June 21, 2024 – Here we investigate the global market for dairy and dairy alternative drinks, exploring key trends shaping this dynamic category. Through our 360-level macro and micro trend research, we examine market size and growth, key players and brands, consumer insights, new product development, and key takeaways for future growth and innovation.
Dairy and Dairy Alternative Drinks Market Trends
The global dairy alternative drink market is continually growing, and is expected to double its sales value in 2027, when compared to 2018. While the overall dairy drink market is expected to grow at a slower pace it is also on the rise in both sales and volume at a rate of 3% and 2% respectively. The dairy alternative segment is experiencing a stronger growth trajectory with a 7% and 6% growth rate in sales and volume, respectively. This growth is partially driven by rising demand in North America and Western Europe, with both forecasted to grow by around 10% in sales within the category between 2023 and 2027.
Asia currently dominates the dairy alternative drinks market, accounting for 65% of all sales in 2023. However, in dairy drinks, while Asia still produces the most sales, the America’s and West Europe represent a larger slice of global sales compared to dairy alternative drinks. Latin America represents 18% of sales, with substantial growth projected into 2027, West Europe represents 15% of sales, and North America represents 11%.
When measuring by country, China leads the dairy drink market in terms of sales, while Vietnam and Argentina are showing strong growth. In the dairy alternative drink market, China alone accounts for over half of global sales. The United Kingdom, Denmark, Canada, and the United States are all demonstrating notable growth in sales in the category.
Companies and Brands in the Dairy and Dairy Alternative Drink Market
The global dairy drink market is more fragmented than the dairy alternative drink market. Private label is also a significant player in both categories, representing around 15% of new product development in both.
European giants like Nestlé, FrieslandCampina, and Lactalis are key players, with Nestlé’s brands including Nido/Ninho, Nesquik, and Milo, while FrieslandCampina focuses on markets like Europe and Asia with brands like Campina, Landliebe, and Frisian Flag. Lactalis, a French multinational, is known for its Parmalat brand and has a strong presence in various regions with brands like Lactel, Puleva, and Dukát.
Danone, another French multinational company, is the top company in the dairy alternative drink market, achieved through its global dairy alternative drinks brand Alpro. The company’s plant-based division, which includes dairy alternative drinks, accounted for 54% of its revenue in 2022.
Oatly, a Swedish company, is a pioneer in oat-based drinks and continues to be a dominant player. However, the company has recently undertaken cost-cutting measures to improve profits. NotCo, a Chilean food tech company specializing in plant-based alternatives, is rapidly growing in Latin America and globally with its NotMilk product.
Other notable companies include Cereal Base Ceba, Ecotone, and Kikkoman, all of which are actively innovating and expanding their product ranges.
Consumer Insights in Dairy and Dairy Alternative Drink Trends
Globally, consumers are increasingly incorporating dairy and dairy alternative drinks into their diets, with a significant portion consuming these beverages regularly. Older consumers (Boomers) are the most frequent consumers of both dairy drinks, and dairy alternative drinks. Europe is the most common region for consuming the two categories of drinks.
Consumers tend to maintain consumption of dairy milk products. Among those changing consumption across all regions there are more increasers than decreasers. This is particularly notable in the Middle East and Africa, where 30% of consumers have increased consumption in the past year. By age, the most likely to increase consumption are younger generations (Gen Z and Millennials). With dairy alternative drink products the majority of consumers are maintaining their consumption of dairy alternative drinks.
Health and taste largely drive consumption of dairy and dairy alternative drinks. For consumers of dairy alternative drinks, environmental and ethical reasons also rank highly. A range of claims influence consumption of dairy and dairy alternative drinks. Product safety, made with real ingredients, high in/source of protein, and low/no/reduced fat claims are all drivers of consumption in dairy drinks, and plant-based, low/no/reduced sugar, and made with real ingredient claims are all drivers of dairy alternative drinks consumption.
Both drinks are mostly bought at supermarkets, although in Asia Pacific, the Middle East, and Africa, convenience stores are more popular. They are also typically consumed with breakfast.
New Product Development in Dairy and Dairy Alternative Drinks
The global dairy alternative drinks market is experiencing a surge in product launches, with a 5.8% growth from 2019 to 2023. Europe is leading the charge, and the Middle East and Africa is demonstrating particularly strong growth. In dairy drinks, Asia Pacific, and the Middle East and Africa are driving new product launches.
Ethical and protein claims are gaining traction in dairy drinks. Protein-related claims are by far the most popular health claim in dairy drinks globally. Lactose-free products are also seeing strong growth in new product development, driven by rising awareness of lactose intolerance. Ethical and health claims are helping drive new product development in dairy alternative drinks. There are a wider range of health claims seen in dairy alternative products compared to regular dairy drinks, such as no added sugar, high/source of protein, vitamin/mineral fortified, organic, and GMO-free.
Oat-based drinks have emerged as the most common dairy-alternatives drinks launched in 2023, growing by 23% and outperforming soy. Pea-based drinks are also gaining traction but haven’t yet reached mainstream popularity.
Flavor innovation is also a key driver of new product development, with Asian-inspired flavors like melon and almond gaining momentum. Indulgent flavors like caramel and chocolate are also popular, with companies increasingly combining them with healthy ingredients to create indulgent yet healthy options.
What’s Next in Dairy and Dairy Alternative Drink Trends?
The global dairy and dairy alternative drinks market is evolving rapidly, with key opportunities for innovation in the coming years.
Older consumers are increasingly seeking functional health benefits in their beverages, presenting an opportunity to develop products that address their specific needs. On the other hand, younger consumers are embracing smaller pack sizes, ambient products, and convenient formats that fit their busy lifestyles.
Protein content is a growing concern, with consumers seeking higher protein levels in their drinks. Plant-based protein is gaining popularity alongside traditional dairy protein, creating opportunities for innovative blends and formulations.
Finally, brands can target increasing consumption outside of breakfast by incentivizing dairy and dairy alternative drinks as a snacking opportunity. Indulgent flavors and high-protein content can be considered, enticing consumers looking for a treat and satiety.
This article is based on our report, “Now & Next in Dairy & Dairy Alternatives Drinks – Global.” If you are interested in reading this report, feel free to request a demo.
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