Nowadays, people are more health-conscious than ever. They know the secret to long-term health lies with a balanced diet and regular exercise. As a result, the global dairy industry has seen some significant changes in consumer attitudes in recent years.
Global Dairy Industry Size
Three product types are included in the global dairy industry value calculation – milk and cream, yogurt and curdled milk, and cream cheese. In 2019, they held value shares of 54%, 37%, and 9%, respectively.
The three dairy industry products were valued at 357.53 billion USD in 2015. In the next five years, they grew at a compound annual growth rate (CAGR) of 6.16% to reach 454.14 billion USD. Until 2025, they are forecast to grow at a 5.28% CAGR and reach 615.92 billion USD.
The three largest regions by value share in the partial dairy industry were Asia Pacific, Europe, and Northeast Asia. In 2019, they accounted for shares of 23%, 21%, and 19%, respectively.
South and Central America, Africa, and North America followed with value shares of 11%, 9%, and 8%, respectively. The CIS countries recorded a 6% share in 2019, while the Middle East – 3%.
Global Dairy Industry Trends
Consumers opt to intake their calories from protein instead of carbs. That is due to health benefits like weight loss, satiety, and healthy aging. Moreover, some people use fermented dairy products for muscle strengthening and bodybuilding due to the benefits they provide.
Thus, consumers will continue to show interest in dairy products that not only taste good but also:
- have less sugar and additives
- incorporate more sophisticated flavors
- provide functional health benefits
- are environmentally sustainable
- made by socially responsible companies
- have simple and clean labels.
Consumers are more educated than ever before. They carefully examine product labels to identify the origin of dairy products and their contents. If there are any ingredients with unfamiliar names or ones with negative health effects, the product will go back on the shelf. Furthermore, greenwashing these claims may bring some short-term gains but can turn out to be devastating in the long-term.
Affluent Consumers Look Beyond Their Basic Needs
As populations around the world become more affluent, consumers look beyond their basic needs and adapt their buying habits. The products they purchase need to go beyond their basic function. They must also express their identity and provide validation.
Accordingly, consumers look for ways to balance indulgence and health. Furthermore, the premiumization of food has surged demand for high-quality products with unique flavors, a trend fueled by consumer desires for new experiences. They seek out new tastes, exotic flavors, and unique textures by exploring diverse cuisines and fusion foods.
Dairy companies continuously develop new flavors following contemporary consumer taste, which explains the present trend towards new and exotic tastes across the cheese category.
As a result, consumers can find a wide range of flavored cheese varieties with spicy and bold flavors. Some of the most popular cheese types include cheeses with jalapeño and chili; more traditional herb-flavored cheese that contains tarragon, chives, parsley, and garlic also grows in popularity.
In addition, the growing interest in international flavors has resulted in cheese infused with spices and ethnic flavors, representing Indian and Middle Eastern cuisines.
Whey Protein Products See Widespread Use Among Fitness Enthusiasts
Whey has enjoyed more attention from both consumers and producers in recent years. It is rich in proteins, lipids, carbohydrates, vitamins, and minerals. Thus, it enables brands to meet the needs of the growing fitness segment. Although it was previously considered a by-product of the processing of cheese, nowadays, manufacturers use whey as a functional ingredient in protein supplements.
In addition, whey can be used as a nutrient in dietetic and healthy foods. Its increasing popularity is due to its known health benefits. Among them are:
- Weight management;
- Body composition;
- Bone health;
- Satiety;
- Muscle recovery and performance;
- Reversing muscle loss in the elderly.
Furthermore, the diversity of whey proteins, coupled with their health benefits, widens the scope for different whey formulations and enables the development of products with a richer taste.
Urbanization Drives Demand for Dairy Snacks
Urbanization — moving from rural to urban areas, leads people to have less free time to regularly prepare their meals. Thus, people opt to skip some of their daily meals in favor of snacking.
That makes cheese snacks in sliced or cubed formats very convenient for consumers, who want to save time. In fact, North America accounted for the largest share of the global cheese snacks market at 45%.
Moreover, driven by their desire to stay healthy, people move away from sugary snacks entirely. Instead, they turn to healthier alternatives such as cheese snacks. The convenience and high-protein content of dairy snacks further stimulate the adoption of single-serving cheese snacks.
To capitalize on this emerging trend, dairy companies aim to combine cheese with foods that have well-known health benefits such as fruits and nuts in single-portion packaging.
