Hybrid flavors and “trend collisions” help dairy brands break out

14 Apr 2020 --- A number of starring themes are expected to influence dairy product development throughout this year, given rise by consumers’ appetite for new flavor experiences and emergent hero ingredients. In NPD where these trends “collide,” a unique opportunity for brand storytelling is presented. The rising popularity of the category for fermented dairy blended with exotic ingredients, for instance, can be attributed to both claims of boosted gut health and opportunities for flavor discovery. FoodIngredientsFirst speaks to key players in the space to explore how traditional dairy is breaking out into novel segments.

Fermented milks are trending in the dairy space, particularly because of their probiotic virtues. That leads to the fast expansion of the “ethnic fermented milks” segment, such as lassi from India, ayran from Turkey, laban from Lebanon, skyr from Iceland and straggisto from Greece. “One of the advantages of these products is that they pair very well with exotic and ethnic flavorings, which are a growing trend – for instance, coconut, matcha and chai are popular tastes for Indian lassis,” remarks Kévin Bangratz, Marketing Researcher at Prova.

Trending fermented milks are expanding the “ethnic fermented milks” segment.Today’s adventurous consumers are keen to seek explorative eating experiences. In line with Innova Market Insights’ number seven trend for 2020, “Hello Hybrids,” highlights that they are highly receptive to hybrid products. In this space, successful launches adapt the archetype “the crazier, the better.”

“There is a notable interest on the market in ‘hybrid’ solutions based on nuts, grains and seeds, which combine the benefits of dairy and plant-based products to create something delicious. One such example is a delicious porridge topped with protein-rich yogurt,” Eric Souza, Global Category Manager Dairy & Dairy Alternatives at Agrana.

Fifty-six percent of global consumers say that stories around a brand influence their purchase decision, according to Innova Market Insights Data. The market researcher has crowned “Storytelling: Winning with Words” as its Top Trend for 2020 expected to influence NPD across the board. “These food stories add authenticity and brand loyalty to a product, they just need to be communicated properly,” notes Lavanya Venkateswar, Product Manager at Univar Solutions USA.

“We’re building a portfolio of ingredients from suppliers with some great stories to tell, whether it’s organic seaweed sourced from the pristine waters of the Outer Scottish Hebrides or agave inulin from a co-operative of Mexican farmers,” she explains.

In the region of Europe, the Middle East and Africa (EMEA), Univar is seeking out suppliers with a story centered on sustainability. “Our new lactose-free milk powder supplier is set to be carbon neutral by 2035 through a number of specific practices including smart grass cultivation, using manure as biogas and offering plant-based packaging,” she adds.

Dairy consumers are growingly sensitive to flavor variations, particularly when these are positioned as premium offerings.Flavor trends and novel ingredients
Dairy consumers are growingly sensitive to flavor variations, particularly when these are positioned as premium offerings. “That is why single origin vanillas are increasingly used in dairy products, particularly in yogurts and ice creams: vanillas from Madagascar, Tahiti or Papua New Guinea are among the trendiest ones. These ingredients capitalize on the terroir, which is a good way to make more traceable and authentic products,” details Bangratz.

“Customers are still looking for new flavors to bring new experiences and differentiate in the market. There is an increased interest in premium indulgent flavours and cross category inspired concepts. We can see this in botanicals and dessert inspiration; the use of botanical ingredients such as rose petal is growing in a number of categories, including dairy,” says Neil McCluskey, Dairy EUM Lead of Europe & Russia at Kerry.

Other overarching trends in the dairy category are centered around health and wellness, leveraged by products touting a clean label. “This is taking shape as increased protein and functional ingredients for an added immunity boost. We are also seeing special inclusions in dairy beverages, such as matcha, fruit, cereal, vitamins/minerals; more indulgence and fun with creamier mouthfeel in yogurt and carbonation in dairy protein drinks,” says Anne Sinha, Director of Global Protein Segments at CP Kelco.

Agrana, meanwhile, is currently working on ways to further enhance the health benefits of yogurt. “One example is the strengthening of the innate immune system via botanicals and herbal extracts like Echinacea and green tea extract. To promote more natural formulations, we have products which are made only from fruits, and are free from added ingredients like stabilizers and coloring,” says Souza.

