The Dairy & Dairy Alternatives Market

Welcome to Packaged Facts' Dairy and Dairy Alternatives Page! Explore complete dairy industry coverage through our market research reports, blog posts, press releases, multimedia & more, consolidated for your convenience. 

The dairy alternative market has enjoyed rising popularity from 2000 to 2016, as non-dairy plant-based milk consumption increased by triple digits. Over 90% of U.S. households drink traditional dairy milk, although consumption is decreasing -- consumers have gone from 10 glasses of milk per week to just eight. 

Dairy foods are central to the American diet and beloved nationwide. Animal milk-based dairy products are expanding into new markets, despite the surge of non-dairy alternatives. Packaged Facts predicts that consumers will gravitate toward dairy food products that showcase whole and nutritious aspects, such as cultures and connections to animal welfare and farming traditions - elements that consumers see as indicative of safety, nutrition, and sustainable food production. 

Trends & Opportunities in the Dairy Industry

Consumers are also projected to continue snacking on dairy products whose nutritional profiles (protein and calcium-rich) promote good health. To that end, savory snacking options will beckon from the grocery store dairy case, calling out to be eaten at any time of the day. Dairy snack products whose packaging promotes portability and portion control will simplify consumers' busy lives, and provide convenient access to nutritious, healthful dairy foods. 

The recent European Union ruling against soy products marketed with dairy terminology, like the parallel regulatory skirmish in the U.S., reflects a broader “rush to the perimeter” taking place in supermarkets. Consumers increasingly seek fresh, whole, natural foods, while budging very little in the priority on convenience. The dairy and refrigerated cases are in this sweet spot, having a huge “fresh” food advantage over the shelf-stable center store, and even to a degree over the frozen food cases. Dairy and refrigerated product marketers and segments, therefore, find themselves embroiled in shelf- space battles with players and rivals that were formerly center store, plus private-label counterparts to these invaders.

The new generation of refrigerated plant milks - with almond milk and novel blends leading the dairy-free charge-represent far more dangerous competition to dairy milk than soy milk, safely tucked away in the center store, in perfunctory flavors and in shelf-stable aseptic packaging that does not signal either fresh or milk-like status to U.S. consumers. What a difference refrigerated formulation and the familiar table-top carton makes.

But it’s not just dairy milk vs. dairy alternative beverages, or dairy yogurt or ice cream vs. soy/tofu versions. There’s a disappearance-take-the-hindmost scrimmage in full play around fresh and frozen dairy categories. Product segments are mushrooming, morphing, stealing thunder from rivals, and gesticulating wildly to attract attention. With grass-fed, dairy milk is taking a page from the meat case. With the Mediterranean diet in mind, butter has been wedded to olive oil. As consumers rethink their snack food choices, cheese marketers are co-bundling with meat snacks and nuts. With branded refrigerated guacamole dips, avocadoes have slid over from the fresh produce section. With refrigerated hummus spreads, chickpeas have leapt out of the center store. And meaningful branding, in the refrigerated cases, means dollars. (What’s more memorable: a canned chickpea brand or a refrigerated flavored hummus brand?) Even nutrition bars and nut butters are getting chill with products such as Perfect Bar Almond Butter.

Consumer trends in the market for milk and dairy milk alternatives

Non-Dairy Ice Cream

The mature ice cream and frozen desserts market has had little growth in recent years. New products may enjoy better-than-usual sales, but their success disrupts existing products and doesn’t increase overall industry sales. Packaged Facts projected the overall 2016 market for all ice cream and frozen dessert sale at just shy of $28 billion.
Plant-based ice cream showcases itself as a rich source of vitamins, proteins, and minerals. Ice cream industry giant Häagen-Dazs noticed dairy-free’s appeal and launched a line of dairy-free flavors available at U.S. target locations. The dairy-free alternatives cater to vegan and lactose-intolerant consumers. The brand stated that their dairy-free direction was “inspired by our passionate fans.”
Other big-name ice cream industry players, most notably Breyer’s and Ben & Jerrys, have also launched their own non-dairy ice cream product lines. Non-dairy ice cream’s growth doesn’t seem to be slowing; Packaged Facts projected the market segment’s sales to increase 44% between 2011 and 2015.

