MACRO TRENDS REPORT

THE PLANT-BASED FOOD

REVOLUTION: DAIRY

O C T O B E R 2 0 2 0

The South Australia Food and Beverage Export Hub This report has been produced by Food South Australia for the South Australia Food and Beverage Export Hub.

The South Australia Food and Beverage Export Hub program has been developed by Food South Australia to assist food and beverage businesses to streamline their export growth development and help take South Australian food and beverage products to the world.

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THE PLANT-BASED FOOD REVOLUTION: DAIRY

Plant-based eating has evolved from being a niche trend ten years ago to a way of life for many consumers in 2020. Plant-based eating is moving from trend to food revolution status, with indications of innovation and increasing new product development activity in this category.

Globally, food and beverage launches with a ‘plant-based’ claim grew by +68% compound annual growth rate (CAGR) from 2014 to 2018, according to Innova Market Insights [1].

Mintel has tracked the plant-based revolution over the last 10 years, highlighting key milestones in the evolution of this trend. The plant-based trend in 2010 began with an interest in vegan products among a small segment of consumers along with a growing interest in non-dairy, particularly soy-based beverages. Today, plant-based alternatives are seen across a range of categories that have previously been essentially animal-based, ranging from meat to dairy and many others that include animal-based ingredients. Interest in plant-based formulations extends even beyond food and drink categories to beauty, personal care, and household care categories [2].

Global innovation in plant-based dairy

With the rise of veganism and increasing health consciousness among consumers, the dairy alternatives market has grown increasingly popular over the years [3]. The perception that dairy alternatives are healthier and the growth in the incidence of lactose intolerance across the globe are factors that have driven a greater preference for alternatives. The global dairy alternatives market is reportedly expected to exceed US$35 billion by 2026 [4]. Soy milk is the largest segment within the dairy alternatives market, although in recent years the market has expanded rapidly to include other nut-based, grain-based and seed-based milks.

As reported by Mintel, the growth of plant-based dairy is largely driven by plant-based drinks, while plant-based yogurt and ice cream innovation is still lagging in some regions of the world (based on share of launches, April 2019-March 2020). [5] In the Asia Pacific, Latin America and Middle East & Africa regions, plant-based drinks account for more than 80% of the innovation within plant-based dairy. Plant-based yogurts and ice cream innovation is more developed in North America and Europe, where they account for around half of all plant-based dairy innovation.

The Danone brand Silk is considered a pioneer in plant-based products, having launched the first soy-based beverage decades ago [6]. The brand has expanded beyond soy over the years, launching almond milk, coconut milk, cashew milk and beverage blends such as Almond Coconut Milk. The brand also expanded beyond milks, launching soy-based yogurt and various nutritional blends including protein nut milks, Omega-3 ALA beverages and prebiotic beverages. Silk has most recently entered the oat milk category with the launch of Silk Oat Yeah beverages in 2019.

Source: Silk (https://www.danone.com/brands/dairy-plant-based-products/silk.html and https://silk.com/plant-based-products/oat-yeah/)

Blue Diamond, a grower-owned co-operative of more than 3,000 California growers, launched the Almond Breeze brand - today is the leading almond milk brand globally and available in 65 countries [7]. The company grows its own almonds, and their Managing Director believes that this gives them a competitive advantage over other almond milk brands, especially at a time when consumers are interested to know about how the products they buy are sourced and produced.

Source: Blue Diamond (https://bluediamondalmonds.co.za/)

Swedish company Oatly, founded in 1994, was the first to commercialise oat milk. It was launched in the United States in 2016 and this led to oat milks gaining rapid popularity globally [8]. The company tapped into high end coffee shops in major cities in the United States and, once the baristas were impressed with the product, the demand for it expanded quickly across food service and retail. Oat milk is known to have a neutral flavour and creamier taste than other alternative milks, making it popular with baristas. Oat milk is also known to have high fibre and beta glucan content. The company’s sales nearly doubled in 2019 to $200 million and Oatly’s products are now available in 20 countries [9].

Source: Oatly (https://www.oatly.com/int/products/oat-drink)

Pea milks began to gain popularity in 2017, with Ripple Foods becoming a pioneer for this category of plant-based milks. Pea milks are nut free, soy free, gluten free and lactose free. They are reportedly better for the environment when compared to almond milks and have more protein and calcium when compared to other alternative milks [10].

Ripple Foods’ range includes Pea milks for adults and children, barista style products, frozen desserts and nutritional powders.

Source: Ripple Foods (https://www.ripplefoods.com/blog/press/)

Global brands launch plant-based dairy ranges in Australia

Califia Farms, a vegan company from California, launched its plant-based milks and cold brew coffees in Australia in 2017 and has seen great success in the Australian market in recent years [11].

According to founder Greg Steltenpohl, the growing trend of alternative milks and a strong café culture in Australia were the main reasons for entering the Australian market.

