ProVeg's Gemma Tadman explores plant-based milk's ascendance, and why it is revolutionising the dairy industry.
What kind of milk do you enjoy with your morning brew? Do you stick with cow’s? Perhaps you’re partial to soya, or maybe oat floats your boat…
If it's plant-milk you choose, you’re not alone.
Plant-based milk has truly entered the mainstream; no longer a niche product consumed by the few, it is a household staple for many. Indeed, plant-based milk is the most purchased category in plant-based food and drink and has both the highest market value and penetration.
Recent industry statistics and predictions suggest that plant-milk is now the growth engine for the entire milk category – leading in terms of product innovation and generating huge sales and overall industry growth.
In the US, plant-based milk has been a driving force in the milk industry for several years. For example, plant-based milk unit sales grew 19% from 2019 to 2022, compared to animal-based milk, which saw unit declines of 4% over the same period.
Moreover, plant-based milk contributed $105 million in growth to the overall US milk category in 2021, while animal-based milk’s decline equated to a loss of $264 million. In terms of dollar sales, plant-based milk grew a remarkable 33% over the last three years.
Plant-milk now occupies a 15% share of all retail milk dollar sales in US conventional channels (and rising – no mean feat considering the scale of US dairy!), and 42% in the Natural Enhanced Channel.
Plant-milk also had a remarkable 41% household penetration in 2022 and a 76% repeat purchase rate in the country.
Interestingly, almost half of Americans buy both plant-based and dairy milk varieties, which further points to the normalisation of plant-milk in the eyes of the everyday shopper.
A similar situation can be seen across Europe. Plant-milk accounted for a significant 11% of total milk sales in 2022, comprising a staggering 38% of total plant-based sales that year, making it the sector leader.
Plus, the European sales value of plant-based milk shot up 19% between 2020 and 2022 to over €2.8 billion, while unit sales grew 20%. In the same period, ‘conventional’ milk unit sales in Europe decreased by 9%.
Globally, the space is expected to reach US$30 billion by 2030, growing at a compound annual growth rate (CAGR) of 9% between 2022 and 2030.
While the conventional dairy products industry is still expanding, over the same forecast period, it will experience growth at a significantly slower CAGR of 3.2%.
Leading Innovation
The success of plant-milk is down to a cascade of reasons (e.g., low price point, changing consumer preferences, integrated merchandising), with the most prevalent being ingredient and product innovation.
Plant-milk producers are raising the bar for innovation and sustainable ingredient sourcing, working with new and functional ingredients to create products that appeal to varying consumer interests, offer novel experiences, and satisfy the desire for tasty ‘milk’ products.
A wide variety of ingredients are being harnessed to create these new products, including soya, oat, rice, coconut, flax, hemp seeds, pea protein, upcycled barley, potato starch, cassava root, hazelnuts, and more.
Excitingly, the process used for producing alt-milks can liquify nutrients from an array of plant sources, and so the variants and blends of plant milks are virtually limitless.
Conventional milk brands simply cannot match such levels of innovation or unique product launches.
Embracing The Plant-Milk Revolution
In the ever-evolving landscape of the food industry, the rise of plant-based milk has emerged as a remarkable phenomenon, reshaping the milk category and galvanising the broader alt-protein movement.
No longer confined to the fringes of dietary preferences, plant-based milk has established itself as a dominant force in the market, making strides in sales, innovation, and consumer adoption. Professionals involved in the food industry must recognise the impact of this paradigm shift and harness its potential for strategic growth and innovation.
Actionable Insights
The New Food Hub makes the following recommendations for businesses looking to take advantage of the market success of plant milk.
1. Seizing the innovation advantage: A surge in ingredient and product innovation has propelled the success of plant-based milk. Collaborate with plant-milk producers to create novel offerings that cater to diverse consumer interests. Exploring functional ingredients, sustainable sourcing, and unique blends can pave the way for captivating new products that stand out in a competitive market.
2. Strategic merchandising for visibility: Integrating plant milk alongside traditional dairy counterparts in retail settings has been pivotal to ‘mainstream’ success. Work closely with retailers to optimise shelving and presentation, making these products more recognisable and accessible to consumers. By leveraging nudge principles and encouraging pick-up rates, the transition to plant milk can be expedited.
3. Affordability as a catalyst: Offering plant milk at a similar price point to conventional dairy milk has been instrumental in driving consumer adoption. This affordability factor can act as a gateway to plant-based choices for budget- and health-conscious consumers. Work to maintain this competitive pricing to maximise market penetration.
4. Capitalising on shifting consumer values: As health and sustainability become top consumer concerns, plant milk offers a solution. Align offerings with these evolving values, emphasising the health benefits and environmental advantages of plant-based choices. By capitalising on these motivations, businesses can position themselves as allies in promoting healthier and more sustainable lifestyles.
5. Plant-forward market dynamics: The rise of plant milk aligns with broader dietary trends favouring plant-forward choices. You should stay attuned to these shifts and adapt product portfolios to cater to the increasing number of consumers identifying as flexitarian, vegetarian, pescatarian, or vegan. This entails not only developing appealing plant milk options but also complementing these offerings with a comprehensive range of alt-protein products.
Looking To The Future
The surge of plant milk into the ‘mainstream’ is rewriting the rules of the milk category and extending its influence throughout the food industry. Understanding the driving forces behind this transformation and embracing the associated opportunities is key to thriving in the dynamic world of alt-protein.
By fostering innovation, optimising merchandising strategies, prioritising affordability, aligning with shifting consumer values, and capitalising on plant-forward trends, businesses can forge a path toward sustained growth and relevance in the ever-evolving landscape of food and beverages.
The plant-based milk revolution is here, and it's time to seize its potential for a prosperous future.
Article by Gemma Tadman, ProVeg. Featured image: Unsplash/Kenny Eliason
