmilk” and “coconutmilk.”
GenZennials are more likely to experiment when it comes to flavor and texture profiles, too, Steltenpohl says.
“Plant-based products are not only being consumed by vegans or vegetarians, but also those who consider themselves flexitarians,” he adds.
Milk alternatives lead
Milk alternatives comprise the largest dairy-alternative category in terms of household penetration — at more than 40%, according to Stephen Williamson, CEO and co-founder of San Francisco-headquartered Forager Project LLC, which offers dairy alternatives and other plant-based products.
“The dairy-free ‘milk’ category is often the first category where a consumer enters the world of dairy alternatives,” he explains.
Forager Project recently added an organic unsweetened “oatmilk” to its Forager Project brand milk-alternative lineup, Williamson notes. Like the company’s other products, it is made with 100% organic vegan ingredients.
Steltenpohl agrees that plant-based milk alternatives are a driving force within the category.
“According to the Plant Based Foods Association, sales of plant-based ‘milks’ have grown 6% over the past year, now making up 13% of the entire milk category,” he says.
The oat drink category alone is expected to reach $698.8 million by 2027, Steltenpohl notes, citing data from Future Market Insights. With that reality in mind, Califia Farms expanded its oat platform under its eponymous brand with the launch of protein “oatmilk.”
“Our protein oat offers consumers a nutritional equivalent to dairy milk, with 8 grams of plant protein per serving, nine essential amino acids and complete omega-3, -6 and -9,” he says. “The development of protein oat marks one of the first times the industry has seen a plant ‘milk’ formulated with this level of nutrient-rich ingredients.”
Califia Farms also added oat-based creamers, and most recently, keto creamers. The latter address the growing number of consumers who are following the ketogenic diet. Per serving, the whitening creamers contain 500 milligrams of medium-chain triglyceride oils from coconut oil and coconut cream, Steltenpohl says.
And Danone North America is kicking off the fall season with the introduction of two limited-edition pumpkin spice-flavored almond-based beverages under its nondairy pioneer Silk brand, Borrelli says. The Silk “almondmilk” has a hint of pumpkin spice and retails in a half-gallon carton. The Silk “unsweet” creamer boasts the flavor of classic pumpkin spice with zero grams of sugar and retails in a pint-sized carton.
Other alts are growing, too
But milk and dairy-creamer replacements are not the only plant-based dairy alternatives demonstrating strong growth. For example, plant-based frozen novelties also are taking off, Eddings says.
“According to SPINS/IRI data ending June 14, 2020, over a 12-week period, frozen plant-based novelties have grown over 43% since [the same] time last year,” he notes.
It’s no wonder, then, that the new certified-vegan Alden’s Organic Sammies (novelties) are among the fastest-growing products in the brand’s dairy-free line.
“This demand stems from consumers seeking more snacking-size and portion-controlled options, as well as shareable desserts for the whole family,” Eddings says. “In addition, there are a limited number of dairy-alternative options in the novelty space, so consumers are looking for variety.”
Speaking of variety, the company is working on dairy-free line extensions for 2021, he says. The five new products in the works include four novelty items and one 14-ounce pint. All will be organic, of course.
“At Alden’s we believe organic is better for all,” Eddings adds. “As we expand our dairy-alternative offerings in 2021 and beyond, we will remain committed to supporting organic farmers and organic agriculture by sourcing high-quality organic ingredients our consumers can trust.”
Plant-based frozen desserts that serve as ice cream alternatives are taking off, too, says Greg Holtman, founder of Arctic Zero, a San Diego-based maker of such products under the Arctic Zero brand.
“Although people are living healthier lifestyles, they’re still looking to satisfy their sweet tooth with something comforting,” he explains. “Ice cream has been a staple dessert for years in most homes, so it is only natural that people will also show interest in plant-based ‘ice cream.’”
It is worth noting that Arctic Zero was not always a plant-based brand. But it listened to consumers and reformulated its products back in 2018, swapping out whey protein in favor of faba bean protein.
“Faba beans contribute to sustainable farming,” Holtman maintains. “They help fix nitrogen in the soil, replenish soil nutrients and increase soil fertility.”
The relaunch comprised nine flavors in pint containers — with each GMO-free pint boasting between 160 and 320 calories, no sugar alcohols and no artificial ingredients. Since that launch, Classic Vanilla and Pistachio flavors were added to the 160-calorie lineup, he says.
