Consumers resonate with functional health benefits and wellness in dairy and alt-dairy, flags IFF

24 Apr 2024 --- Amid the current challenging economic climate, IFF has unveiled a report that delves into the evolving consumer trends in the dairy and alt-dairy space. The new research highlights the key advantages of offering functional health benefits to dairy products while also connecting with consumers’ values.

“In the face of a global cost-of-living crisis, dairy and alternative dairy brands have found a silver lining by focusing on quality and value,” says Richard Neish, head of global futures and consumer intelligence at IFF.

“It is not about competitive pricing, it’s about delivering products that enhance wellness and align with consumer values — a strategy that is proving to be a game-changer.”

Deep dive
The report, derived from a comprehensive quarterly global survey of 21,000 consumers,  identifies five key trends that will drive market changes and product innovation. 

“Better-Being” is the leading trend, reflecting a significant shift in consumers’ health preferences. Six in ten respondents said they were always or often influenced by health labeling in their product choices. 

Other trends highlighted in the report are: “Simple Frugality,” “Neo-hedonism,” “AI/Human” and “Responsible Living.”

According to IFF, dairy has been one of the categories worst hit by inflation, with value CAGR outstripping volume CAGR. 

Despite inflation’s impact on the dairy industry, the report highlights that since 2022, consumers have prioritized quality over cost, with many opting for premium brands that promise uncompromised quality. 

According to IFF, six in ten respondents say they are always or often influenced by health labeling in product choices.Private label dairy products have emerged as a popular choice during the economic downturn, with 35% of consumers gravitating toward budget-friendly options without sacrificing quality. Sixty-three percent of respondents said they started, or continued, to buy more expensive dairy brands in Q4 of 2023, and 52% said they preferred to pay more to ensure that quality is not compromised. 

The report emphasizes the strategic importance of integrating functional wellness ingredients, such as probiotics, to add value beyond pricing. 

“Driving value with values”
The IFF insights also reveal a compelling narrative of brands “driving value with values,” resonating with consumers who seek to express their personal beliefs, like sustainability and authenticity, through their food choices. 

This is reflected in 61% of respondents and particularly true for Gen Z, with 67% emphasizing the importance of aligning purchases with values. 

Additionally, the report highlights a shift toward indulgence and convenience, highlighting consumer desire for pleasurable experiences and consuming on-the-go products like ice cream. 

Earlier this month, the company opened a co-creation center in Wageningen, the Netherlands, enhancing its capabilities and facilities to drive research and innovation to better serve its global customers.  

Edited by Elizabeth Green