Plant Milk-Based Beverages

Alternative beverages' sales growth has been approximately 250%, rising to more than $894.6 million in 2015 while the total milk market shrank by more than $1 billion.

Non-dairy and plant-milk based beverages are entrenched in mainstream supermarkets. Refrigerated plant milks began their presence in grocery stores off in the center store, but now sit amongst dairy-based products in the refrigerated dairycase. Conventional dairy-based milk marketers inevitably caught wind of refrigerated plant milk's incursion into the 'traditional' dairycase.

Domestic dairy industry leaders have proposed the "Defending Against Imitations and Replacements of Yogurt, Milk, and Cheese to Promote Regular Intake of Dairy Everyday Act (Dairy Pride Act)" in order to standardize the legal definition of "milk". Dairy industry leaders argue that plant milk-based products could potentially mislead consumers into thinking they are purchasing dairy milk, since non-dairy milk products contain different nutritional content than their dairy counterparts. Some dairy industry leaders, instead of fighting alternative dairy's market growth, seem to be taking advantage of dairy's market shift. 

Clean Label in the Dairycase

Consumers often favor products made with "pure", "real", and organic ingredients. According to a 2017 Packaged Facts National Consumer Survey, more than a third of younger consumers, those between 18 and 34 years old, say they are paying more attention to product claims and nutritional information for plant milks, cheese, and dairy milks, among other products. 

Food Business News  named "clean label" the trend of the year. But what does "clean label" actually mean to customers? Per, a massive December 2015 survey of 27,185 respondents in 31 countries by London-based market research firm Canadean found that when asked what the term clean label means: 

  • 36% of respondents said free from artificial ingredients
  • 34% said natural/organic
  • 34% said they did not know what it means

Globally, other ways consumers defined the term were

  • No pesticides/chemicals/toxins (31%)
  • Free from allergens (24%)
  • No GMOs (23%)
  • Minimally processed (16%)
  • Simple/short ingredient lists (11%)
  • Transparent packaging (7%)

E-Book: Product Innovation in the Dairycase

America's diet has changed drastically over the years. According to a 2016 survey by the Pew Research Center, Americans are consuming 42% less milk and eating three times as much cheese as they did in 1970. Yogurt consumption has also soared rising an astonishing 1,700%...

Download E-Book: Product Innovation in the Dairy Case

Dairy & Dairy Alternatives Industry News

Once tucked away in the shelf-stable center store, non-dairy and plant-based dairy alternatives have jumped into the refrigerated dairy case alongside milk-based counterparts. Since soy milk's popularity skyrocketed in the late 1970s on the heels of the natural food channel's counter-culture health beverage trend, plant-based milks have become entrenched in mainstream supermarkets.

Now next-generation refrigerated plant milks have attracted the attention, if not necessarily the neighborly affection, of conventional dairy milk marketers. Traditional dairy products have long satisfied consumer demands for both convenience and freshness. 

The advent of dairy alternatives' encroachment on the dairy case sanctum is pitting traditional dairy and refrigerated product marketers & segments against rivals formerly tucked away from increasingly health-conscious, knowledgeable consumers.

Despite non-dairy alternatives' growing traction in the dairy industry, milk-based products continue to dominate. 'Traditional' dairy marketers are likely to push products by highlighting characteristics such as:

  • High protein content
  • Cultures & Probiotics
  • Connections to animal welfare
  • Associations With Farming Lifestyles
  • Safety, nutrition, and sustainable food production

With Increased consumption also comes a broader array of flavors and styles of dairy foods, meeting today's mandatory call for flavor adventure, no matter the time of day. In 2017, count on consumers to pick elderberry or cloudberry, try out black sesame, and know their quince from their queso. 

