Key Takeaways
Key players operating in the dairy alternative market are Danone North America PublicBenefit Corporation (US), The Hain Celestial Group, Inc. (US), Blue Diamond Growers(US), SunOpta (Canada), Sanitarium (New Zealand). Key players are focusing on newproduct launches, partnerships, and M&A activities to strengthen their market positions.Danone recently launched two new oat milk yogurts under its flagship Silk brand.
The growing demand for plant-based foods due to rising health awareness among consumers isdriving the growth of the dairy alternative market. Consumers are increasingly switchingto non-dairy milks and frozen desserts as they offer similar nutritional benefits and tastebetter than conventional dairy products. Especially after the COVID-19 pandemic, peopleare more focused on immunity-boosting diets and wellness regimens.
The global dairy alternative market is experiencing strong growth with expandingoperations across international markets. Leading brands are focusing on R&D efforts toimprove flavors and textures of dairy alternatives to closely mimic dairy products. Theyare also investing in awareness campaigns to educate people about benefits of plant-baseddietary choices for the environment and animal welfare. The market is witnessingremarkable growth in the Asia Pacific region due to growing Western influences andrising incomes.
Market Drivers
The rising prevalence of lactose intolerance globally is a major driver for the dairyalternative market. According to the National Institutes of Health, around 68% of theglobal population has a reduced ability to digest lactose after infancy. The lactosemalabsorption condition is most prevalent in Asia and Africa. As people seekalternatives to dairy, the demand for lactose-free and dairy-free products are surgingacross the world. Plant-based milk sales now exceed many dairy categories includingconventional milk in the United States which highlights consumers’ expandingpreference for non-dairy items.
Current geopolitical situation and its impact on Dairy Alternative Market growth
The global dairy alternative market is facing uncertainties due to the ongoing geopolitical tensions and conflicts across major regions of the world. The Russia-Ukraine war has disrupted global supply chains and export of key ingredients like soy, oats and almonds used in plant-based dairy products. This has constrained the production volumes and pushed up raw material costs for dairy alternative brands. Rising input costs are being partially passed on to customers, thereby impacting price-sensitive consumers in developing markets of Asia and Africa which were emerging as high growth territories. The dairy alternative market players need to closely monitor the geopolitical developments and rework their supply chain strategy. There is a need to diversify sourcing regions and identify alternative supplier countries to minimize overdependence on key exporting nations amid conflicts. The brands also need to innovate new dairy-free products using locally available indigenous plant-based ingredients to cater to regional tastes and reduce import dependency.
Geographical regions with highest concentration in Dairy Alternative market
North America currently dominates the global dairy alternative market and accounts for over 40% of the total market value led by the United States. Wide acceptance of plant-based lifestyle, increasing vegan population and proactiveness of American consumers towards healthier diets have propelled the demand for dairy-free products in the region. Europe is another major regional market for dairy alternatives accounting for over 30% value share led by countries like Germany, UK and France. The growth is supported by stringent environmental sustainability regulations, growing health-conscious middle class and advocacy campaigns for animal welfare practices. Asia Pacific is fast emerging as an important geographical region for dairy alternatives with China and India taking lead on the back of rising lactose intolerance, pivot towards herbal alternatives in ayurveda and home-grown brands promoting indigenous plant-based offerings.
Fastest growing region in the Dairy Alternative market
Asia Pacific region, excluding Japan, represents the fastest growing regional market for dairy alternatives projected to expand at a CAGR of over 12% during the forecast period. The key factors crediting to this growth include rising affluence, burgeoning middle class population with increasing expenditure on premium health products, growing awareness about benefits of plant-based nutrition and adaptation of western vegan trends especially among millennials and generation Z consumers. Additionally, higher prominence of lactose intolerance in the Asian gene pool and initiatives by regional governments to promote indigenous plant-based diets are also driving the demand for dairy-free products. Countries like India, China, Indonesia, Thailand and Vietnam with their huge consumer base and rapid urbanization offer immense growth opportunities for dairy alternative brands looking to expand footprint in Asia.
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