Califia Farms’ range in Australia includes Almond milks, Oat Barista Blend, Almond & Coconut Blend and Cold Brew Coffees.

Source: Califia Farms (https://califiafarms.com.au/pages/products)

Nestlé has launched a plant-based version of its iconic malt beverage Milo. The plant-based Milo utilises soy and oats to replace the milk powder. The core ingredients of malt, barley and cocoa are retained, similar to the original version. The new plant-based version has reduced sugar content, while maintaining the iconic choc-malt taste.

Source: https://milo.com.au/products/powders/plantbasedenergy

Nestlé’s new range of non-dairy lattes under its Nescafé Gold brand was launched in Australia in June 2020. The new vegan friendly range includes Almond, Coconut and Oat lattes, made using Arabica and Robusta coffee beans and plant-based milks.

Free samples of the new Nescafé Gold Plant-based Lattes are seen included by HelloFresh in their food deliveries, enabling consumers to try the product at home.

Source: Nestle (https://www.nestle.com.au/en/media/news/enjoy-deliciously-creamy-plant-based-lattes-home)

Local brands capitalising on the plant-based dairy market

Lion’s joint venture with Vitasoy has seen the launch of a complete range of plant milks and barista blends in Australia. Vitasoy’s coconut milks and almond milks were launched in 2017 [12], with oat milks added to the range in 2019. Most recently the brand has launched its Whole milk range, made from whole almonds and soybean, in three indulgent flavours, Vanilla Chai, Milk Chocolate and Double Espresso.

Source: Vitasoy (https://soy.com.au/)

Source: Bickford’s Group

South Australian manufacturer Bickford’s Group has introduced a range of premium plant milks including Oat, Cashew, Almond, Macadamia and Pistachio milks. The range of plant milks are 100% Australian made and owned and are GMO free and contain no artificial sweeteners, colours or flavours.

COVID-19 AND THE OPPORTUNITY FOR PLANT-BASED DAIRY

Sales of plant-based dairy alternatives has been on the rise over the past decade and this growth has continued in 2020 despite the COVID-19 pandemic. According to Euromonitor data from May 2020, the milk alternatives market size is expected to see a 9.2% growth in 2020 [13].

The first few months of the pandemic from February to May 2020 saw the overall dairy category (conventional and plant-based combined) outperform its general average retail sales according to Nielsen retail sales data.

Apart from yogurt, which declined in sales, all other dairy segments saw a rise in sales during this time. The plant-based milk alternatives segment saw a strong growth of 22.4% during this period.

Yogurt sales declined by 6.5%, possibly attributable to the fact that it is often consumed on the go. Consumers mostly staying home due to the pandemic were opting for other breakfast or snack choices.

The pandemic has influenced a shift in Australian consumer attitudes [14]. The Mintel Global Consumer data tracker indicates 38% of Australian consumers agree that the COVID-19 pandemic proves humans need to eat fewer animals, while 17% of consumers are contemplating eating fewer animal products (both dairy and meat).

THE WAY FORWARD FOR PLANT-BASED ALTERNATIVES

Product positioning

Product positioning is key when it comes to plant-based options and consumer perceptions of them. Instead of focusing only on being an alternative to dairy, product differentiation can be highlighted, with greater focus on the taste, quality and health benefits of the dairy alternatives.

Plant-based milks tend to have lower calories and fat content compared to their dairy counterparts (except for coconut milks) and this may be appealing to adult consumers. While the protein levels are generally lower than dairy milks, some plant-based milks are fortified with vitamins and nutrients [15].

Environmental credentials

One of the key drivers of consumer interest in plant-based alternatives is the environmental and ethical concerns around dairy consumption [16].

As reported in a scientific study by the University of Oxford, the production of plant-based milks creates far lower greenhouse gas emissions when compared to that of dairy milk [17]. A glass of dairy milk is estimated to produce almost three times the greenhouse gas emissions of any non-dairy milks and utilises nine times more land than the dairy alternatives. Among the different plant-based milks, almond milk and rice milk require more water to produce in comparison to oat or soy milk.

The ‘milk’ debate

Labelling plant-based beverages as milks has prompted discussion and debate around the use of the word ‘milks’ for something that is not sourced from animals [18].

The United States Food and Drug Administration (FDA) is considering making the use of the term ‘milk’ exclusive to dairy products. The European Court of Justice has already restricted the use of dairy terms on soy products. Dairy manufacturers also argue that plant-based beverages are not as nutrient rich as dairy based products. Plant-based beverage manufacturers are fortifying their products with nutrient rich additives in order to compete against their dairy counterparts.

REFERENCES

1. Innova Market Insights: Top Ten Trends for 2020, Innova Database 2019

2. Mogelonsky, Marcia. You Heard It Here First: The Plant-Based Revolution. Mintel Blog. 2 August 2019. Available at https://www.mintel.com/blog/food-market-news/you-heard-it-here-first-predicting-the-plant-based-revolution. Accessed September 2020.

