The US milk category is facing its greatest threat ever – plant based dairy drinks show a sales growth of 10 percent (CAGR, 2010-2022F) versus three percent for milk and milk drinks, and continue to gain space in the dairy case. The November 2019 bankruptcy declaration by market leader Dean Foods highlights the challenges dairy faces to remain viable amid changing consumer tastes.
Recent innovation in milk and milk drinks in the US demonstrates industry positioning to defend its market share. New product development (NPD) in milk and milk drinks was up 22 percent from 2017 after several years of nominal change and is expected to continue growing. Although flavored milk is the only sub sector to have recorded negative growth over 2014 to 2018, with a CAGR of -5 percent, NPD is strengthening.
Several of the Innova Market Insights Top 10 Trends for 2020 capture the types of innovations seen in the milk industry. ‘The Right Bite’ describes the quest of busy consumers to maintain a healthy lifestyle; ‘Macronutrient Makeover’ highlight attention to changing perceptions of macronutrient content and balance. The US shows higher penetration for health claims than in the overall global market – two-thirds of launches carry an allergy claim, over one-quarter declare high or source of protein, and 22 percent claim gluten free. The US also sees around triple the penetration level for allergy claims compared with other regions of the world. Health attributes could help milk drinks extend into meals as an alternative nutrition source, rather than being considered as part of a snack.
Products that go beyond the traditional vitamin and mineral fortifications to provide enhanced health attributes in a convenient format hit the sweet spot for today’s consumers. Private label manufacturers in particular are leading the movement toward multiple health claims, promoting established free from claims such as lactose free and gluten free along with newer statements regarding sugar reduction and higher protein content. Using ultrafiltration technology, start-up companies like Slate feature lactose free flavored milk products with less sugar and more protein than regular chocolate milks in a convenient can. In the traditional carton format, Organic Valley introduced ultra-filtered products with more protein and less sugar, while Clover Sonoma has expanded its suite of milk benefits to include brain health.
Below: Slate Lactose Free Mocha Flip Chocolate Milk with Coffee (US, Mar 2019), lactose free chocolate milk with coffee. Gluten and soy free. Contains 130 calories. Organic Valley Ultra 0% Fat Free Ultra-Filtered Organic Milk (US, Jul 2019), contains 13g protein per serving. Fat free and 50 percent less sugar. Clover Sonoma Organic 2% Reduced Fat Milk (US, Apr 2019), contains 50mg DHA omega-3 plus and 100mg choline for brain health. Thirty-seven percent less fat and 13 percent more of the daily value for choline than regular milk. Supports brain health. Contains vitamins A and D.
New milk and milk drinks exemplify the trend ‘Tapping Into Texture’ with added indulgence through texture and mouthfeel claims previously not common to this subcategory. Enhanced creaminess is a popular feature and confectionery flavors are making inroads.
‘The Sustain Domain’ demonstrates consumer expectations around sustainability. Packaging claims appeared on 46 percent of 2018 NPDs, with share growth of 19 percent (CAGR, 2014-2018). Claims are largely centered around recyclable and sustainably sourced packaging materials.
‘Hello Hybrids’ recognizes growing prevalence of products that combine two different features. Milk beverages with both dairy and plant based components, as in Live Real Farms Lactose Free Dairy Plus Almond Milk Blend, are positioned for the flexitarian consumer who wants to incorporate more plant based foods and beverages without completely cutting out dairy products.
The example on the right is Live Real Farms Lactose Free Dairy Plus Almond Milk Blend: Vanilla (US, Aug 2019), a 50:50 blend of dairy milk and almond milk.
Building on current trends, milk and milk drinks are expected to continue their expansion with enhanced health benefits; targeting of various eating occasions; expanded flavor options beyond chocolate, vanilla, and strawberry; and sustainable packaging and ingredients.
Category Insider: Milk & Milk Drinks – US is a report from Innova Market Insights, which brings together consumer research, market sizes, company analysis and a review of new product trends and activity to demonstrate just how the picture has been changing and to suggest where the future opportunities can be found.