Dairy ingredient innovation: Leading suppliers unravel key industry trends

12 Jun 2024 --- Global consumer demand for high-quality protein and healthy but indulgent F&B products is spurring innovation in dairy ingredients. Suppliers are harnessing AI and machine learning to advance R&D and increasingly targeting plant-based opportunities as they grapple with inflation and pursue more sustainable solutions.

Food Ingredients First speaks to Arla Food Ingredients, FrieslandCampina Ingredients, International Flavors & Fragrances (IFF) and dsm-firmenich to understand how these leading ingredient suppliers are tapping into the dairy sector’s key trends.

According to Katrine Helene Fruergaard Holm, global industry marketing manager at Arla Food Ingredients, “Consumers are increasingly proactive about their health, and protein demand is switching from quantity to quality.” The company offers the Nutrilac Protein Boost line of whey proteins, which is rich in all nine essential amino acids and easy to add to ice cream and yogurts.

Meanwhile, Vicky Davies, senior marketing director for Performance, Active & Medical Nutrition at FrieslandCampina Ingredients, reminds us that modern consumers still want to increase their overall protein intake: “Health-savvy consumers recognize a wide variety of dairy ingredients for their holistic benefits, such as boosting gut health and immunity. Whey and casein ingredients are popular choices for muscle recovery, while lactoferrin offers unique nutritional properties too.”

Prebiotics are also a popular option for health-conscious consumers. Davies explains: “Galacto-oligosaccharides (GOS) are one group of prebiotics gaining traction for positively influencing the balance of gut microbiota, which has a beneficial effect on digestive health.”

“There are also emerging studies on the impact of prebiotic supplementation on brain and muscle health. For instance, one study showed our Biotis GOS could help reduce anxiety symptoms in young women.”

Post-pandemic pleasures
IFF’s new dairy trends report has identified another key development, “Neo-Hedonism” — a shift toward pleasure-centric lifestyles. “Our proprietary research shows that 50% of global consumers are rewarding themselves more than they did before the pandemic,” says Richard Neish, head of global futures for Consumer Intelligence at IFF.

“In Dairy, this is particularly influential in categories associated with indulgence, such as ice cream and desserts. Brands can play into this trend by adding complex or unusual flavors and textures to enhance indulgence and premiumization, create novelty and upsell standard products.”

Through its Taste Design platform, IFF offers a wide range of dairy-specific, technology-enabled flavors crafted to meet customer needs and regulatory standards.

Rogerio de Almeida Prado, global category director for Dairy at IFF, adds: “Yogurt has traditionally been associated with health, but indulgence also plays an important role in driving consumers preference, which can be delivered via innovative flavors and tasty profiles of classic options like strawberry and vanilla.”Brands can ride the post-pandemic indulgence wave with complex or unusual flavors and textures.

AI and machine learning
For dsm-firmenich, AI is crucial to innovation opportunities in Dairy. Leveraging AI and machine learning technologies can be particularly beneficial when overcoming one of the industry’s most protracted processes — R&D, explains Karoline Kjærulff, global business development manager for Fermented Milks & Alternatives at the company. 

“With the right advanced tools, manufacturers can significantly enhance the efficiency and precision of NPD, accelerating time to market and propelling progressive companies ahead of the competition. Take yogurt — traditionally, NPD in fermented milk products is marred by a myriad of complexities, from assessing starter cultures for taste and texture to evaluating bioprotective cultures for shelf life.”

“Testing each culture by itself is not only time-consuming, costly and less efficient, but it can lead to unintended interactions once combined in an application, such as increased post-acidification. Finding the ‘starter sweet spot’ can be an exhaustive task.”

The company’s latest portfolio of all-in-one cultures for fermented milk products, Delvo One, exemplifies the transformative impact of advanced technology on yogurt production. Created using dsm-firmenich’s new AI-powered Culture Co-Creation Platform, the portfolio is made up of five different finely tuned culture combinations, all offering taste, texture and health benefits with built-in bioprotection. 

“The machine-learning-driven platform eliminates the guesswork and replaces the somewhat tiresome tried, tested, tasted and try-again method with a more robust, resilient and reliable approach,” says Kjærulff.

Overcoming cheese challenges
Innova Market Insights data indicates that global dairy product launches experienced an 18% increase from April 2022 to March 2024. The most launched subcategory in this sector was Cheese — Semi-Hard & Hard, making up 15% of all launches.

