Dairy alternatives mature as protein and hybrid trends accelerate

A few years ago, much of the discussion around dairy alternatives was framed as plant-based versus dairy, but many companies are now taking a more flexible approach. This is happening against a backdrop of consumers increasingly identifying as flexitarian and seeking out a mix of dairy and plant-based products. Success in the alternative dairy space is no longer measured by replacing dairy entirely, as the market is evolving toward diversification of protein sources.

We speak to two leading players in the dairy alternatives space — ADM and Cargill — to examine what trends, innovation, and market dynamics are shaping the category in 2026. 

As Corinna Faustmann, R&D category leader at Cargill, puts it: “Consumers are no longer making binary choices between dairy and plant-based.”

“The dairy-free and plant-based dairy ingredients market is entering a more mature and pragmatic phase. Growth is continuing, but the conversation has shifted away from simply replacing dairy toward delivering products that genuinely meet consumer expectations around taste, texture, nutrition, affordability, and ingredient familiarity,” she tells Food Ingredients First.

“Many (consumers) are flexitarian and looking for products that fit different moments, needs, and preferences. That is driving interest in hybrid approaches, where dairy and plant-based ingredients are combined to deliver functionality, sensory quality, and nutritional balance.”

“At the same time, the continued rise of high-protein product development is influencing formulation strategies across the category. As demand for protein-enriched products grows, manufacturers are increasingly exploring combinations of dairy and plant proteins to help balance nutrition, sensory performance, and cost-in-use.” 

How dairy alternatives are evolving

Trish Hammond, senior marketing manager, Dairy and Specialized Nutrition, North America, ADM, agrees that an increasing consumer cohort is mixing and matching plant-based and conventional dairy products.

She flags how the dairy-free and plant-based dairy ingredients market is being shaped by consumers seeking balance, flexibility, and protein diversity. Rather than fully replacing traditional dairy, many shoppers are buying plant-based and conventional dairy products based on health goals, taste preferences, and dietary needs.

“Moreover, many plant-forward consumers (defined as flexitarians, vegetarians, and vegans) believe it is healthier to obtain protein from a variety of sources. As a result, manufacturers are innovating with blends such as soy, pea, and wheat proteins, as well as combinations of other plant-based and wholesome ingredients or dairy proteins like whey.”

“At the same time, consumers increasingly expect improved taste, texture, and nutritional performance, heightening demand from manufacturers for highly functional plant protein ingredients.” 

Overcoming formulation challenges

As dairy alternatives mature, innovation is shifting from single ingredients to integrated systems that can solve multiple challenges at once, such as taste, texture, nutrition, and scalability. Fermentation, fiber systems, and advanced texturizers are increasingly central to that shift.

Faustmann says that several innovation areas are moving very quickly right now, with fermentation remaining one of the most exciting spaces because it can improve flavor development, functionality, and ingredient efficiency. 

“We are also seeing strong momentum in precision fermentation for specific applications, particularly around sweeteners and functional ingredients. For example, Eversweet stevia sweetener (a product of Avansya, a joint venture of dsm-firmenich and Cargill) enables significant sugar reduction while maintaining a more sugar-like taste profile.”

“We are also seeing increasing interest in fiber systems because they can contribute texture, mouthfeel, and nutritional enhancement simultaneously. In parallel, there is growing interest in novel texturizing systems and ingredient combinations that can improve sensory quality while simplifying formulations and supporting scalability.”

“Integrated functional systems are becoming increasingly important. Manufacturers are looking for solutions that simplify development, accelerate time to market, and improve process robustness without compromising product quality,” she says. 

Nutritional and functional benefits

Hammond says that consumers increasingly prioritize high-protein products with added nutritional and functional benefits, which is pushing manufacturers to rethink protein formulation strategies and to maintain taste and texture.

Seeing as not all plant proteins are nutritionally complete or functionally equivalent, achieving the right amino acid profile, solubility, and stability — particularly in powdered shakes and ready-to-drink (RTD) beverages — requires thoughtful formulation.

