Dairy has long been one of the most creative categories in the supermarket, possibly rivaled only by beverages in its track-record of creating new types of products and bringing new benefits to the consumer.
A major advantage for dairy is that science increasingly shows it is one of nature’s “naturally functional” whole foods. For almost 40 years, health professionals demonized dairy for its saturated fat content - as a result of creating the market for low-fat dairy products. But a growing body of research is rolling back the negatives about dairy fat - its connection to risk of cardiovascular disease has been firmly debunked - and finding more positives beyond calcium - such dairy’s role in reducing your risk of Type 2 diabetes, the role of protein in weight management, bone health and healthy aging.
Dairy’s increasingly positive image means that, despite the emergence of plant-based alternatives, dairy products can be positioned as both healthy and indulgent. Many successful brands make “permission to indulge” a core part of their strategy, capitalizing on dairy’s versatility and taste and texture advantages. Nutrition and health have long been a core element of dairy’s consumer appeal and is more important in dairy strategy than ever before. There are many opportunities for companies to build successful businesses on a health and nutrition connection - and the 8 Key Trends in this report spell out exactly what those opportunities are.
What is a key trend?
We define a key trend is something to which you can connect in order to generate lasting growth and/or improved margins, as Box 1 explains. Many developments which are described as trends, such as clean label, are in reality hygiene factors - benefits that consumers increasingly expect as standard (and won't reward you for). The trends do not exist in isolation. As almost all of the Case Studies show, they overlap with one another, and the most successful brands and ingredients are those that deliver against multiple trends.
For example:
- Halo Top is less sugar (Key Trend 6) but also more protein (Key Trend 1)
- Fairlife Milk is less sugar (Key Trend 6), but also lactose-free (Key Trend 2) and more protein (Key Trend 1)
- P3 protein packs are snacking (Key Trend 3) and protein (Key Trend 1)
Key Trends work everywhere
The trends are applicable in Europe, the Americas, the Middle East, and Asia. While different cultures have very different preferences in terms of flavors and textures and even product types (with drinkable yogurt popular in some countries but a failure in others), people have much in common when it comes to nutrition and health. Using the trends is a question of adapting them to what works best in each market.
For example:
- A2 milk is a big success as liquid milk in Australia and New Zealand (where the idea originated) but its biggest success is in China with infant formula, and in Russia, it has been “Russified” and appears in quark.
- Yakult’s probiotic dairy drink is a major success in Asia - and also in South America and Australasia. It also has a market in the US and Europe and has inspired a wealth of me-toos (such as Danone’s Actimel).
Size doesn’t matter
A trend should not be overlooked just because it’s at this stage very small. In fact, one of the biggest lessons of the past 25 years is that what’s “wacky and weird” has a habit of becoming normal, successful and even every day. When that happens, you almost always find that because it’s connected to key trends. For example A2 Milk (Key Trend 2, Case Study 7). When this digestive wellness milk debuted in Australia back in 2004, it was regarded as eccentric, lacking in science and certain to fail. Dairy giant Fonterra turned down an offer to partner with the A2 Milk company. But now, A2 Milk is the world’s most profitable dairy company and Fonterra has concluded a partnership that will see its manufacturing and distributing A2 dairy products - 15 years after ignoring the opportunity.
The rise of butter and the fall of margarine (Key Trend 8, Case Study 18). Since the 1960s, butter has been condemned by health experts as unhealthy - particularly for the heart - because of its saturated fat content. Meanwhile, margarine and other spreads sang their credentials as a source of health-giving polyunsaturates. Spreads sales rose, butter declined. Unilever built a global business on spreads which were at one time a pillar of their profitability. Today the tables are turned - but not as a result of any company’s strategy. In fact, it has happened despite the marketing and product development muscle of giants like Unilever, which has lost the battle against a big trend shift. Fear of fat has ebbed away and butter appeals to consumers' preference for naturalness. And Unilever has sold off its declining spreads business.
Table of Contents
- Dairy Key Trends
- Introduction
- Key Trend 1: Protein
- Key Trend 2: Digestive Wellness
- Key Trend 3: Snackification
- Key Trend 4: Authenticity & provenance
- Key Trend 5: Permission to indulge
- Key Trend 6: Sugar
- Key Trend 7: Plants
- Key Trend 8: Fat re-born
List of Charts
Chart 1: Top-3 mass brands vs insurgent brands – who is the winner?
