The dairy alternative market includes products made from plant-based raw materials such as soy, almonds, coconut, oats, and rice among others. These products offer similar nutritional benefits as dairy products while being suitable for individuals with lactose intolerance or prefer a vegan diet. The market has witnessed significant growth in the last few years owing to the rising demand for plant-based products and awareness around their health benefits.
Key Takeaways
Key players operating in the dairy alternative market are Danone North America Public Benefit Corporation (US), The Hain Celestial Group, Inc. (US), Blue Diamond Growers (US), SunOpta (Canada), Sanitarium (New Zealand).
The increasing prevalence of lactose intolerance, veganism, and nutrition allergy has boosted the demand for dairy-free products. Plant-based milks provide similar texture and taste as compared to cow milk while catering to various dietary requirements.
Technological advancements have allowed manufacturers to improve product qualities like taste, texture, and shelf life. Various innovations like fortification with added nutrients have further expanded the target audience of dairy alternatives.
Market Trends
Functional ingredients - Major players are focusing on enhancing the nutritional profile of dairy alternatives by adding functional ingredients. Products fortified with probiotics, prebiotics, proteins, vitamins, and minerals are gaining popularity.
Innovative packaging - To increase shelf life and appeal to evolving consumer preferences, companies are investing in innovative packaging solutions like cartons, bottles, and aseptic packaging. Environment-friendly packaging is also becoming an important trend.
Market Opportunities
Growing foodservice demand - Rising adoption of veganism and lactose intolerance in the foodservice sector is prompting restaurants, cafes, and fast-food chains to offer more plant-based milk options.
Emerging markets - Markets in Asia Pacific and Middle East/Africa regions with growing health consciousness offer huge untapped potential for dairy alternatives. Localization of products and awareness can help drive faster adoption.
The Global dairy alternative market is estimated to be valued at US$ 27.0 Bn in 2024 and is expected to exhibit a CAGR of 10.% over the forecast period 2023 to 2030.
Impact of COVID-19 on Dairy Alternative Market Growth
The COVID-19 pandemic has significantly impacted the growth of the dairy alternative market. During the initial phase of the pandemic, lockdowns imposed worldwide led to closure of food services and disruptions in supply chains. There was a sharp decline in out-of-home consumption of dairy alternatives. However, as people stayed home consumption of plant-based dairy alternatives rose significantly through retail channels. With growing health and wellness concerns, demand for healthy and nutritious food products rose sharply. This benefited the dairy alternative market.
As lockdown restrictions eased, foodservice progressively reopened albeit with new safety and hygiene protocols. Many consumers who tried plant-based products during lockdowns continued their consumption as they liked the taste and health attributes. This expanded the consumer base of dairy alternatives. Also, with growing environmental and animal welfare concerns, more people preferred plant-based substitutes over animal-derived dairy products.
To tap into rising demand, companies strengthened their retail distribution channels and product offerings. They also launched new products catering to evolving consumer preferences such as climate-friendly packaging, nutritious ingredients, and comfort foods. The pandemic has accelerated the market growth trajectory. Although supply chain issues and rise in input costs remain challenges, the future outlook for dairy alternatives appears bright with increasing health, sustainability and flexitarian trends.
Geographical Regions with Highest Dairy Alternative Market Value
North America accounts for the largest share of the global dairy alternative market in terms of value. Rising lactose intolerance, veganism and focus on nutritional and vegetarian diets have been major factors fueling market growth. Within North America, the United States holds the dominant position led by increasing product innovations, marketing campaigns and awareness about benefits of plant-based dairy products. Europe is the second largest regional market driven by stricter environmental laws supporting sustainable foods. European countries such as Germany, UK and France are implementing policies promoting use of dairy alternatives.
Fastest Growing Regional Market for Dairy Alternatives
The Asia Pacific region has emerged as the fastest growing regional market for dairy alternatives. With rising health consciousness and disposable incomes, more consumers in countries like China, India and Japan are opting for plant-based milk alternatives. Local companies are launching innovative new products tailored to regional tastes. Also, growing global exposure via internet and travel is supporting market growth. While starting from a smaller base, APAC's dairy alternative market is expanding at a rapid pace underpinned by favorable demand and industry trends. The region provides huge untapped opportunities for dairy alternative companies.
