Alternatives milking the market

31 May, 2018 04:00 AM
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Companies are milking just about everything – almonds, peas, oats, barley, rice, hemp are all boasting their competitive angle.
Dairy-free “milk” represented 12pc of total fluid milk and alternative sales globally in 2017.
Companies are milking just about everything – almonds, peas, oats, barley, rice, hemp are all boasting their competitive angle.

In the lead up to United Nations’ World Milk Day comes the alarming news for dairy farmers and milk purists that almost anything from walnut to flax is now potentially considered “milk” – and is growing fast in popularity.

Real milk sales declined five per cent in western Europe in the five years to 2017 and 3pc in the US, but global retail sales of plant-based alternatives jumped 8pc in the past decade.

Although the copycat alternatives to fluid milk are invariably more expensive, less tasty and less nutritious, according to research by Rabobank, they notched up total worldwide sales worth almost $21 billion last year.

Market intelligence firm, Euromonitor, says dairy-free “milk” represented 12pc of total fluid milk and alternative sales globally in 2017.

Rabobank predicts plant-based products will continue gaining momentum with compound annual growth around 5pc lifting global sales to $30 billion within five years.

“Global demand for (real) dairy is expected to grow 2.5pc for years to come,” US-based RaboResearch senior dairy analyst Tom Bailey said.

However, milk’s use in non-fluid categories, including yoghurt and cheese would offset weakening fluid milk sales.

Soybean-based alternatives have long rated as the world’s most prominent product in the milk copycat space, representing 39pc of sales and 67pc of brands in the category, according to Rabobank.

But in the US, almond has just trumped soy “milk” to gain 76pc of the dairy-free market and in Europe soy has slipped 14 basis points in three years to 62pc.

In the Asia-Pacific soy products hold a dominant 42pc, but walnut-based lines are rising fast in popularity, capturing the strongest brand positioning in the market, despite having a much smaller consumption base.

“Companies are milking just about everything – almonds, peas, oats, barley, rice, hemp are all boasting their competitive angle,” Mr Bailey said.

“Barley is sustainable, flax has no allergens, pea is protein-rich and quinoa is high in fibre.

“No matter what type of alternative milk we are talking about, multiple studies show there are several characteristics which are key to market positioning.”

Consumers were responding to the marketing noise by going dairy-free more frequently, particularly when making choices to accompany breakfast cereals, or in coffee.

In his report “Dare not to Dairy” Mr Bailey noted findings from Comax Flavours surveys showing 76pc of dairy alternative consumers used copycat milks on their cereal, 54pc in smoothies, 43pc in coffee and 25pc in protein shakes.

Curiosity, and changing perceptions of health and sustainability, including animal welfare and environmental footprints, were core motivators behind consumers swinging away from real milk.

“The largest segment of consumers choosing dairy-free beverages consists of – no surprises here – millennials and Generation Z,” he said.

Bad taste of low nutrition

However, real dairy products actually rated better in multiple studies on nutrition, price, and flavour.

“Plant-based dairy alternatives do not perform as well as conventional milk products in taste tests, they are less nutrient dense, cost about twice as much and are highly processed,” he said.

Only soy products had a protein content near to milk’s 3pc and the amino acid composition in dairy protein was regarded by scientists as superior to all plant-based imitations.

Another potential marketing advantage for whole milk was its content of fat, which was now back in vogue for its nutritional value.

Typically it was 50pc to 80pc more than the alternatives.

Milk’s cleaner reputation

Milk also enjoyed a “cleaner” reputation among consumers wanting to avoid artificially fortified products and those uneasy about the use of genetically modified soybeans to make soy fluids.

The protection of the definition of “milk”, was also rising as an important factor for the dairy industry, with dairy alternatives now banned in Europe from using names such as “milk” or “yoghurt” since a European Court of Justice ruling last year.

Blatant use of the word milk to market plant-based products in Australia has been a red rag to many in the dairy industry, notably industry lobby group Dairy Connect.

Chief executive officer Shaughn Morgan is hoping milk’s value as a cost-effective, genuinely healthy product attracts some well-deserved publicity on World Milk Day (June 1).

He noted milk also contributed about $3 billion, or 7pc, to Australian agricultural exports and was the basis for our third biggest agricultural production category, behind beef and wheat.

“I find it rather incredible that plant-based so-called `milks’ are attractive to the health-conscious millennial generation, when, in fact, these consumers are choosing products which aren’t natural and lack many of milk’s nutritional characteristics.”

World Milk Day represented a chance for the dairy industry to put fact before emotive marketing sentiment or elaborately funded vegan sector campaigns.

However, Rabobank’s report, has also warned “consumers don’t seem to react to facts anymore”.

Mr Bailey said real dairy’s message probably needed to be more emotional, and the dairy industry needed to listen and learn consumers’ language.

“Instead of fighting emotion with facts, the time has come to seriously consider implementing a new and possibly blended strategy,” he said.

His report suggested more openness to diversifying dairy farming operations, enhanced product innovation to perhaps include “flexitarian” products such as oat-based beverages infused with ghee to boost fat content and flavour, or adopting different milk marketing strategies not focused on low price leadership.

Mr Bailey noted market results now favoured dairy companies investing in milk alternatives across the supply chain – from planting almond trees to buying brands.

European dairy giant, Danone, bought dairy alternative company WhiteWave for $17 billion last year and Finland’s largest milk co-operative, Valio, recently launched the “Oddlygood” range of oat-based dairy alternative products.

“It’s okay to be alternative,” he said.

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