3. Lucio, Remedios. Plant based milk sales continue to soar. Inside FMCG. 12 August 2019. Available at: https://insidefmcg.com.au/2019/08/12/plant-based-milk-sales-continue-to-soar/. Accessed October 2020.

4. Dairy Alternatives Market, Consumption, Global Forecast by Plant based Milk, Regions, Companies – Researchandmarkets.com. Businesswire.com. 30 January 2020. Available at: https://www.businesswire.com/news/home/20200130005497/en/Dairy-Alternatives-Market-is-Anticipated-to-be-Valued-at-Over-USD-35-Billion-by-2026---ResearchAndMarkets.com. Accessed October 2020.

5. Mintel – A year of innovation in plant-based drinks, yogurt & ice cream, 2020. Mintel.com. Available at: https://www.mintel.com/innovation-year-ice-cream-yogurt. Accessed October 2020.

6. Canning, Kathie. Silk is a plant-based products pioneer. DairyFoods.com. 3 April 2020. Available at: https://www.dairyfoods.com/articles/94224-silk-is-a-plant-based-products-pioneer?. Accessed October 2020.

7. Almond Breeze: We are the leading Almond drink brand globally. Vegconomist.com. 24 May 2019. Available at: https://vegconomist.com/interviews/almond-breeze-we-are-the-leading-almond-drink-brand-globally/. Accessed October 2020.

8. Weissman, Cale. How Swedish oat milk exploded into a $15 million business last yar. Fast Company. 19 February 2019. Available at: https://www.fastcompany.com/90298942/oatly-most-innovative-companies-2019. Accessed October 2020.

9. Morrison, Oliver. Oatly – Now we want to challenge the whole dairy industry. Food Navigator. 20 July 2020. Available at https://www.foodnavigator.com/Article/2020/07/20/Oatly-Now-we-want-to-challenge-the-whole-dairy-industry. Accessed October 2020.

10. Judkis, Maura. Get ready for pea milk. It doesn’t taste like peas and it’s not even green. Washington Post. 21 September 2017. Available at: https://www.washingtonpost.com/news/food/wp/2017/09/21/get-ready-for-pea-milk-it-doesnt-taste-like-peas-and-its-not-even-green/. Accessed October 2020.

11. Hogan, Ruth. The Californian vegan company making its mark Down Under. Inside FMCG. 14 March 2019. Available at: https://insidefmcg.com.au/2019/03/14/the-californian-vegan-company-making-its-mark-down-under/. Accessed October 2020.

12. Lucio, Remedios. Vitasoy releases new plant milk range. Inside FMCG. 4 September 2017. Available at: https://insidefmcg.com.au/2017/09/04/vitasoy-releases-new-plant-milk-range/. Accessed October 2020

13. Grebow, Jennifer. Plant-based dairy alternative sales grow during Covid-19 pandemic. Nutritional Outlook. 23 July 2020. Available at: https://www.nutritionaloutlook.com/view/plant-based-dairy-alternative-sales-grow-during-covid-19-pandemic. Accessed October 2020.

14. Li, Daisy. What new eating trends mean for small business. Inside Small Business. 18 September 2020.

Available at: https://insidesmallbusiness.com.au/latest-news/what-new-eating-trends-mean-for-small-business. Accessed October 2020.

15. Ferreira, Sanae. Going nuts about milk? Here’s what you need to know about plant-based milk alternatives. Nutrition.org. 25 January 2019. Available at: https://nutrition.org/going-nuts-about-milk-heres-what-you-need-to-know-about-plant-based-milk-alternatives/. Accessed October 2020.

16. Kateman, Brian. Non-dairy milk alternatives are experiencing a ‘holy cow!’ moment. Forbes. 19 August 2019. Available at: https://www.forbes.com/sites/briankateman/2019/08/19/non-dairy-milk-alternatives-are-experiencing-a-holy-cow-moment/#afffe104c44b. Accessed October 2020.

17. Guibourg, Clara and Briggs, Helen. Climate Change: which vegan milk is best? BBC. 22 February 2019. Available at: https://www.bbc.com/news/science-environment-46654042. Accessed October 2020.

18. The Conversation. Almonds don’t lactate, but that’s no reason to start calling almond milk juice. Inside

FMCG. 7 August 2019. Available at: https://insidefmcg.com.au/2019/08/07/almonds-dont-lactate-but-thats-no-reason-to-start-calling-almond-milk-juice/. Accessed October 2020.

Connect with us

This trend report has been produced by the South Australia Food and Beverage Export Hub through our Market Intelligence and Consumer Insights Program.

For more information, please contact:

Avanthi Ravindran

Market Intelligence & Consumer Insights Analyst

Food South Australia

Phone (08) 8303 9435

Email: ExportHub@foodsa.com.au