According to Holm at Arla Food Ingredients, consumers increasingly demand a premium sensory experience from nutritious, high-protein products. “One key category where this plays out is cheese, where consumers are highly focused on nutritional content but also want indulgent taste and texture,” she says.

“Our Nutrilac range of functional milk protein solutions can help manufacturers enhance the sensory qualities of cheese products and overcome challenges that can arise when reducing fat.”

For example, the company recently developed a recipe that highlighted how Nutrilac solutions can provide creamy texture and taste, as well as nutritional value, in cream cheese. It contained all the essential amino acids, despite containing 50% less fat than standard recipes.AI and machine learning technologies can elevate one of the industry’s most protracted processes — R&D.

Inflationary pressures
At the same time, inflation has hit dairy hard, with value CAGR outpacing volume CAGR, particularly in the milk, butter and spreadable fats subcategories, while geopolitical instability and adverse weather patterns could continue to drive price volatility in 2024.

IFF’s proprietary research found that 6 in 10 consumers were spending their money more carefully in the past 12 months and embracing frugality.

“Private label initiatives are emerging as a popular strategy, appealing to the 35% of consumers who wish to trim their dairy spend without sacrificing quality. Heightened awareness of the environmental and animal welfare impacts of their lifestyle is also leading consumers to actively explore dairy-alternative products,” says Neish.

“Almost 50% of US consumers are now purchasing plant-based alternatives, although often alongside dairy products.”

According to Kjærulff at dsm-firmenich, consumers are expected to remain price sensitive, which is driving an increase in private label cheeses. “However, these cheeses also need to offer an enjoyable taste experience, so premium varieties at more competitive prices will be a trend to watch over the next five years,” she says.

Plant-based alternatives
Dairy alternatives are commonly regarded by consumers as tasty, affordable and versatile while tapping into the dairy health halo. With texture becoming more important, plant-based brands need to ensure that the sensorial experience surpasses expectations and is on a par with dairy, notes Rogerio de Almeida Prado, global category director for Dairy at IFF.

“Adding ingredients for greater functionality will also help give dairy alternatives a competitive edge. However, there is some hesitancy about the positive impact that switching from dairy to plant-based will have. Our dairy trends report found that consumers are realizing that not all dairy alternatives are as ‘green’ as they first seemed.”

IFF has developed a full range of cultures to help brands exceed the expectations of this growing consumer base. Its Danisco Vege cultures are specially formulated to create a wide variety of plant-based fermented products and mask unpleasant off-notes. Additionally, its Versilk enzyme can help manage viscosity in high-protein, plant-based applications (as well as dairy) without releasing bitterness.

Likewise, dsm-firmenich has created a comprehensive portfolio of plant-based cheese alternatives to help manufacturers more accurately replicate the properties of consumer favorites like sliced gouda and cheddar, shredded mozzarella, Parmesan and cream cheeses.Many consumers see plant-based dairy alternatives as important to their health goals.

Emerging trends
Looking to the next five years, industry experts expect dairy ingredient trends to evolve in different directions. For Holm at Arla Food Ingredients, the clean label trend will remain prevalent: “With one in three consumers saying they always check the label for ingredients, a clean label with familiar dairy ingredients will continue to be a key purchase driver.”

Neish at IFF also sees health considerations, as well as price, continuing to drive purchasing decisions: “Consumers will be looking for dairy products that support their ‘better-being’ lifestyle. They will also continue to value quality, affordable products that help them navigate busy, time-poor lives — for example, with the convenience of on-the-go, ‘top-up’ nutrition from functional dairy drinks.”

Meanwhile, Davies at FrieslandCampina Ingredients believes the EU’s Farm to Fork strategy will undoubtedly have an impact on the dairy ingredients market, particularly the target of halving GHG emissions from agriculture by 2030: “In response, the dairy ingredients industry will continue to adapt toward more sustainable and regenerative practices to ensure it adequately contributes to this goal,” she says.

For Kjærulff at dsm-firmenich, lactose-free dairy-based products will likely see a rise in demand across many countries to cater to the increasing number of people suffering from digestive disorders: “As this category grows, we expect more lactose-free ingredient launches to help this category mature. We have developed an innovative lactase enzyme that is the fastest pure lactase on the market, enabling optimal efficiency and capacity with no off-flavors.”

According to Innova Market Insights, the top positionings for global dairy launches were “high/source of protein,” “gluten-free” and “lactose-free” from April 2022 to March 2024.

By Joshua Poole