Many dairy companies that initially didn’t jump on board the plant-based trend have since done so – is there still room in this market for companies to get involved?
Sales of plant-based drinks are growing around 7% year on year in Europe, while annual sales growth for spoonable plant-based products is around 12% in Germany and 30% in France. So this is definitely a sector where there is room for more companies to enter, including dairy companies.
The European market for soy drinks has, of course, already existed for a couple of decades. The difference today is that, due to the rise of flexitarians, it has moved from the hippy niche to a mainstream market category. This may explain why dairy companies were, at first, a little slow to respond with their own plant-based dairy alternatives.
Why should dairy companies jump on board? They have the supreme advantage that their products already have a healthy image among consumers. With plant-based products, they have a further opportunity to act on consumer concerns around health, the environment and ethical production. Because of their background, dairies are also likely to have a different innovation mindset and more fermentation experience compared to other manufacturers of plant-based products.
In the spring, for example, Arla entered the market with its new JÖRD brand of organic oat drinks, made with Nordic raw materials. The key is to fill an unoccupied space in the market and then own it.
What are the challenges companies face in this sector?
Regardless of whether companies are producing plant-based dairy alternatives as drinks or spoonable products, the first challenge is always taste and mouthfeel. Consumers are attracted to the sweet and creamy dairy flavors they have grown up with. Plant bases often have an off-taste, although technological advances have reduced their harshness over the years.
Companies also have to find the space they want to occupy – whether they are going to develop a me-too product or something new. The main drivers for innovation at the moment are health, particularly good digestion, and the environment. However, there are other ways for manufacturers to differentiate their products, such as by targeting the many consumers who enjoy a regular snack or by adding functionality in the form of protein, live cultures or botanicals.
The important thing is that manufacturers do their homework so they understand what consumers want. For example, in France, consumers often go for spoonable products that are sold in small pots, while the Spanish love the flavor of horchata.
Another challenge is at production level. If you run a dairy setup, you cannot simply start producing nut or soy drinks due to the risk of allergen cross-contamination. One way to solve this is to rely on a third-party manufacturer for production. That avoids capital investment too.
Can companies with existing dairy products switch them easily to become plant-based? And will they need to change their production processes and equipment?
When switching from dairy to plant-based products, the processing principles, such as fermentation, are generally the same, but the nature of plant proteins is different. There may be a need to use enzymes as a preliminary processing step to break down a cereal raw material. This is why some companies choose to buy a plant-base paste that has already been pre-processed.
In theory, it is possible to use more or less the same equipment for dairy or plant-based production. The challenge that dairy companies face is that they may not have enough space to create an allergen-free zone, which is necessary to avoid cross-contamination from nut and soy raw materials to dairy processing lines. Use of a third-party manufacturer is a good alternative option.
What are the keys to developing a really good and distinct range of plant-based products?
If you are just developing another milk alternative, then that alone is not enough to make your product stand out on supermarket shelves. But there are opportunities to take advantage of.
These could be the use of a small packaging size and addition of flavor to turn your milk alternative into a refreshing, plant-based snack. Live cultures can also add extra functionality to your brand.
Alternatively, there is the possibility to choose from a range of plant bases. Oat or coconut bases, for example, are a way to differentiate your product from the many drinks based on soy. If you are looking to create a different sensory experience, then fermentation provides many opportunities to create new and delicious products.
At what stages of the process from concept to final product can DuPont assist companies?
We like to provide companies with complete support, from concept development to the start up of commercial production.
Based on our own consumer research and market studies that we commission, we generate concepts that serve as inspiration for new commercial products. Our experienced application teams and sensory analysis experts can then help with product development and the ultimate fine-tuning that ensures a product is the right match for a specific market.
What kind of solutions does DuPont have that can help?
We have a comprehensive portfolio of ingredient solutions for plant-based drinks and spoonable products. These include starter cultures for fermenting a variety of cereals and living cultures that provide additional benefits in vegan and vegetarian products.
From a nutritional enrichment perspective, we supply soy and pea proteins and soluble dietary fibers. Our proteins can also be used to help balance the viscosity of the final product so beverages, for example, are still lightly textured and refreshing to drink. Further, we supply tailored systems which ensure uniform quality, convenience and stability.
Many flexitarians or those considering switching to a plant-based diet expect plant-based products to match the taste, texture and price of their dairy counterparts – how do you address those issues?
Flexitarians are the main drivers of the plant-based segment. Although they are looking for good taste, they are these days generally aware that plant-based drinks provide a different sensory experience compared to dairy. Having said that, the technology available today is far improved compared to 20 years ago, so it is possible to cater for demanding consumer palates. At the same time, it is important to remember that health, environmental and ethical concerns also drive consumer choices.
Compared to dairy products, plant-based alternatives do often retail at a premium price. However, if locally grown cereals are in focus, this does not necessarily have to be the case. Part of our role as an ingredient supplier is to help manufacturers develop solutions that are affordable for consumers while being profitable for their business.
One way to achieve this is to develop snack-size products in smaller packaging. In fact, this is already a growing trend. Over the past few years, we have seen an increasing number of drink launches in 300 to 350ml packs, while more smaller pots are being used for spoonable products.
Is the key to be better, for example stick with tried and tested products like a vanilla yogurt alternative and make them more premium, or differentiate with a high protein claim; or is it to create something completely different, like unique flavors not already on the market?
This is a market that offers great possibilities and is in rapid growth.
Manufacturers have certainly experimented with plant-based alternatives to traditional dairy products, nutritional enrichment and the use of new and exciting flavors. There are many trends to draw on.
High protein addition is still popular for new product innovation, but manufacturers could also explore consumer interest in products that boost energy or immune health or promote relaxation or relief from stress and anxiety.
Combinations of juice and a plant-based drink are one possibility for summer refreshment, while consumers might welcome a hot plant-based chocolate drink in the winter. Years of dairy innovation have highlighted many new perspectives for product differentiation, which can now be expanded simply by switching from dairy to a plant base.