Dairy's rich nutritional profile and consumer call for convenience still come together for more 'traditional flavors', recently noted in the ice cream industry;  Halo Top Creamery has officially surpassed other big-name ice cream industry players like Ben & Jerry's and Häagen-Dazs in the dairy ice cream space. Now the No.1 best-selling pint of cream in the U.S., Halo Top's ice cream contains egg, cream, and milk, but also touts a protein-rich, low-sugar background that still delivers an authentic ice cream taste and texture.

Packaged Facts is Watching: 

1. Cultured Dairy

Skyr, a Norwegian and Icelandic regional yogurt style, is vying for a place among dairy food products. More of a fresh cheese than yogurt, skyr is made from skim milk incubated with specific cultures, thickened and then strained to remove excess whey. The result is a thick, creamy yogurt whose high protein and calcium content, as well as lack of fat and little sugar, make for a nutritional profile that's difficult to beat.
Cottage cheese has just the right amount of versatility to be reinvented for new and expanded audiences. both legacy and start-up cottage cheese manufacturers are playing with the size of the curd, the texture, the type of packaging, and flavor profiles.

2. Flavor Expansion

As the name implies, these products' attraction lies in their innovative nature. Ice cream that's new, whimsical, and delightful is exactly what these Asian-style ice cream products aim to be.
Thai Rolled Ice Cream

Ice cream base spread on metal plate chilled to -10 degrees fahrenheit, frozen layers scraped into cylinders with a spatula, then served with sauces and toppings.

Taiwanese Shaved Snow

Thickened ice cream base frozen yogurt in large cylinders, then "shaved" to create soft, layered ribbons with a slightly chewy texture.

New cheese snacks and condiments are adding new layers of flavor, calling for consumer interaction in the forms of dipping, spreading, and generally engaging in cheese eating in fun and shareable ways.
Now that good fats are welcomed in our diets, butter is going beyond classic flavors, chefs, bakers, and traditionalists are adding flavoring agents from spices and herbs to beer, miso, and seaweed. This is a big cue to marketers to explore ways to make butt more exciting and tempting.

Dairy and Dairy Alternatives Market Research

New Report: Dairy and Dairy Alternative Beverage Trends in the U.S., 4th Edition

Innovation and disruption - it's creating dramatic change throughout the food industry. Most notably in the dairy market, traditional products battle plant-based dairy alternatives for shelf space and consumer dollars. Many traditional dairy marketers have taken staunch positions against what they see as encroachment on a dairy industry that has for some time suffered declining sales. 

Dairy marketers looking to navigate the current market may look, for example, to dairy foods' 'traditional' heritage. Relationships can be struck with consumers who are seeking authentic, old-fashioned taste sensations  that may bring them back to animal milk-based dairy products. Marketers can at the same time call out wholesome and nutritious angles of dairy when baked or cooked into other foods. 

The dairy milk category has faced strong headwinds in recent years, this while innovation from traditional dairy farmers has been slow in coming. The trends can be seen in Packaged Facts' report, Ready-to-Drink Beverages: Culinary Trend Tracking Series, which examines alternative dairy categories in relation to traditional dairy milk products. 

Dairy milk consumers are gravitating to new varieties of nut milk that are seen as healthful dairy milk alternatives. Almond milk in particular dominates the alternative dairy beverage market segment, with sales reaching $921.1 million in October 2016. 

Premium dairy food product marketers must inspire innovation, especially considering America's rising multiculturalism, which is leaving various niches wide open for savvy competitors. Low-fat dairy milks packs a nutrient punch, and added sugars, commonplace in plant milks, are in the crosshairs of food industry regulators. Greek yogurt, among the most significant packaged food product trends of the decade, shows that back to the future can be viable when staying the course means continued decline. 

Larger marketplace trends are what make dairy and refrigerated case growth go round, and growth-oriented marketers will focus on meaningful innovation that broadens out the parameters of food product identity.