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Vol. 6, No. 2 January 2016 Naturalproductsinsider.Com US$20.75 Vol. 6, No. 2 January 2016 naturalproductsinsider.com US$20.75 The NEXT GENERATION of DAIRY Expo Hall April 28 & 29 Market Watch Competition, Innovation Thrive in the Dairy and Dairy Alternative Markets by Judie Bizzozero Increased consumer comfort with dairy alternatives and scrutiny of dairy foods is fueling intense competition between the dairy and dairy alternative sectors, particularly beverages. 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 from Packaged Facts, U.S. retail sales for dairy and dairy alternative beverages reached US$24 billion in 2014, representing a 4-percent 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 percent 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 increased 40 percent on unit while volume increased 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 have started to introduce additional alternatives such as cashew milk and hemp milk. The dairy milk industry is fighting back, with spokespeople expressing the frustration that has been building up through years of having dairy From foods in general, and milk in particular, bashed by food and 2013 to 2014, nutrition “experts.” The National Dairy Council, the Milk Process dollar sales Education Program (MilkPEP), and the Dairy Management of almond milk Institute (DMI) are working together on a new “GetReal” INCREASED campaign, launched in January 2015, to counter what the % industry perceives as mistruths about dairy milk. 40 Looking ahead, the battles will include the dairy forces stressing the protein levels of their products, including Source: Packaged Facts those with added protein, and other healthy added ingredients. More flavored milks will be introduced, including limited-edition holiday and seasonal flavors. Look for more organic milk products, and for the IN THIS ISSUE Dairy & Dairy-Alternative Foods & Beverages p.5 2 INSIDER Dairy & Dairy Alternative Foods & Beverages Digital Issue January 2016 Market Watch market to expand in other, more unusual ways, such as the recent launch of donkey milk. (Pope Francis helped shine light on this product in 2014, when he said he drank donkey milk as a child in Argentina.) 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 “super milk” fairlife®, as well as new products in market segments 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 they have had to double the amount of space allotted to organic milks over the past few years, and news reports indicate 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, The next few years will see the market research publisher, introduction of new dairy milk Packaged Facts. Not to be overlooked is the products testing the waters at market for dairy-alternative foods the premium levels. that appeal to a wide range of consumers: those with lactose intolerance, dairy-free consumers (vegans), those who don’t prefer dairy-laden products, and those looking to venture out and try new flavors. In her article, “The Next Generation of Dairy and Dairy-Alternative Foods and Beverages,” Alissa Marrapodi discusses the market as a whole, what hot flavors are trending and what applications are seeing the most action. 4 INSIDER Dairy & Dairy Alternative Foods & Beverages Digital Issue January 2016 Dairy & Dairy-Alternative Foods & Beverages The Next Generation of Dairy and Dairy-Alternative Foods and Beverages by Alissa Marrapodi INSIDER's Take Dairy and dairy alternatives are On-the-go dairy products, such Consumers are looking for exciting popular deliverables for nutrients, yogurt and cheese snacks, offer and adventurous flavors to mix including the hot ingredient protein. nutrition that fits into busy lifestyles. in with their dairy products. From almond and cashew milk to coconut milk yogurt and meat-free products capitalizing on cheese’s shapeability, consumers have a lot of options to choose from in the “dairy” aisle. Dairy and dairy-alternative foods and beverages are truly expanding their reach when it comes to flavor, innovation and texture. For example, Innova Market Insights’ “Top 10 Trends List for 2016,” inspired by clean eating, named “The ‘Flexitarian’ Effect” as a major upcoming trend in which the rise of part-time vegetarians is having a major impact on new product activity. In fact, Innova said Western Europe has doubled its meat substitutes consumption since 2011. What’s fun about this trend is it includes “the technological development and promotion of better- tasting products more reminiscent of meat, as well as the use of alternative protein sources and more animal-friendly processes.” And this is where innovation within the dairy segment comes in; examples of this trend include grilled cheese marketed as dairy-based and meat substitute in the shape of a hot dog. Innovative indeed. But vegetarian-based food isn’t the only category seeking out new proteins and protein alternatives. Nutrient-Rich The dairy and dairy-alternative category has taken a turn in that these products are increasingly popular vehicles for many nutrients—calcium, pro- and prebiotics, fiber, protein, etc. Of course, one of the hottest nutrients to fortify with is protein. “Today, consumers are looking for ways to add more protein to their diets,” said Lesley Nicholson, marketing manager, ADM, WILD Flavors & Specialty Ingredients. “For a variety of reasons, from convenience to sustainability and vegan lifestyles, dairy-alternative products are packing in more protein, most often in the form of vegetable or nut protein.” “Certainly one of the hottest applications is protein fortification,” said Ivan Gonzales, marketing director, dairy, Ingredion Inc. “In the case of protein-fortified products, we have identified the use of dairy and plant-based proteins pairings for consumers interested in having a mixed source of proteins. Among other IN THIS ISSUE Market Watch p.2 Last Bite p.12 5 INSIDER Dairy & Dairy Alternative Foods & Beverages Digital Issue January 2016 Dairy & Dairy-Alternative Foods & Beverages emerging nutrient claims are the ones related to energy and sustained energy. Manufacturers are leveraging the use of protein and fibers in their formulations to convey these messages.” Jen Lowry, vice president of sales and marketing at Edlong Dairy Technologies, agreed: “Protein, specifically pea protein, is an emerging and increasingly important addition to many applications. Healthy consumers are becoming more educated on what types of protein they want to add to their diets and the pros and cons of each. For vegans, lactose-intolerant or dairy-allergic consumers, getting the right protein while satisfying their health needs can be a challenge.” Functional beverages are a popular medium for nutrients such as protein in both dairy and non-dairy forms. Edlong developed a non-dairy protein beverage with as much protein as an egg and almost half of the recommended daily fiber for teens and adults. Edlong’s R&D (research and development) department combined natural, kosher, pareve milk flavors with a natural, kosher, pareve vanilla cream flavor, at low usage levels, with pea protein and rice milk to mask the high amounts of bitter, plant-based protein. Vicky Fligel, business development manager, Glanbia Nutritionals, said dairy “For vegans, lactose-intolerant beverages such as smoothies and fortified or dairy-allergic consumers, flavored milk are attractive to consumers getting the right protein while looking for nutritional supplementation. “A highly functional delivery method for a variety satisfying their health needs of market segments, beverages offer an can be a challenge.” on-the-go, hydrating solution for most demographic groups,” she said. “Within the —Jen Lowry, vice president of sales and marketing —at Edlong Dairy Technologies category, ready-to-drink (RTD) beverages are the preferred application format to include a high content of nutrients including dairy, milk and whey proteins, or grains for their fiber, omega-3 alpha lipoic acid (ALA) and calcium claims.” Molly Spence, regional director, North America, Almond Board of California, said, “We’ve seen a lot of interest in almond milk as a dairy alternative and ingredient in dairy-free products, potentially to reduce calories because some unsweetened almond milk products have as few as 35 calories per 8-ounce serving. When it comes to nutrient pairings, almonds
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