The plant-based dairy alternatives market faces challenges, but brands still have clear opportunities to regain momentum. According to data from FMI – The Food Industry Association, total plant-based store sales reached $16.8 billion for the 52 weeks ending Aug. 10, 2024, up from $16 billion the previous year. Within the plant-based food and beverage category, sales of milk and dairy alternatives saw a slight dip, totaling $2.6 billion compared to $2.8 billion the prior year.
Consumer demand for plant-based dairy is driven by a desire for healthier, more sustainable products, but expectations around taste, texture and nutrition are higher than ever.
With 67% of shoppers drawn to products with fewer ingredients and 69% favoring those close to whole food plant sources, brands have an opportunity to differentiate through clean label formulations and ingredient transparency, according to FMI. However, converting skeptics remains a challenge—only 5% of consumers who have not yet tried plant-based milk alternatives are very willing to do so, based on FMI data.
While consumers are open to innovation, only a small fraction who have not yet tried plant-based dairy are very willing to do so, with just 5% willing to try dairy milk alternatives and 6% willing to try other dairy product alternatives – highlighting the importance of improving product appeal, particularly around taste and texture, to convert skeptics and grow the category, according to FMI.
Yet, alternative dairy brands may find lucrative opportunities in Gen Z consumers who prefer the taste of these products more than conventional dairy, as previously reported by FoodNavigator-USA.
Hybrid dairy products may bridge the gap on taste, texture and sustainability for skeptical consumers
Hybrid products, combining traditional dairy and plant-based ingredients, offer a compelling bridge for consumers who are open to sustainable options but not fully committed to plant-based diets. These products provide balanced nutrition while addressing sustainability concerns, with formulations leveraging ingredients like starches, flours, hydrocolloids and plant-based proteins to improve texture and mouthfeel, Ivan Gonzales, director of marketing, Ingredion, explained to FoodNavigator-USA.
The focus for these products should be on aligning messaging around nutrition, sustainability and taste, particularly since taste and texture continue to be top considerations for consumers deciding whether to adopt plant-based alternatives.
Hybrid formulations are generally more complex, requiring a longer ingredient list that includes both dairy and plant-based components. However, from a formulation perspective, the process is manageable given the established expertise in both traditional and plant-based product development, Gonzales said.