Cultured, other alts show promise
Outside of the beverage and frozen space, alternatives to cultured dairy products also are in growth mode. For example, Kesey points to high interest in yogurt alternatives. To help meet demand here, Nancy’s Probiotic Foods recently added three new flavors to the Nancy’s “oatmilk” nondairy “yogurt” lineup: Apple Cinnamon, Cold Brew Vanilla and Passionfruit Banana.
“All of our ‘oatmilk’ nondairy ‘yogurts’ are Non-GMO Product Verified and offer 6 grams of plant protein per serving and, of course, billions of live probiotics per serving,” she says.
And late last year, Norwich, N.Y.-based Chobani LLC entered the plant-based dairy alternatives space with the introduction of the Chobani oat lineup. In addition to other products, the lineup includes Chobani oat blend and Chobani oat blend with crunch offerings. The yogurt alternatives, which come in a variety of flavors, retail in 5.3-ounce cups.
Also new to the cultured dairy-alternative mix is Forager Project "sour cream." According to Williamson, the product features the brand’s creamy organic “cashewmilk yogurt” as its base.
Another area poised for growth is the plant-based “butter” segment. Although margarine has been around for seemingly forever, some new varieties are losing that name, using nontraditional ingredients and touting “plant-based” as a positive.
Forager Project, for instance, now offers a plant-based butter alternative made with coconut oil and sea salt, Williamson says.
Even whipping cream is getting a nondairy makeover. Earlier this year, Silk introduced a dairy-free heavy whipping cream alternative.
“This dairy alternative can be used as a cup-for-cup replacement for all your whipping, cooking and baking needs,” Borrelli says. “It is also a great alternative to add to your favorite holiday dishes so everyone can enjoy.”
Although taste and functionality shortcomings have adversely affected the growth of plant-based cheese alternatives, recent advances here could change that reality.
“We also see interest in the dairy-free cheese category, as consumers want a product that has the same incredible melt, stretch and taste as the dairy counterpart and is also made with clean, wholesome ingredients,” Williamson says.
Obstacles to overcome
Dairy processors that wish to enter the nondairy space likely will have to address some challenges along the way. Product formulation is one of them.
“Creating a dairy-free base that is creamy and neutral enough to deliver true-to-flavor taste and texture is a challenge,” Eddings says of ice cream alternatives. “At Alden’s, once we were able to identify our core ingredients in our plant-based Oregon Blend, it was a matter of determining the right ratios to land on a recipe that would uphold the standards of our famous ice cream. We took 29 tries to get it right.”
Borrelli agrees that taste and texture can be big barriers for consumers considering plant-based options. Danone North America has a dedicated research and innovation team for Silk — and its 30-plus-year-old sister So Delicious Dairy Free brand — that addresses that reality during product development.
Cost can be another challenge, Holtman stresses.
“The dairy processors we approached in the past are often faced with a big commitment to produce in a plant-based environment,” he says. “Most have been in business for decades and are faced with costly plant upgrades and processes. My experience is that some processors look at plant-based as more of a problem than an opportunity. The ones that embrace those opportunities seem to be the ones thriving.”
Nancy’s Probiotic Foods certainly is among those thriving, with a 25-year history of producing both dairy products and dairy alternatives. The company realized early on that lactose-intolerant and other nondairy-preferring consumers were still seeking the benefits of live probiotics, Kesey says.
“By shifting our dairy-alternative offering to ‘oatmilk’ nondairy 'yogurt' in 2019, we were able to attract new consumers and grow our overall brand awareness while still offering the same benefits they have come to expect from Nancy’s Probiotic Foods,” she says.
Success really boils down to listening to consumers, Holtman adds, as the food industry has seen dramatic changes in the past decade. Moreover, with social media and today’s connected consumers, it is much easier to listen these days.
Consumer education also plays a role in efforts to branch out into the dairy-alternative space.
“While more people are gravitating toward plant-based diets than ever before, there is still a lot of opportunity to educate consumers about the benefits of a plant-based lifestyle,” he says. “With brands like Silk and So Delicious serving as trailblazers in this industry, it’s also important to us to promote the nutritional value of our products and plant-based lifestyle benefits with consumers.”