Chart 2: Brands in this report on the nutritional product life-cycle
Chart 3: In 2010 science-backed higher protein for effective weight loss; media attention to protein increased
Chart 4: The protein evolution
Chart 5: Growing science about protein fueled media attention and increased consumer awareness – making it easier for brands to communicate about protein
Chart 6: High-protein dairy products can aim at two different product positionings
Chart 7: Added protein is starting to win with consumers, products with added protein are now "everyday"
Chart 8: Whey protein is the best source of amino acids
Chart 9: Meat, eggs, and dairy are American consumers’ primary sources of protein
Chart 10: Price comparison, Njie Propud (SEK)
Chart 11: Njie Financial performance
Chart 12: Kraft P3 financial performance
Chart 13: Kraft P3 price comparison
Chart 14: Consumers’ fragmented views of dairy
Chart 15: Consumer beliefs about food and digestive health
Chart 16: Lactose-free milk is growing fast
Chart 17: Yakult has been powered by the Asia-Pacific market
Chart 18: Biotiful price comparison
Chart 19: Price comparison, Fairlife milk
Chart 20: The upward march of A2 milk continues
Chart 21: A2 milk sales surge fuelled by Chinese demand for infant formula (NZ$m)
Chart 22: Dairy pioneered single-serve convenience 50 years ago
Chart 23: Snacking transforms commodities into a value-added, high-margin business
Chart 24: Cheese is a big snacking opportunity
Chart 25: Cheese to catch up with yogurt
Chart 26: Compared to other dairy-based snack pots, Keso snack pots are premium-priced
Chart 27: Price comparison, Chobani Flip (US$)
Chart 28: Premium pricing strategy has not hindered Balanced Break growth
Chart 29: Price comparison, Löfbergs ice coffee (SEK)
Chart 30: Price comparison, Oui by Yoplait (US$)
Chart 31: Pastoret financial performance
Chart 32: Pastoret achieves extreme premium through provenance, authenticity, and indulgence
Chart 33: Four strategies in dairy for permission to indulge
Chart 34: Halo Top sales
Chart 35: Halo Top, price comparison
Chart 36: The Collective UK sales ($)
Chart 37: The Collective UK, price comparison (£)
Chart 38: Most mentioned sugar replacement on Instagram, September 2018
Chart 39: Soy milk sales (US$ millions)
Chart 40: US volume share of milk, plant milk compared to dairy milk
Chart 41: Non-dairy yogurts, desserts, and creamers are clearly identified as the next big growth opportunities in “non-dairy dairy”
Chart 42: Price comparison, Oddlygood oat drink
Chart 43: Good Karma Foods price comparison
Chart 44: Percentages of consumers trying to eat more healthy fats
Chart 45: Consumers are slowly becoming more positive about fat, 2017 vs 2018
Chart 46: Consumers increasingly rate full-fat yogurt as healthy, 2017 vs 2018
Chart 47: Cholesterol-lowering spreads in trouble
Chart 48: Butters and spreads the UK market (£M)
Chart 49: Room for growth – US per capita consumption of butter is modest compared to many European countries
Chart 50: Price comparison, Know Brainer coffee creamer
Chart 51: Price comparison, 4th & Heart Chocti ghee (US$)
List of Boxes
Box 1: How do we choose the Key Trends?
Box 2: Consumers are all food explorers now
Box 3: Multiple motivations for protein
Box 4: ThinkThin offers high-protein “guilt-free” snacks
Box 5: Nutrition snapshot, Njie Propud limited edition gingerbread flavor
Box 6: Njie marketing communications
Box 7: Kraft P3 Product portfolio
Box 8: Kraft P3 Brand messages
Box 9: People still want probiotics – but from new forms
Box 10: FODMAP fuel for lactose-free?
Box 11: Prebiotics and fiber
Box 12: Direct-to-consumer delivers success
Box 13: Biotiful honey and mint kefir smoothie
Box 14: A2 communications emphasize naturalness and digestive benefits
Box 15: Fragmentation creates opportunities
Box 16: Snacking enables companies to create new markets – such as adult cheese snacks in Asia
Box 17: Dairy benefits underpin Frito-Lay snack brand
Box 18: Arla’s Keso cheese snack pots
Box 19: Emmi Mexican coffee
Box 20: Nestlé mainstreams “cool” coffee
Box 21: RTD milk+coffee is a premium-priced growth business
Box 22: Nutrition snapshot, Chobani Flip almond coco loco
Box 23: Sargento communications
Box 24: Nutrition snapshot, Sargento Balanced Breaks
Box 25: Nutrition snapshot, Borden snack bars (mild cheddar)
Box 26: Nutrition snapshot, Löfbergs ice latte macchiato
Box 27: Löfbergs sustainability messages
Box 28: In China, Kerrygold markets butter with Irish provenance and quality
Box 29: Daioni – a Welsh dairy focusing on export
Box 30: Consumer motivations driving the rising of Provenance and Authenticity
Box 31: Fresh liquid New Zealand milk sent directly to Shanghai sells at £8 a liter
Box 32: Five Acre farms – from the farm to grocery stores, restaurants and coffee shops in New York
Box 33: Nutrition snapshot, Yoplait Oui blueberry
Box 34: Pastoret offers a full range of artisanal and indulgent products
Box 35: Noosa's success built on indulgence
Box 36: Haagen Dazs Five success supported by authenticity and provenance
Box 37: Pots & Co, a premium portion-controlled dairy-based dessert success
Box 38: Nutrition snapshot, Halo Top vanilla bean
Box 39: The Collective nutritional snapshot
Box 40: The Collective brand messages
Box 41: Provenance a trend for plant “milk”
Box 42: “Simpler” ingredients – some brands are adopting shorter ingredient lists to appeal to consumers who want more “natural” and unprocessed products
Box 43: Good Karma invites customers to create goodness and “pour it forward”
Box 44: Nutrition snapshot, Good Karma dairy-free yoghurt, flaxmilk and probiotic drinkable yoghurt
Box 45: Whole is better
Box 46: Changes in fat consumption
Box 47: Grass-fed – an emergent Micro-Trend?
