June 28, 2024 – The European dairy and dairy alternative drink market is in a state of flux. While traditional milk remains a staple, consumers are increasingly embracing plant-based options, driven by health, environmental, and ethical concerns. Through our 360 research, we will explore the latest trends shaping this dynamic category, providing insights into consumer behavior, market trends, key players, and emerging innovations.
Consumer Insights in the European Dairy Market
More than one in three European consumers of dairy drinks say they consume milk and flavored milk drinks daily. This is the highest rate among other regions around the world. Older consumers are driving dairy drink consumption, with almost one in two consumers over the age of 55 consuming dairy milk every day or more. The main reasons for consuming dairy milk is for taste, health, and because it is a staple. Younger consumers are driving increased consumption of dairy drinks, especially in the 18-24 age range.
With dairy alternative drinks, there is no clear age group driving consumption. However, younger consumers are less likely to consume dairy alternative drinks daily, whereas consumers over 55 are most likely. Health is the primary driver for consumer dairy alternative drinks, ahead of taste and environmental/ethical reasons. Additionally, one in three European consumers have increased their consumption of dairy alternative drinks, driven by the 25-34 age range.
Clean label claims are the most influential for consumers of dairy drinks. European consumers are also influenced by where and how dairy milk is produced. In non-dairy milk, consumers want the reassurance of a plant-based claim. The low/no/reduced sugar positioning is the most influential health claim, and natural claims are also important to European consumers.
European dairy market research indicates that cost is the most influential purchasing factor for dairy drinks. This is followed by taste, freshness, and shelf-life. For dairy alternative drinks, taste is most important, with many consumers looking for a tasty alternative to dairy milk. Cost is less of an influence when buying dairy alternative drinks than it is when buying dairy drinks, but it still ranks as second most important. Health aspects are also key for consumers buying dairy alternative drinks.
European Dairy Market Size and Trends
Dairy drink sales have remained steady in the European dairy market, mirroring the global rates of growth. Europe accounts for 24% of global sales of dairy drinks and is projected to rise by 3% CAGR over the next five years. Dairy alternative drinks are growing at a faster rate, with an 8% CAGR in sales projected over the next five years in Europe.
West European markets lead sales growth in the region for both dairy and dairy alternative drinks. Spain, Sweden, and Finland have the highest sales of dairy drink products, while the United Kingdom and Denmark have the highest sales in dairy alternative drinks.
The average per capita consumption of dairy drinks in Europe is 81 liters, far exceeding the global average of 59 liters. Despite being a traditional dairy-consuming region, there is wide variation in consumption rates across Europe. Estonians are the highest in the region, while Bulgarians are the lowest, with one of the lowest per capita consumption rates in the world. However, along with other East Europeans, Bulgarians are forecast with relatively high increases in per capita consumption between 2023 to 2027.
The average per capita consumption of dairy alternative drinks in Europe is 2 liters – a similar rate to that seen globally. This compares to more than 80 liters for dairy drinks. However, it is worth noting that among consumers of dairy alternative drinks, the average consumption rate is likely to be much higher. There is a wide variation in consumption rates across the region, with the UK far exceeding the rate of the lowest consumers in Greece. The UK is also forecasted to have the strongest growth in per capita consumption.
Companies and Brands
The European dairy market is more fragmented than the dairy alternative drink market. The top ten launchers of dairy drinks represent 33% of total launches in the region, compared to the top ten dairy alternative drink launchers representing 47% of total launches.
French multinational Lactalis is the most active launcher of dairy drink products in Europe, and is active in multiple markets, with brands like Parmalat, Lactel, and Puleva. Dutch giant FrieslandCampina focuses on unflavored and flavored milk, with brands like Campina, Landliebe, and Yazoo. Danish cooperative Arla is a major player in Western Europe, offering a wide range of milk products under its umbrella brand.
Danone is the biggest player in the European dairy alternative drinks market and represents 25% of product launches in the region. Its Alpro brand is a key driver of growth, focusing on plant-based products. Oatly is a dominant player in oat drinks, although it has recently undertaken cost-cutting measures to improve profits.
Dairy and Dairy Alternative Drink New Product Development Trends
New dairy alternative drink products are launched more often than dairy drinks. Additionally, dairy alternative drinks launch activity is increasing at a faster rate than dairy drinks. East Europe is helping drive this uptick in launch activity.
Ethical and health claims are showing significant growth in dairy drinks, outpacing clean label claims. In dairy alternative drinks, ethical, health, and natural claims are all growing in popularity.
Milk chocolate, strawberry, and vanilla are the top three dairy drink flavors, while milk chocolate, vanilla, and banana are the top dairy alternative drink flavors. Indulgent flavors are also becoming more important in both types of drinks, as companies target adults and those looking for a healthy indulgent drink. Indulgent flavors are often used in products that have added health benefits such as added protein. Alongside chocolate, flavors to watch out for include salted caramel and sweet bakery flavors.
What’s Next in the European Dairy Market?
Key opportunities for innovation in the European dairy market lie in catering to the evolving needs of consumers. Older consumers, particularly Boomers, are seeking functional health benefits to help them age well. Younger consumers are looking for convenient formats, smaller pack sizes, and ambient products that fit their busy lifestyles.
There is a growing demand for high-protein products, with plant-based protein gaining traction alongside traditional whey protein. While breakfast remains a key consumption occasion, there is potential to increase usage throughout the day, particularly for snacks and lunchtime meals.
Finally, ethical claims are becoming increasingly important, with consumers demanding transparency and sustainability from brands. Companies that can demonstrate a positive impact on the environment and promote ethical sourcing practices will be well-positioned for success.
This article is based on our report, “Now & Next in Dairy & Dairy Alternative Drinks in Europe.” If you are interested in reading this report, feel free to request a demo.
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