Tradition vs. Innovation:
Has cow’s milk already lost the battle to plant-based alternative drinks?
Simona Bernatonyte, Analyst at Euromonitor International
Milk drinks market development continues its course toward plant-based ingredients as traditional dairy reputation has been seriously challenged by shifting consumers’ expectations and habits. In the period of 2015-2020 volume consumption of cow’s milk has seen decline of -2.4% CAGR in Western Europe, and even deeper -2.9% CAGR drop in North America. Other regions, apart from Asia Pacific, demonstrated stagnant performance rates. During the same time frame, milk alternatives demonstrated 9.8% and 6.0% CAGR in Western Europe and North America respectively.
Based on global Euromonitor Health and Nutrition survey findings, rather limited share of population opts to follow very strict dietary restrictions. For example, only 4.4% of global population follow strict dairy-free diet. Top reasons to follow such dietary restriction according to respondents are: ‘care of one’s digestive health’, ’makes me feel better and healthier’ and ‘medical recommendation from a doctor’. Similar 4.0% mark is observed while surveying choice of strict vegan diet. Meanwhile, interest in limiting dairy intake, rather than cutting it out altogether, is significantly greater. As the results of Euromonitor’s survey suggest 14% of population are intentionally trying to limit their dairy intake in 2020.
So, the key target audience for surging milk-alternatives industry is rapidly expanding flexitarian society. This group although does not follow firm dietary restrictions, limits animal-based product consumption. Although, this group’s motivation for choosing such dietary restriction is not limited by health care reasons but also includes environmental concerns and animal rights.
Also, according to recently launched Euromonitor Product Claims and Positioning tool, it was identified that top claim for Milk Alternatives category online is – Organic. This trend gets traction because consumers increasingly are looking for ingredients that are naturally sourced and are allergen-free. While due to GMO and other accusation soy drinks have long gone into the background in most of the global markets, Other Milk Alternatives (made grom grains, nuts etc.) took over the leading stage as manufacturers continue to innovate and expand variety of plant-based products. In 2020 the latter category already reached USD 9.4bn retail value sales, which is 22% higher compared to soy drinks. Also, it is anticipated that during the forecast period until 2025 the split will continuously mark the advantage of Other Milk Alternatives category.
Alternatives assortment made of grains in recent years expanded with innovative ingredients such as quinoa or buckwheat, also pulse and seeds drinks selection was enlarged with products made of peas or water lentils. Even if these new tastes may be niche, they are marking a path for further innovation opportunities. Rising sustainability and animal welfare concerns among vegans, vegetarians, and flexitarians initiate sufficient demand to provoke manufacturing innovations which in turn, attract a broader array of consumers as a range of needs and expectations in this area are met by diversified production. Therefore, Other Milk Alternatives category is anticipated to continue expanding with 4.8% CAGR in volume globally over the next five years.
Nevertheless, in the context of global pandemic consumers more than ever are approaching nutrition as the top means for preventative health and thus food is perceived as means to boost immunity. Such trend is to stay for some time, thus dairy products’ relevance is also likely to come back as cow’s milk strongly outperforms any milk alternative in three aspects: calcium, vitamin B12, and proteins. Affordability in times of household income uncertainty is also to gain stronger attention, and consequently benefit cow’s milk manufacturers.
In conclusion, we can admit that competition between innovation and tradition within milk drinks looks fierce and dynamic. We expect further growth of milk alternatives market, as it continously expands its target audience from those who have health concerns to those that care about animal rights and those that are searching after novel tastes. Yet, as the graph bellow demonstrates, traditional Cow’s milk category is also set to see a positive come back during forecast period, benefitting from increased attention to preventative health, pandemic imposed budgeting measures and continuos introduction of convienience, snacking and further fortification product portfolio.
Source: Euromonitor International