Non-dairy alternative formulators eye hybrid concepts and dairy price parity as innovation proliferates

28 Feb 2024 --- Globally, non-dairy alternative innovations are gaining traction, with a spike in consumer interest in ethical and sustainable F&B aligning with their health goals. Once restricted to mainly soy milk, plant-based dairy alternatives have expanded to incorporate different bases — almond, cashew, coconut, rice, oat and a diversity of non-dairy spoonable and drinking yogurts, cheeses, creamers and butters.

Food Ingredients First catches up with ingredient suppliers in the expanding category to navigate the sector’s misconceptions, innovations, and opportunities.

“As its appeal has grown, the dairy alternatives market has evolved to meet more consumer aspirations regarding delicious, environmentally responsible and convenient consumption formats,” says Laura Clover, senior marketing manager, EMEA at CP Kelco.

“The number of offerings has broadened, from barista creamers to ice cream alternatives, snacks and regional beverage varieties, yogurt alternatives and cheese alternatives. We have seen product developers adapt quickly to new trends in plant protein bases and add longer shelf life formats to appeal to e-commerce trends and sustainability demands.”

Demographic-specific demands related to more protein and indulgence are set to drive alt-dairy growth, says Clover (Image credit: CP Kelco).Innova Market Insights’ data depicts this upward trend, with non-dairy launches showing an 11% CAGR from 2019-2023, with dairy alternative drinks accounting for 54% in 2023. Oat milk was the most-used product base (22%).

An evolving landscape
The alt-dairy sector has witnessed innovative exploration in the past five years. Butter was the fastest-growing subcategory (+50%), followed by non-dairy cheese (+21%), cream (+19%), drinking yogurt/fermented beverages (+14%) and alt-dairy drinks (+11%), as indicated by Innova Market Insights’ data from 2019 to 2023.

Consumers now demand more than taste.

“While the initial basic assortments of alternatives to milk drinks, yogurt and sliced cheese focused on taste and texture, consumer demands have steadily increased over the years,” remarks Linda Eitelberger, product manager at Planteneers.

Clean labels and improved nutritional values have become increasingly important due to the continuing mega-trends toward “indulging in health,” as Innova Market Insights describes one of the Top Ten Trends for 2024.

In the same vein, Karin Jenniskens, marketing manager of dairy and dairy alternatives Europe at Cargill, tells us: “This demand has driven advancements in foundational plant-based ingredients like plant proteins, sweeteners and fats/oils to meet and exceed consumer expectations for creamy mouthfeel, rich dairy-like flavors and comparable nutrition.”

She further adds that the dairy alternatives landscape has not only “expanded but has become more sophisticated” in response to heightened consumer preferences, setting the stage for continued growth and innovation in future.

Tackling skepticism
Amid the advancements, Jenniskens flags some prevalent misconceptions in the alt-dairy sphere, including doubts about the nutritional balance, concerns about unfamiliar or overly processed ingredients and skepticism about the sustainability of sourcing.

Consumers expect a creamy mouthfeel and rich dairy-like flavors from alt-dairy (Image credit: Planteneers).She highlights the company’s starch solution, SimPure, which leverages botanical sources such as corn and tapioca to enhance flavors and textures in non-dairy alternatives. The ingredient helps address consumers’ desire for simple ingredients and familiar labels, “while also providing the sensory profile and functional properties manufacturers need for successful formulations.”

According to Clover, one of the top misconceptions revolves around sensorial attributes, with most brands trying to replicate the creamy richness of their dairy counterparts. 

“This challenge can be solved with a very small amount of an ingredient such as multifunctional Kelcogel Gellan Gum that can help provide a neutral mouthfeel in addition to stabilization and suspension.”

For beverage and yogurt alternatives, she highlights CP Kelco’s Genu Pectin to protect the protein and deliver a creamy, rich texture in low-pH applications.

Meanwhile, Larissa Leites, product manager, Sweet Flavours Europe at Sensient, points to some consumers considering plant-based products to have a vegetable or coconut taste, being pricier than dairy products and that they are not clean label.

“We have natural flavor technologies, developed specifically for each project to mask the base taste, reducing bitterness, astringency, metallic note and any other unpleasant notes,” she says, adding that the company works with natural flavors (95:5) and/or extracts to have a friendly ingredients list.

Elevating barista experience
Baristas worldwide are increasingly experimenting with alt-dairy to complement coffee, especially in Europe, which saw the most product launches (58%) last year, followed by Asia (14%) and the US/Canada (12%), Innova Market Insights’ data indicates.

Rodolfo Garza, global business development manager of Milk and Plant-Based Alternatives at dsm-firmenich, points to consumers’ expectations that come with the trend.

dsm-firmenich's Barista Toolbox helps enhance consumers’ frothing and foaming experience (Image credit: dsm-firmenich). “While a great taste and texture is key here, consumers increasingly expect beverages made with dairy alternatives to also have the ideal foam level and bubble size.”

“This is why we launched our Barista Toolbox, containing multiple ingredient solutions – including enzymes, superior hydrocolloids, flavors and functional premixes.” The product helps enhance consumers’ frothing and foaming experience and aids the stability and visual appearance of alt-dairy products when mixed with coffee. 

According to Eitelberger, alternatives to barista milk must remain stable in coffee’s acidic environment and create a very stable foam. 

“With plant-based cocoa alternatives, the systems must prevent sedimentation. In terms of flavor, texture and mouthfeel, the plant-based alternatives must be very similar to cow’s milk products - and preferably as clean as possible.”

