Markets ¦ IDM
May 2020 ¦ international-dairy.com · 31
compared to the previous year The increase
of the price per litre is due to the
popularity of the product coupled with
rising costs of raw materials, higher production
costs and the premium positioning
compared to cow’s milk.
The clientele
Millennials and Generation Z are driving
the consumption of plant-based drinks.
These demographics are more sensitive to
animal welfare and the environmental impact
of their food and drink choices. Adults
from Generation X and baby boomers are
also purchasing plant-based drinks but in
lesser quantities.
Zenith Global‘s research has shown
that several factors are influencing consumers
when purchasing plant-based
drinks namely flavour (52%), price (40%)
and health claims (37%). Convenience is
also an important factor.
Although plant-based drinks brands
generally target younger consumers, some
brands such as Oatly are marketing their
products to people over 50 years old. The
company has recently launched a new
range of plant-based nutritional beverages
targeting this overlooked demographic
segment The line features a proprietary
blend of plant proteins, vitamins, minerals
and fibres which are “tailored to fuel, body
and brain over 50”. The different marketing
approach enables Oatly to differentiate
itself from the competition and target a
new consumer segment.
The popularity of plant-based drinks
has been boosted by the ongoing health
and wellness trend. In addition to vegan
and lactose intolerants, consumers who
do not necessarily suffer from allergy or
intolerance have also increasingly purchased
plant-based drinks. This audience
usually perceives plant-based drinks as
healthy and are keen on trying new beverages.
Other drivers include environmental
concerns and animal welfare.
Plant-based drinks are consumed in a
variety of ways including on their own, for
breakfast, and they are used as an ingredient
in beverages such as juice, smoothies,
coffee and hot chocolate.
Next 5 years
The US plant-based market is forecast to
enjoy steady growth over the next five
years growing at a rate of 7% between
2018 and 2019. By 2023 sales of plantbased
drinks are projected to reach over
1.58 billion litres compared to 1.16 billion
litres in 2018 a CAGR of 6.4%. The
growth will continue to be led by the
health and wellness trend. Whilst almond
drinks is likely to remain the most popular
type within the plant-based drink category,
oat drink is expected to gain additional
momentum while soy drink will continue
to lose popularity. Oat drink is said to
more environmentally sustainable as its
production requires less water and GMO.
Plant-based drinks made using peas is also
a trend to watch being high protein and
similarly to oat using a lesser amount of
water compared to nut based drinks.
The growth of plant-based drinks will
be fueled by companies’ continuous investments
as dairy players see it as a new avenue
of growth. Danone has recently stated
that its plant-based business has the potential
to become as significant as its own
dairy offerings.
Plant-based drink growth is expected
to continue outpacing dairy milk sales.
Cow’s milk consumption has been falling
over the years and is expected to decline
further by 2.2% in 2019. Sales are hampered
by negative press, greater awareness
of animal welfare and the anti-dairy
movement. Additionally, plant-based milk
is perceived as better for the environment
than animal based milk.
Per capita consumption (PCC) of cow’s
milk is projected to decline by 1.3 in 2023
standing at 62.3 litres per person, an equivalent
of 21.5 million litres. In comparison,
the PCC stood at 68.8 litres in 2018.
Producers of animal milk are likely to
seek new growth opportunities to prevent
a further decline in sales. Organic and functional
milk appear as the two growth drivers
of the category.
Innovation trends
As the plant-based category evolves companies
are working harder to differentiate
with new plant-based niches, new flavours
textures and cross category products.
The emerging varieties within plantbased
drinks are growing at the cost of
soya and almond drinks due to consumers’
perception of the environmental impact
of the production of these varieties
together with the excitement of new
consumers to diversify their plant-based
drinks consumption with varieties that
could provide additional health benefits
and novel flavours and tastes
Good Karma (flax) Oatly (oat) and
Forager Project (cashew) are examples of
new and established brands seeking to
exploit niches and evolve individual categories
into more sophisticated offerings
in a bid to differentiate themselves from
the competition.
2018 was the year that confirmed oat
milk’s rise to prominence in the US plantbased
dairy alternative category. Pinterest,
the online vision board website, revealed
that oat drinks was the year’s hottest
plant-based drink. Reporting that oat milk
searches on its site went up 186 year over
year. For instance, Silk’s new oat milk line
Oat Yeah was launched in January 2019
and is available at retailers including Target,
Walmart, Publix and Sprouts in three varieties
Plain, Vanilla and Chocolate.
Within the oat drinks space, the
Swedish firm Oatly which entered the
US in 2016 has seen its sales surge as it
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