“Manufacturers must lean into ingredient optionality and consider blended solutions to strike the right balance between nutrition, functionality, and cost. Our portfolio includes clean-tasting soy, pea, and wheat proteins, as well as beans, pulses, and ancient grains that help create nutrient-dense, high-protein products with strong sensory performance,” she says. Soy remains especially important because it provides excellent texture and functionality in fortified dairy-free alternative applications and is one of the few plant proteins considered a complete protein, with a PDCAAS of 1.

“Pea protein also performs well in dairy alternatives and beverage systems, especially those that take advantage of advanced agronomy, such as our pea proteins with incredibly low total aromatics, mitigating beany or earthy off notes.”

“Combining dairy proteins like whey or milk concentrates with plant proteins can improve affordability while maintaining nutrition and functionality. Soy is also an advantageous solution to partially replace whey as it has a more consistent and readily available supply than whey,” she notes.

The future of alt-dairy

The future of dairy alternatives appears less about replacing dairy and more about expanding consumer choice through flexible formulations, improved nutrition, better sensory performance, and greater affordability.

Looking ahead, ADM anticipates the dairy-free alternative category will be reshaped by innovations that spotlight stronger nutrition with functional health benefits while maintaining great taste. 

One of the most significant areas of innovation will be gut health-focused ingredients.

“Heat-stable postbiotics are especially promising because they enable digestive and gut health benefits in applications like plant-based shakes and drinkable yogurts while maintaining product integrity during processing. For example, ingredients such as our Esflorin1 (Bifidobacterium longum CECT7347) postbiotic may help support overall gut and digestive health, as well as potentially support reduced bloating,” Hammond says.

“Prebiotic fibers will also play an important role. Solutions like ADM/Matsutani’s Fibersol Prebiotic dietary fiber have not only been shown to provide support for the gut, but it also helps manufacturers reduce sugar, while maintaining texture and structural integrity. Fibersol is also stable in heat, acid, shear, freeze, and thaw conditions, along with being neutral in flavor and color, making it ideal for dairy-alternative yogurts and frozen treats.”

“Dairy-free products that combine high-quality protein, digestive-support ingredients, lower sugar, and dairy-like sensory appeal at an accessible value point will be best positioned for broader consumer adoption,” she concludes.

Faustmann sees a future alt-dairy space that is much more complementary than competitive. 

“Dairy alternatives will continue to grow, but we do not expect a complete replacement of dairy. Instead, we expect a broader diversification of protein and fat sources across the food system.

Hybrid and blended formulations are likely to become increasingly important because they offer practical advantages from both a formulation and consumer perspective,” she says.

Volatility in some protein markets, including ongoing pressure on dairy protein pricing, is also encouraging manufacturers to explore blended systems that provide more formulation flexibility while still meeting nutrition and sensory targets.

“Consumers today are looking for flexibility. Many are not strictly dairy-free or vegan. They are simply looking for products that fit their lifestyle, values, and budget while still delivering a satisfying eating experience.”

“From a technical standpoint, hybrid systems can also provide advantages. Dairy proteins and fats still offer unique sensory and functional properties, while plant-based ingredients can support diversification, formulation flexibility, and nutritional optimization in some applications. So rather than a replacement story, we increasingly see this as an expansion of choice within the broader food system.” 

The next phase of dairy-free technology

Over the next three to five years, Faustmann believes the biggest breakthroughs will likely come from technologies that help manufacturers scale dairy-free products with better sensory performance, formulation simplicity, and cost efficiency. Technologies that deliver more authentic dairy-like creaminess, meltability, flavor, and stability at scale will be critical for mainstream adoption.

“We expect continued progress in fermentation technologies, particularly around flavor development and functional ingredient production. We also expect major advances in blended protein systems, emulsification technologies, and multifunctional ingredient systems that simplify formulations while improving performance.”

“Another important area will be ingredient systems that support both nutritional improvement and ingredient familiarity. Products that can combine strong sensory performance with simplified ingredient lists will likely gain traction fastest.”

Finally, she cites AI-supported formulation and predictive modeling to accelerate innovation cycles. “These technologies are already helping improve formulation precision, optimize ingredient interactions, and reduce development timelines. The companies that succeed will be those able to translate these technologies into products that are scalable, affordable, and genuinely enjoyable for everyday consumers.”