With consumers increasingly conscious about their health, as well as looking to save money where possible, the dairy product sector is well positioned to capitalise, new information from GlobalData has found.
As 2024 progresses, several trends are poised to shape the dairy landscape, reflecting evolving consumer preferences and economic conditions, from targeted health to functional benefits, to the rise of dairy alternatives.
“Consumers are responding to increasing dairy product prices in different ways,” says Ana Purcaroiu, senior consultant and food analyst at GlobalData. “Some opt to continue buying dairy products, but are reducing their spending in other grocery categories to offset higher prices or switching to cheaper store brand or private-label products.
“We are also witnessing a rising interest in plant-based dairy alternatives [compared] to traditional dairy products, primarily in Western countries.”
Elsewhere, demand for dairy products is expected to accelerate over the next decade, due to increasing per-capita incomes, particularly in emerging markets, such as India, Pakistan and Africa.
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GlobalData has outlined three trends in the dairy and dairy alternative market to watch out for in 2024, as follows.
1. Affordability And Value Scepticism
As economic uncertainties persist, consumers are increasingly prioritising affordability without compromising on quality. With high inflation and rising food prices, cash-strapped consumers are seeking value in their dairy purchases.
While quality remains paramount, consumers are exploring cost-saving measures, such as opting for store brand or private-label products. This shift towards affordability has intensified competition, challenging established brands to deliver superior functional benefits and quality at the best value.
According to a consumer survey carried out by GlobalData in Q4 2023, almost two thirds of consumers are switching to ‘own-brand products’ or ‘other cheaper brands’.
‘Consumers unaware of pricing structures in the dairy industry may also see private labels as better value and may assume that brands are using macroeconomic issues as an excuse to raise prices further simply for profit – sometimes referred to as “greedflation”,’ GlobalData noted. ‘For some consumers who question a brand’s justification for higher prices, a switch to own-label alternatives or cheaper brands is a likely outcome.’
2. Targeted Health Solutions
Growing concerns over lifestyle-related health issues are driving consumers towards healthier dairy options. From low-fat to low-sugar products, there is a rising demand for dairy items that offer superior nutritional value.
Brands are responding by innovating with specialised health solutions, leveraging scientific research to highlight specific health benefits. Probiotics, for instance, have gained popularity for their gut health benefits.
Consumers, particularly millennials, are increasingly prioritising multifunctional dairy products that offer both nutritional value and convenience. As a GlobalData consumer survey in Q3 2023 found, a quarter (24%) of millennials view ‘multi-benefit/multi-functional’ as the third-most popular definition of ‘good value for money’ when purchasing dairy products.
3. The Rise Of Healthy Snacking
In an era marked by busy lifestyles and on-the-go consumption, the demand for healthy snack-sized dairy products is on the rise. Yoghurts, cheese snacks, and milkshakes are becoming go-to options for consumers looking for convenient and nutritious snacks.
Younger demographics, notably Gen Z, are driving this trend, preferring smaller portion sizes and healthier alternatives.
‘In addition, “snackification” has impacted the dairy industry and has gained popularity as people seek convenient and portable options to satiate their appetites,’ noted GlobalData. ‘Consequently, companies have diversified from conventional snacks and offered healthier alternatives like yogurt cups, cheese snacks, nutritious milkshakes, and protein-rich snacks to meet increasing demand.’
According to GlobalData’s Purcaroiu, “[The dairy sector will] not only be shaped by trends such as targeted health, healthy snacking, and value scepticism in 2024, but also by the adoption of innovation and formulation development supported by AI’s analytical and search capabilities.
“With Gen Z contributing 27% of the global workforce by 2025 [according to data from the World Economic Forum], their spending power will become increasingly important for dairy brands, as will the need for companies to increase their supply chain transparency, as regulatory probes into pricing and upcoming laws on mandatory sustainability reporting come into effect.”
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