June 25, 2024 – The dairy aisle is changing. While traditional milk remains a staple, the rise of plant-based alternatives is reshaping the landscape. Here we dive into the North American market for dairy and dairy alternative drinks, exploring consumer trends, key players, and the innovations driving this dynamic category.
Consumer Insights in Dairy and Dairy Alternative Drink Trends
Canadians are more frequent consumers of dairy alternative drinks than Americans, with 23% of Canadians purchasing these drinks in the past year compared to 17% of Americans. The same trend holds true with dairy drinks, where 68% Canadians purchased these products in the past year, compared to 56% of Americans. However, both countries purchase dairy and dairy alternative drinks more often than the global average.
Drink trend research indicates that dairy drink consumption increases with age. Generation X and Boomer consumers are more likely than their younger counterparts to consume dairy drinks. With dairy alternative drinks, vegans are unsurprisingly highly likely to consume these products, often consuming them every day. Younger consumers, such as Gen Z and Millennials, have also rapidly increased their consumption of non-dairy alternative drinks in the past year. Both dairy and dairy alternative drinks saw more consumers increasing than decreasing their consumption in North America.
Health and taste are the primary reasons for consuming both dairy and dairy alternative drinks. In dairy alternative drinks, environmental concerns are becoming increasingly important to consumers as well. Cost and freshness is valued more heavily in dairy drinks, while health aspects are more important to dairy alternative drink consumers.
Breakfast is a key consumption occasion for over 60% of both dairy and dairy alternative drink consumers. Dairy drinks are also less likely to be consumed at between-meals snacking occasions, compared to dairy alternative drinks.
North America Market Size and Trends in Dairy and Dairy Alternative Drinks
While overall dairy drink volume in North America is on a slight decline in recent years, sales have been on the rise since 2021. Dairy drink sales are projected to continue growing at a rate of 3.6% throughout the next five years. Per capita consumption of dairy drinks in the region is relatively average within the global picture. It is higher than average intakes in Asia, the Middle East, and Latin America, but is lower than the averages for Europe and Australasia.
Drink trend research shows that dairy alternative drinks are growing in both sales and volume. Sales are projected to grow at a rate of 7.3% in the next five years, and volume is expected to grow at a rate of 10.1%. Per capita consumption of dairy alternative drinks in North America is relatively high by international standards, particularly so in Canada, which has the fourth highest per capita rate worldwide. Additionally, North American sales of dairy alternative drinks are growing faster than the global totals.
Companies and Brands in the Dairy and Dairy Alternative Drink Market
Private label products are a significant force in the dairy drinks market, representing 50% of total sales value in North America. Additionally, private label’s share of total launches in the region stands at 21%. This highlights the competitive nature of the market and the importance of innovation and differentiation for established brands.
Regarding the top public companies in North America for dairy drink product launches, Farmers of America (DFA) leads the traditional milk market in the US and Saputo holds the top spot in Canada. DFA, a large cooperative owned by 11,000 family farms, boasts a wide range of regional brands including Alta Dena, Dean’s, and Kemps, while Saputo, a global company with significant Canadian interests, features brands like Baxter, Dairyland, and Neilson.
In the dairy alternative space, Danone is the current North American market leader, responsible for 10% of new product launches in 2019-2023. Their portfolio includes the popular Silk brand, offering a diverse range of almond, soy, oat, coconut, and cashew milk options. Other notable innovators in the non-dairy sector include Blue Diamond Growers, a California-based almond cooperative, and Califia Farms, a plant-based specialist known for their almond, oat, and coconut milk offerings. Private label is not as advanced in the dairy alternative drinks market, representing 9% of product launches.
What’s Shaping the North American Dairy and Dairy Alternative Drink Category?
North America represented 4% of new dairy drink launches, and 10% of dairy alternative drink launches in the global market. Dairy drink trend research indicates that in the past five years, dairy alternative drinks have represented an increasing number of launches within total milk launches in North America. Dairy alternative drinks now account for 64% of milk launches in the region, with unflavored milk representing 23% of launches, and flavored milk representing 14%.
Ethical claims focused on animal welfare, as well as protein, and fat content-based claims are key in dairy drinks. However, protein claims are on the rise in dairy drink trends, while fat content related positionings have been decreasing in use. In dairy alternative drinks, free from claims dominate the market, such as GMO-free and gluten-free. However, plant-based and vegan are also popular, with plant-based growing substantially in the past five years.
Vitamin/mineral fortified dairy alternative drinks have grown in the past five years, going from 1% of launches in the category, to 8% of launches. Barista blends, and seasonal and limited-edition products are also increasingly popular in the dairy alternative drink market.
Oat and almond are the most popular bases for dairy alternative drinks, but are both losing launches share, while products that do not cite specific ingredients in the product name are becoming more popular. Sustainability is also a growing influence on ingredients in dairy alternative drinks. For example, innovation utilizing legumes and pulses as a sustainable ingredient base for dairy alternative drinks is emerging in the market.
With dairy alternative drinks, the market is heavily concentrated on four key flavors, which represented three-quarters of all launches in 2023. These four flavors are milk chocolate, strawberry, vanilla, and banana. Strawberry more than doubled its share of new product launches between 2019 and 2023, with much of the growth coming from 2023 alone.
What’s Next in Dairy and Dairy Alternative Market Trends?
The North American dairy and dairy alternative drinks market is evolving rapidly, with key opportunities for growth in the coming years.
While younger generations are driving growth in consumption in non-dairy drinks, older consumers remain frequent buyers of both types of drinks. Brands can cater to their needs by focusing on functional health benefits, such as protein and calcium, to support healthy aging. Additionally, brands can encourage younger, more adventurous consumers to adopt dairy drinks in place of other soft drinks by innovating with flavor, convenient formats, and media tie-ins.
There is a growing demand from younger consumers for hybrid products that combine the taste and texture of dairy milk with the health and environmental benefits of plant-based alternatives. These products can offer a wider range of flavors and textures, as well as additional benefits like fiber enrichment and protein content.
Consumers are increasingly interested in knowing where their food comes from and how it is produced. Brands can capitalize on this trend by promoting traceable and responsible sourcing practices in dairy drinks, such as organic farming, pasture-raised cows, and sustainable ingredients.
Finally, sustainability is a key concern for consumers, especially younger generations. Brands can leverage this by exploring ingredients that benefit sustainable credentials, such as oats and pulses, and promoting the environmental benefits of their products.
This article is based on our report, “Now & Next in Dairy & Dairy Alternative Drinks in US & Canada.” If you are interested in reading this report, feel free to request a demo.
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