Plant-based dairy products have been ever-present in the market globally. However, the recent increase in flexitarianism has made plant-based dairy a rapidly growing segment. As a testament to this growth, leading companies that historically were not plant-based, such as Nestle and Danone, have successfully launched alternative dairy products. In addition, plant-based yogurt is the fastest-growing segment in dairy alternatives. Abhilash Ravi, Nutrition and Food Consultant at ChemBizR, analyzes this growth and other trends in the alternative dairy market. He expands on the most popular protein ingredients, the geographic markets experiencing the most growth, and what companies are leading with the taste, texture, and nutritional profile of conventional dairy products.
Nicole Astra: Welcome to Talking Plant Protein. We are talking dairy today and trends in that segment. Please welcome Abhilash Ravi, nutrition and food consultant for ChemBizR. Let me turn it straight over to you with what ChemBizR is and why you have a unique perspective on the industry?
Abhilash Ravi: Hi everyone. My name is Abhilash Ravi and I work as a consultant for the food and nutrition industry. To give a brief introduction of our company, we are a global strategy and business consulting company, carrying out constant research activities on biggest domains across multiple chemical industries. This basically includes conversations with companies across the value chain, from ingredient manufacturers to food and beverage customers.
Nicole Astra: What trends are you seeing in the dairy segment?
Abhilash Ravi: Plant-based dairy products have been ever-present in the market globally. However, the recent increase in consumer base of [flexitarians 00:00:58] across the globe, has made plant-based dairy a rapidly growing segment. Although it is not talked about much as the plant-based [alternatives 00:01:05], who could have imagined such as this scenario 10 years back? However, currently we are seeing that many leading FMCG companies, such as Nestle and Unilever, and large dairy companies such as Danone and Yili, who have been part of the dairy market have successfully launched plant-based dairy products in the market.
When we look at the dairy alternative space, similar to the conventional dairy market, there are various categories of products, such as non-dairy milk, yogurt, frozen desserts, cheese, and [inaudible 00:01:33] among others, and a lot of companies including Danone, the Hain Celestial Company, and Oatly have a diversified range of products across multiple [equities 00:01:41]. As we have been keeping on consistent system track of the plant-based dairy alternatives market, like that plant-based yogurt has been the fastest growing segment, but lots of products large system companies such as Shubhani, Califia farms, so delicious among others.
Probiotic dairy for yogurt has been very popular among the consumers due to its health benefits and LS in free nature. Oat milk and [inaudible 00:02:05] have also been lavishing in the market due to its creaminess and texture profile conventional dairy milk with companies such as Planet Oats and Oatly being highly successful.
The base proteins play a major role in formulating these products contributing to the texture and nutrition profile, and the most commonly used protein sources add soy and almond. However, in recent years, 13 sources such as oat B and [inaudible 00:02:30], have been increasingly used to formulate dairy products. Typically, a combination of protein sources are used in the formulations to achieve the right nutritional taste and texture profile.
One other trend that we have been seeing is that sugar reduction, which has been a major part of the food and beverage industry, has also adversely influenced the dairy alternative industry segment, as well. The company's offerings should have recount counterparts to their existing portfolio of speed and [products 00:02:56]. The increasing market penetration of dairy alternative products is evident across the value chain, big coffee chain such as Starbucks and Dunkin expanding the dairy offerings to keep up with the dying demand of dairy alternatives, such as soy milk, almond milk and oat milk which is nowadays, a lot of their menu.
Nicole Astra: What regions are you seeing the most growth in?
Abhilash Ravi: Then we talk in terms of demand, [inaudible 00:03:19] is one of the largest contributing region valued at close to 10 billion US dollars. Countries in east Asia, such as China and Japan, have historically used soy milk, which have traditionally been considered a part of the diet. That is also a huge potential for the market in this region, which has also been sensed by global players, such as [Sporty and Algrove 00:03:38], which have heavily invested in China to increase their market presence.
However, based on the recent study that we had conducted on dairy alternatives, we found that majority of the recent prosperous growth has been driven by key players in the U.S. and Europe markets, such as Blue Diamond, Oatly, [foods 00:03:56], and Danone. The U.S. and Europe markets have grown by approximately 25% CAGR in the last couple of years.
Nicole Astra: Besides consumer demand, what do you think is behind some of that growth?
Abhilash Ravi: A lot of this consumer behaviors, the general trends among consumers being labeled allergen-free sustainable products, combined with concerns with lactose intolerance and obesity, have led to the emergence of flexitarians and vegans who are demanding clean and simple ingredients, health and nutrition, sensory experience, and affordability. Consumers are committed to a healthier lifestyle and also expect transparency between the debt purchase patterns are based on natural, organic, low sugar options and they want to know more about the ingredients sourcing and manufacturing process.
Nicole Astra: What challenges do you see up ahead for the dairy industry?
Abhilash Ravi: Being in constantly in touch with the companies across the value chain, we understand that there are various challenges that the industry is looking to overcome, which include [dramatudians 00:04:56], processing and formulation, and cost-related challenges. So [dramatudians 00:05:00] related challenges include supply constraints, such as high prices and low production volumes of proteins and the absence of several essential amino acids in particular plant proteins, which have pushed companies to use combination of proteins for its formulation.
The port formulation processing is also amazing issues for customers as maintaining fat content increasing nutrition profile. They're using sugar content maintaining stability among others can prove to be made the challenges when processing dairy products. This in turn contributes to performance later challenges such as difficulty in obtaining the desired taste, texture, or the shelf life of the product.
Taking plant-based teas as an example, the global size or the amount of protein bonds in the emotion, which affects how the proteins are absorbed onto the fat composition and in turn affects the melting and texture of the vegan cheese products. Stabilizing agents and gums are typically used to enhance the stretching properties of plant-based cheese.
However, it is very difficult to formulate the right blend of gums, solids, and fats that could withstand the process conditions and provide enhanced stretching properties. Apart from the product later challenges, the costs of non-dairy products are significantly higher in comparison to the conventional dairy products. In order to increase the market opportunities, the cost of non-dairy products will have to significantly reduce in the future.
Nicole Astra: From your bird's eye view, since you really see this whole value chain, what are some predictions you'd like to share with Talking Plant Protein?
Abhilash Ravi: To summarize our discussions, we did reduction in prices and closeness to the taste texture and nutritional profile of plant-based dairy alternatives to conventional dairy products. We add this growth of the daily or date of market, particularly in the Europe and North America regions. The dairy alternative market for Europe and North America combined, was estimated to be around eight billion US dollars in 2020 and is expected to grow by more than 20% CAGR over the next five years, compared to a CAGR of less than 5% for conventional dairy market. With the increasing consumer awareness for a healthier lifestyle and constant innovation from food and beverage manufacturing companies, the road ahead for dairy alternatives looks promising.
Nicole Astra: Thank you so much. It was a pleasure to speak with you.
Abhilash Ravi: Thank you.