Regional trends and market challenges
FoodIngredientsFirst also speaks to the dairy suppliers about various regional trends of notable influence. “Since the early 2000s, the Chinese government has supported the consumption of dairy products for its nutritional content, namely protein. Recently, they issued new advice (called the ‘milk and milk-related products consumption guidelines for Chinese residents’) suggesting that dairy can boost immunity. This provides stronger momentum for the consumer to increase their daily intake of dairy products,” says Anne Sinha, Director of Strategic Segments at CP Kelco.

Venkateswar of Univar comments that the dairy sector is “seemingly under siege” in many Western markets following the rise of “conscious consumerism.”“In the US and Europe, we have seen sales surge in dairy alternatives. In dairy alternatives, the trend has become about what the product doesn’t have. ‘Free-from’ seems to be the most touted attribute so that is prompting formulators to seek out multifunctional ingredients, such as our gellan gum. Fermentation-derived gellan gum addresses protein suspension, stabilization, texture and mouthfeel in one nature-based ingredient,” she elaborates.

Different regions have their own set of challenges, but we have seen how they’ve turned them into unique solutions and developed products to adapt. “For example, China is poised to become the largest dairy market in the world. However, chilled chain infrastructure is not in place to cover the vast distances required. Manufacturers have solved this through the development of ambient products, especially ambient drinking yogurts that can be transported easily without refrigeration and have a long shelf life,” says Sinha.

Venkateswar of Univar comments that the dairy sector is “seemingly under siege” in many Western markets following the rise of “conscious consumerism.” “Increased availability of information around health and intolerance and changes in consumer beliefs around sustainability and animal welfare has seen certain segments of the dairy market suffer. While animal welfare is the most common concern regarding traditional dairy consumption, what shoppers want and what shoppers buy can be completely separate things,” she explains.

Also in Europe, the classic dairy product segment is reaching saturation. “Further development of standard products is being given added value through claims like high protein which is seen in Skyr or Greek yoghurt. Furthermore, products including probiotics have gained a lot of acceptance in this segment and consumers associate it with healthy food, even though there are no direct health claims,” says Sierk Weisser, Managing Director at DP Supply, a subsidiary of DMK.

Upcycling in dairy
“Upcycling is the new recycling,” according to Innova Market Insights’ “The Sustain Domain” third ranked Top Trend for 2020. Pectin is commonly used to thicken, suspend and stabilize dairy products. Supplier CP Kelco utilizes a unique upcycling process in the sourcing of this derivative of citrus peels. “Our manufacturing footprint in Brazil is extremely well positioned near the heart of the citrus juicing industry. One of their byproducts, spent peel, is a key raw material for us and we are privy to an abundant local supply,” says Sinha at CP Kelco.

Much of the process water generated through washing the citrus peels is recycled. One way is through fertigation, a fertilizer-enhanced irrigation that has been approved by the government research bodies of Brazil for agronomic efficiency in fertilizing orange orchards and sugar cane fields. 

“We have developed a patented process for washing fresh peel that dramatically reduces water use, and also helps us extract more pectin out of the citrus peel than conventional processes. Spent citrus peel is recycled into D-limonene oil and animal feed. Our trademark, molasses-style Braspolpa animal food supplements the diet of more than 30,000 farm animals per year in the surrounding area,” details Sinha.

Macronutrient makeover
Other overarching trends in the dairy category are centered around health and wellness, leveraged by products touting a clean label. “This is taking shape as increased protein and functional ingredients for an added immunity boost. We are also seeing special inclusions in dairy beverages, such as matcha, fruit, cereal, vitamins/minerals; more indulgence and fun with creamier mouthfeel in yogurt and carbonation in dairy protein drinks,” says Anne Sinha, Director of Global Protein Segments at CP Kelco.

