August 20, 2020
Dairy alternative products are rapidly gaining space on menus and grocery shelves. Consumers who view plant-based products as healthier and more sustainable than dairy are driving the dairy alternative explosion. Sensitivities and allergies to lactose, and increased adoption of veganism are also contributing to category success.
Market Research Future reported that the U.S. dairy alternative market grew 61% from 2012 to 2018 when it reached US$2.3 billion, and it is expected to surpass $2.7 billion by 2022 with a compound annual growth rate (CAGR) of 4.4%. In 2017, almond milk owned 64% of all U.S. dairy alternative sales followed by soy and coconut milks, which together accounted for a quarter of the market. Niche dairy alternative milks like oat, cashew and hemp made up the remaining 11% of the market, according to Mintel. Oat milk has gained momentum over the last couple of years and could take market share away from category leaders. Nielsen found that oat milk sales grew by 23% from 2017 to 2018 while total non-dairy milk blends sales grew by 51%.
Companies can basically “milk” anything these days, thanks to advances in plant-based ingredient technologies, and brands are introducing new innovations every year. Dairy alternative innovation has gone beyond the milk and natural products aisles as well. Ice cream, yogurt and premium cheeses like gouda and chevre have received the plant-based treatment. More dairy alternative products are expected to enter the market and improve over time as new technologies become available.
Formulating dairy alternatives
Though demand for dairy alternative milk has skyrocketed in the last decade, it has existed for centuries and been commercially available for several decades. Early iterations of dairy alternative products had flavor and texture flaws such as tasting chalky, astringent and stale. Proliferation of dairy alternative products prompted suppliers to develop technologies to improve taste and solubility of plant-based ingredients, making them more palatable.
Dairy alternative milks have no standard of identity, so brands have plenty of opportunity to create a unique product. Product developers choose ingredients based on taste, stability, nutrition and mouthfeel. Concerns like calories, fat, fiber and protein content can vary significantly for different plant-based ingredients, and product developers will often enhance products with protein, vitamins and minerals to create a richer nutritional profile.
Brands launching dairy alternative milks typically want a flagship product to taste as close to dairy milk as possible. Flavor profiles for plant-based ingredients range from earthy to nutty, so taste will be affected by the core plant-based ingredient in the formula (e.g., almond, soy or oat). The base ingredient will guide which technologies a product developer and flavorist use to achieve the desired product attributes.
Plant-based ingredients used in dairy alternative milks can be in the form of a flour, paste or concentrate. The ideal ingredient for creating a plant-based product reminiscent of dairy milk has a neutral flavor, smooth, non-gritty texture in water and remains stable through processing. Enzymatically treated ingredients are more soluble and stable in the beverage formula (J Food Sci Technol. 2016 Sep; 53(9): 3408–3423), but they tend to be more expensive and are not available for all types of plant-based products.
Additionally, plant-based ingredients don’t have enough inherent fat to achieve the same mouthfeel and viscosity as a dairy milk, so fat is added using ingredients like sunflower oil, rapeseed oil or coconut cream. Fattier dairy alternative milks often receive better reviews by baristas because fat also helps improve foam formation and creaminess in espresso or coffee.
Most formulations also use stabilizers to keep the protein and fat suspended in the beverage for its entire shelf life. Determining the proper ingredients and proper levels of stabilizing ingredients is one of the biggest challenges in developing and commercializing dairy alternative milk products. Additionally, the clean label trend can create another hurdle for product developers. Many brands don’t want unfamiliar ingredients like carrageenan, xanthan gum, pectin and cellulose gum on their product labels, even though some are derived from plants and are effective stabilizers for these products.
Flavorists complement the product developer’s formula with supplementary flavors and maskers. Dairy milk profiles are achieved by disguising inherent flavors associated with plant-based ingredients like toasted, nutty or green by incorporating a supplementary flavor reminiscent of fresh dairy. The supplementary flavor will have fatty, creamy notes expected from dairy milk and possibly sweeter notes to cover up the pungent flavor of the base ingredient. One of the challenges with plant-based ingredients is that they have off-notes like cardboard, metallic, astringency and rancidity, which is why masking flavors is also recommended for the beverage matrix. A masking system creates a cleaner profile and helps amplify the fresh dairy flavor. Additionally, a masking system can help mute off-notes that may occur when the product is processed at ultra-high temperatures.
Plant-based is promising
The future for dairy alternative products is bright. More consumers are jumping on the plant-based bandwagon as products become better tasting, easily accessible and of greater variety. Oat milk appears to be the “next big thing” in dairy alternative milk. Brands like Oatly have a milk-like flavor and texture that consumers crave. Additionally, oat milk is more sustainable than other dairy alternatives which also adds to its appeal. For example, the Water Footprint Network claimed that it takes around 383% more water to produce one pound of almonds than it does to produce one pound of rolled or flaked oats. Beyond dairy alternative beverages, more plant-based versions of dairy products are expected to become available, such as butter, sour cream, melting cheese and dessert toppings.
Holly McHugh is the marketing associate at Imbibe, a Chicago-based beverage development company. She focuses on the company's external communications and brand awareness and monitors and analyzes beverage trends to guide clients in making strategic decisions about product development.
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