Full-Fat Dairy Gains Steam
The global dairy industry has also seen a shift in consumer preferences towards full-fat dairy products. According to industry experts, the full-fat dairy category is growing faster than reduced and fat-free alternatives. Some of the drivers of this growth include better taste but also scientific evidence that suggests full-fat dairy products may be an important part of people's diets.
Some of the most popular diets, including Keto and Paleo, promote higher consumption of fats. In particular, major product categories such as natural cheese and cream cheese experienced a positive move in whole-fat volume sales in the US in 2017, increasing at about 0.8% and 1.5%, respectively.
The opposite trend is seen in fat-free and middle-fat product sales. Despite the growing interest in whole-fat products, processed cheese and margarine registered a decrease in whole fat volume sales in 2017 at about 4.2% and 4.5%, respectively. At the same time, however, fat-free processed cheese also saw a 26% decline in volume sales, which was the largest negative change in the industry.
Importance of Health and Wellness Grows
The increasing demand for functional and protein-enriched food without artificial preservatives, is among the major drivers for the global dairy industry. It is expected to continue in the medium term, especially driven by demand from developing economies in Asia Pacific and Latin America.
Functional Dairy Products
Innovation in food science have boosted demand for functional dairy products that seek to combat chronic diseases and improve health.
Although there is no universally accepted definition of functional foods, they could be defined as fortified, enriched, or enhanced food, that provide a health benefit beyond the traditional nutrients they contain.
Dairy products contain many bioactive substances including bioactive peptides, probiotic bacteria, antioxidants, and vitamins among others. That makes them crucial for the development of functional foods.
Following consumer preferences for functional dairy products, companies heavily invest in their development. For example, Arla Foods capitalizes on this trend through the use of functional milk proteins to cut the salt content of its processed cheese.
Research studies have examined the production of functional processed cheese by using different additives that enhance its nutritional content. Some of the analyzed additives include buttermilk concentrate (BMC) — rich in phospholipids, and chlorella vulgaris alga — a good source of protein, fatty acids, fiber, essential vitamins, and minerals.
Digestive Health
One of the most popular varieties of cow’s milk is A2 milk. It contains only A2 beta-casein protein, making it is easier to digest. A2 milk has witnessed substantial growth in markets where it has been introduced, including Australia and New Zealand.
Furthermore, the global dairy market has witnessed the expansion of products without or with lower quantities of lactose. That includes less-traditional products such as nut-based and vegan cheese and milk, as well as goat cheese and raw cheese.
As a result, the overall dairy industry has observed more efforts to develop plant-based alternatives.
The growing popularity of veganism, coupled with the increasing numbers of lactose-intolerant people have surged demand for non-dairy cheese and milk made from soy, nutritional yeast, and various nuts in recent years.
Alternative Milk Becomes More Popular
Alternative milk products continue to gain popularity around the globe due to wider availability and lower prices. From milk to yogurt, lactose-free products have received more attention in recent years.
The growing number of people with lactose intolerance and allergies have propelled the demand for more easily digestible products. Thus, companies are shifting gears to accommodate this shift in demand.
Plant-Based Alternatives
In line with the plant-based revolution in the wider food industry, more people opt for plant-based milk alternatives. In particular, growth has been prompted by oat, soy, coconut, and almond milk.
With more consumer interest in plant-based dairy products, new formats continue to appear. Manufacturers tap into macadamia and other nuts and seeds that are rich in probiotics.
Milk from Other Animals
In addition, consumers have discovered the benefits of other animals’ milk — goat, sheep, and camel. Consumers, especially from developed markets, appreciate the nutritional benefits from these sources — high protein and low cholesterol content.
Milk, yogurt, and cheese from goats and sheep, in particular, have been among the leading categories driving demand for cow milk alternatives. In countries such as France and Spain, demand for goat milk has seen steady growth.
Transparency and Sustainability More Sought After
People express interest not only in the health benefits of dairy products but also in how they are made and where they come from. Thus, major companies must become more transparent about how the product is made and the nature of the supply chain.
As provenance is an important quality attribute for a good amount of consumers, companies must convey all relevant information openly and transparently. While it is relatively easy to do that through marketing activities, providing information on packaging should not be overlooked.
Finally, as the global dairy industry matures, brand loyalty will be a crucial factor for long-term success. Thus, brands must actively focus on product innovations as well as diversifying their portfolios if they wish to stay relevant to contemporary consumers.
If you wish to know more about the dairy industry and how it affects your organization specifically, get in touch with us.