NZMP Flow WPC 510 enriches protein, which is particularly useful in spoonable and drinking yogurts. The continued appeal of protein, combined with the snacking trend, led Fonterra to launch a new functional whey protein concentrate. Designed specifically for yogurt systems, NZMP Flow WPC 510 enriches protein without a corresponding increase in viscosity. “This is particularly useful in drinking yogurts, where manufacturers have traditionally been constrained on protein fortification, but it’s also applicable to spoonable yogurts where a smooth, creamy texture is desired. One differentiating factor for this ingredient is its heat stability, delivering excellent functionality in both ambient and chilled yogurt systems,” says Christine Van Asten, GM Beverages & Cultured at Fonterra Co-operative Group.

“Protein is no longer solely the domain of serious athletes and bodybuilders. The positive halo of naturalness and health appeal surrounding protein is encouraging a broadening of the target audience to more mainstream users. These consumers are not willing to compromise on taste to incorporate protein,” she adds. Indeed, a dairy product’s success can be helped along by a “Macronutrient Makeover,” which is pegged by Innova Market Insights as the sixth Top Trend for 2020.

Meanwhile, growing attention is being paid to digestive wellness, whereby consumers are more attuned to gut health. “This is evidenced by the meteoric rise of kefir. Lactose intolerance affects digestion and this heightened awareness is likely to spur growth in lactose-free claims, meaning producers should also focus on digestion benefits when creating lactose-free products,” says Lavanya Venkateswar at Univar.

Both regulatory pressure and increased consumer awareness are driving nutritional enhancement. “For example, sugar taxes and government-led reduction targets have forced dairy companies to take action in reducing sugar content in their products, particularly in yogurt and dairy beverages. Nutriscore adoption has resulted in a push to create nutritionally better-for-you products,” highlights McCluskey at Kerry.

“Looking ahead, given the current environment with COVID-19, we envisage a heightened interest in fortification particularly around immune health to which the dairy market will respond. This is evidenced by the fact that Google searches for food supporting immune health have increased +670 percent in the first two weeks of March, globally,” he notes.

Plant-based disruption
The dairy industry cannot ignore the plant-based trend, stresses Sinha at CP Kelco. “All major dairy companies are adding dairy alternative lines to their portfolio either by new product developments or external acquisitions. It is difficult to tell where that will go but we are seeing a bit of a slowdown in the development of plant-based beverages indicating that we may be reaching a balance between the two major sources, animal vs. plant.”

Dairy alternatives are increasingly becoming popular with consumers compelled by the "Plant-Based Revolution."“More product development is taking place in plant-based versions of traditional dairy products with line extensions into yogurts, desserts, ice cream, cheese and creamers. As a result, we may see a rationalization in the number of dairy references per player. It is also interesting to see the emergence of hybrid products where dairy products are supplemented with plant proteins. This could be a win-win for both industries: it brings established dairy brand credibility to the plant-based wave while also allowing dairy brands to increase their protein content with plants,” she notes.

“The US milk category is facing its greatest threat ever with consumers drinking less milk and embracing vegan diets. This has led our customers to bolster their product lines with value-added milks, such as lactose-free milk and ultra-filtered high protein milk. New offerings of plant-based milks also fit well as product line extensions for some of our customers. With these new product introductions, our customers are setting themselves up for success as innovators in their space,” comments Venkateswar of Univar.

As a whole, traditional dairy still holds many advantages over plant-based alternatives, notes Torben Jensen, Category & Application Manager at Arla Foods Ingredients (AFI). “These include flavor, functional health benefits, perception of quality and the ‘clean and simple’ connotations that plant-based manufacturers are still struggling to overcome. The global dairy ingredients market is set to grow and, for many, dairy products are still viewed as an important part of the diet.”

Whey protein appeals to the consumer with its nutritional quality, rapid absorption and superior content of essential amino acids. “It also has a pleasant taste which makes it acceptable to most consumers. Plant proteins, by contrast, tend to present taste challenges. In future, it’s likely that we’ll see more ‘hybrid’ products, which contain both plant and dairy proteins,” he envisions.

But the claims made by plant milks must be holistic and able to withstand the test of time, flags Venkateswar at Univar. “US consumers are looking at the whole product on the shelf while making their buying decision. Everything from growing practices, such as water and nutrient needs of the plant, to the final product packaging presented on the shelf must share the same story. Increased consumer awareness and greater access to knowledge is driving transparency in sustainability practices along the entire supply chain.”

By Benjamin Ferrer