Box 48: Cheese re-born as a healthy snack
Box 49: How fat got its bad reputation
Box 50: There’s an increase in activity in premium butters with more fat, flavors and combinations
Box 51: Nutrition snapshot, French vanilla ketogenic creamer
Box 52: Nutrition snapshot, casein & lactose-free mocha ketogenic creamer
Box 53: Nutrition snapshot, Passionfruit Chocti
List of Case Studies
Case Study 1: Njie – lactose-free, protein and no added sugar
Case Study 2: Kraft P3 – a protein-rich snack-pack
Case Study 3: Graham's – a consumer trend-based strategy powers the success of family-owned dairy
Case Study 4: Yakult – probiotics direct to consumers
Case Study 5: Bio-tiful – showing the UK how good kefir can be
Case Study 6: Fairlife higher protein milk – redefining the lactose-free market
Case Study 7: A2 Milk – once "too weird", now the world's most profitable dairy company
Case Study 8: Chobani Flip – dairy snack accounts for a third of business
Case Study 9: Sargento Balanced Breaks – success from "cheese-plus" strategy
Case study 10: Borden on-the-go cheese competes with snack bar category
Case Study 11: Lofbergs Lilla – connecting to the next generation of dairy+coffee drinkers
Case Study 12: Oui by Yoplait – provenance turns yoghurt business around
Case Study 13: Pastoret – authenticity drives growth even in a depressed market
Case Study 14: Halo Top – disruptive innovation redefines ice-cream category
Case Study 15: Collective Dairy – flavor focus drives success
Case Study 16: Valio plant milk used alongside dairy
Case Study 17: Good Karma flax milk – a second bite at plant milk for a major US dairy
Case Study 18: Butter beats margarine in natural food re-birth
Case Study 19: Know Brainer – dairy and plant-based creamer taps into keto
Case Study 20: Ghee – updating a high-fat butter product for a new audience
Companies Mentioned
- A2 Milk
- Activia
- Alpro
- Alpro Caffe
- Anchor Protein+
- Arla
- Arla Keso
- Bakers’ Delight
- Barebells
- BelGioioso
- Bellwether Farms
- Ben & Jerry’s
- Biotiful
- Borden
- Breyer’s Delights
- Browne’s Dairy
- Califia Farms
- Cathedral City
- Chobani
- Coca-Cola
- Coconut Cult
- Collective Dairy
- Daiya
- Danone
- Dean Foods
- Eden Creamery
- El Corte Ingles
- Emmi Dairy
- Fair Oaks Farms
- Fairlife
- Fazer
- Five Acre Farms
- Fonterra
- Fourth & Heart
- Frito-Lay Imagine
- General Mills
- Good Karma
- Graham’s Dairy
- Gü
- Haagen Dazs
- Halo Top
- Kerrygold
- Kite Hill
- Know Brainer
- Kraft Oscar Mayer P3
- Lifeway Foods
- Löfbergs Lilla
- Mars
- Molochny Zavod Naro-Fominskiy
- Moon Cheese
- Mueller
- Nescafé Nitro
- Nestlé
- Njie
- Noosa
- NZMP
- Oatly iKaffe
- Oppo
- Otsuka Pharmaceuticals
- Oui by Yoplait
- Pastoret
- Pots & Co
- Roth Cheese
- Sanitarium
- Sargento Balanced Breaks
- Serious Pig
- Siggi’s
- Silk
- Sonoma Creamery
- Theland
- ThinkThin
- Tin Star
- TruMoo
- Two Good
- Unilever
- Valio
- Valio Oddlygood
- W K Kellogg
- Whey Hey
- White Wave
- Whole Foods Market
- Yakult
