Dairy alternative market growth led by almond milk

A new report from Packaged Facts predicts intensified competition between dairy and dairy alternative beverages as both consumer comfort with the alternatives and criticism of dairy foods continue to grow. Sales of plant-based dairy alternatives, especially almond milk, show no signs of slowing and new alternative sources, such as cashews, are expected to drive the alternative segment even faster and higher over the next several years.

According to the “Dairy and Dairy Alternative Beverage Trends in the U.S." report, U.S. retail sales for dairy and dairy alternative beverages reached $24 billion in 2014, representing a 4% increase from 2013. While sales increased for both segments, the past few years have seen the dairy alternative sector increasing its share of the overall market to now account for 20% of the industry.

It’s not surprising that almond milk is leading sector growth. Need proof? From 2013 to 2014 dollar sales of almond milk increase 40% on unit and volume increase just slightly below that figure. Coconut milk sales likewise have grown by double digits. Looking ahead, expansion of the market for plant-based dairy alternative beverages will inevitably be driven by more than the growth of almond and coconut milk sales. The leading marketers, like WhiteWave, are already introducing additional alternatives such as cashew milk and hemp milk.

The dairy milk industry is fighting back, with spokespersons expressing the frustration that has been building up through years of having dairy foods in general and milk in particular, bashed by food and nutrition “experts." The National Dairy Council, the Milk Process Education Program (MilkPEP),and the Dairy Management Institute (DMI) are working together on a new “GetReal" campaign, launched in January 2015, to counter what the industry perceives as mistruths about dairy milk.

Looking ahead, the battles will include the dairy forces stressing the protein levels of their products, including those with added protein, and other healthy added ingredients. More flavored milks will be introduced, including limited edition holiday and seasonal flavors. Look for the more organic milk products, and for the market to expand in other, more unusual ways, such as the recent launch of donkey milk.

According to the report, the next few years will see the introduction of new dairy milk products testing the waters at the premium level, as with Coca Cola’s new “super milk" fairlife, as well as new products in the segments of the market that seem promising in terms of growth, such as milkshakes and flavored milk products. It’s clear, however, that the shining star of milk’s potential comeback will be organic products. Some retailers report that they have had to double the amount of space allotted to organic milks over the past few years and news reports indicate that some regions, even in dairy rich areas in the Midwest, are reporting shortages. 

“The growing market for organic milk is a reflection of the overall increase in sales of organic products and the steady widening of the numbers of American consumers willing to pay a premium price for the guaranteed quality of an organic product," said David Sprinkle, market research publisher, Packaged Facts.