Exploring hybrids
Reducing the fat and sugar content in alt-dairy products, may affect the taste, such as the acidic bite of zero- to low-sugar yogurt, the watery taste of low-fat milks and milk alternatives, or the vegetal taste of plant-based items, flags Bastian Hörmann, global marketing director, Sweet Goods, Dairy & Specialized Nutrition at ADM.

To tackle these challenges, the company has formulated “clean-tasting soy and pea proteins” as base solutions for plant-based dairy formulations and TasteSpark flavor modulation technology, that builds back a creamy mouthfeel and rich flavor profiles that may be lost in reduced-sugar, low-fat, dairy-reduced or dairy-free systems.

Such a broad spectrum of consumer demands presents both challenges and opportunities for brands, states Jenniskens.

Dairy alternatives have become more "sophisticated” in response to heightened consumer preferences (Image credit: Cargill).One emerging solution to address both taste and texture while tapping into emerging ‘flexitarians’ is to introduce “hybrid products” that contain both animal- and plant-based proteins, she says, adding that it can help formulators achieve an enhanced sensory experience.

Hörmann also agrees that such hybrids of animal-derived and plant-derived proteins, or “blends of plant protein sources” like soy and pea, alongside wholesome plant-based ingredients, such as ancient grains, seeds, nuts, beans and pulses, have potential.

Addressing nutritional shortfalls
According to ADM’s research, 44% of global plant-forward consumers said they want to see elevated nutritional profiles in future alt-dairy formulations, reveals Hörmann.

“Dairy products that incorporate more protein, vitamins, omega-3 fatty acids, biotics and fiber will find success with consumers and we anticipate more fortified options will reach store shelves in the coming year.”

In fortified alt-dairy, CP Kelco’s Kelcogel Gellan Gum, Genu Pectin, Keltrol Xanthan Gum or Nutrava Citrus Fiber help formulators with the stabilization and suspension of vitamins, minerals and nutrients, depending on the formulation and the product developer’s needs, Clovers tells us.

“Each plant base offers nutritional value in the form of protein, amino acids, omega-3, calcium, fat, fiber and vitamins. We help brands tackle the challenge of fortification with our nature-based ingredient portfolio.” 

Garza at dsm-firmenich also highlights the importance of nutritional value when companies face increased competition for shelf space and consumer attention. He sees achieving desirable front-of-pack health claims as a “key differentiator” for the market in 2024. 

“Around half of plant-based dairy alternatives are currently fortified and we expect this figure to keep rising in the coming years.” However, he flags that plant-based alternatives to dairy can often lack protein quality and certain nutrients such as calcium, vitamin D, B2, and B12.

Hybrids of animal-derived and plant-derived proteins have both sensory and nutritional aspects, says Hörmann (Image credit: ADM).To bridge the nutritional gap, dsm-firmenich has developed Fortifull, an innovative digital tool set to launch soon.

“In a few steps, Fortifull gathers data on the product type, region and product base, highlighting any micronutrient deficiencies compared to milk.” It also provides information on specific micronutrients, claims and consumer insights.”

Unlocking plant protein power
After several years of growth, protein claims – a key strength of dairy products – have leveled off on dairy alternatives, appearing on approximately one-third of spoonable non-dairy yogurts and about one-quarter of alt-dairy drinks, according to Innova Market Insights’ analysis.

Potato protein (+30%), fava bean protein (+12%) and pea protein (+9%) were the fastest growing protein ingredients used in alt-dairy products from 2019 to 2023, according to the market researcher.

ADM’s “highly functional, non-GMO soy and pea proteins” are used in plant-based dairy formulations, combining protein content with the flexibility to work well with other proteins typically championed in plant-based dairy, such as oat and almond, says Hörmann.

According to Eitelberger, Planteneers has developed various systems that achieve 5-9% protein content for cheese alternatives, with a cheddar substitute having 7% protein.

“The cheese alternative has a very creamy consistency. By comparison, conventional alternatives to sliced cheese generally contain a maximum of 1% protein and are often very firm.”

Planteneers also formulates plant-based fermented dairy products, including alternatives to yogurt, quark, cream cheese and crème fraîche, notes Eitelberger.

Formulators now need to look beyond alt-milk and explore ice creams and desserts, which demand indulgence. (Image credit: Sensient).“The systems are based on various protein sources and ingredients and come very close to animal products in terms of flavor and texture and are just as versatile.”

Other innovations include plant-based variants of feta and pizza cheese, sliced cheese in slices and blocks and processed cheese preparations. “There are also plant-based alternatives to cheddar and parmesan. For desserts, we have developed solutions for high-protein puddings,” she adds.

A new niche
As the non-dairy alternatives category proliferates, companies must understand that they are now addressing a much broader audience and highly engaged consumer with a growing list of important criteria, states Jenniskens.

“Distinguishing a brand or establishing a new niche will take ongoing investment, knowledge and a nimble strategy.”

For Eitelberger, formulators should target the price parity between animal products and dairy alternatives.

“The aim is to offer consumers products that meet their high expectations in terms of taste, texture and nutritional profile, while at the same time offering attractive pricing. We are very confident that animal products and plant-based alternatives will be at parity in the near future.”

Meanwhile, Leites wants formulators to look beyond non-dairy drinks (milk alternatives) and tap into the potential of the ice cream, desserts and yogurt categories, which demand indulgence and nutritional benefits.

“Another opportunity we see for 2024 is the focus on these new products for private labels. Economic instability has greatly strengthened private labels and these categories of dairy alternatives are still little explored by these brands,” she concludes.

By Insha Naureen