The dramatic growth in the popularity of non-dairy milk in recent years is forcing convenience and impulse outlets to really sit up and take notice.
While alternatives such as soy milk and almond milk may not threaten the fridge dominance of traditional fresh milk any time soon, the figures are nonetheless startling. According to recent Nielsen Scan Data, dairy free milk has seen growth of more than 150% in the past five years and all the forecasts suggest this upward trend will continue.
The relative nutritional qualities of the various ‘milks’ may be a matter of some debate, and dairy farmers may argue that the dairy-free milks are not technically milks at all, but what cannot be disputed is that there has been an extremely steep rise in demand for them. Many consumers are attracted to dairy-free milks by the perceived health benefits. Most alternative milks are lower in energy, or kilojoules, and can contain a lot less fat than cow’s milk. However, a lot are also considerably lower in protein and calcium, and some are therefore fortified with key nutrients.
Opportunity in convenience
For convenience and impulse retail operators who are still coming to terms with the impact of supermarkets slashing milk prices a few years ago, the rise of dairy-free milk does offer some encouragement. Firstly, it has the benefit of higher margins than fresh milk, and the products also have a significantly longer shelf life making them easier to manage.
While many supermarkets now stock a significant range of plant-based milks – including soy, almond, coconut, hazelnut, rice, oat, and macadamia milk – most convenience stores are yet to properly embrace the opportunity. While shelf space and fridge space will always be a huge consideration for the convenience and impulse operators, the trend both in Australia and globally suggests that it would be a mistake not to more enthusiastically seek to maximise the category’s potential.
Dairy-free milk producers say the most important thing that convenience can do to capitalise on the growth is to simply improve ranging of dairy-free milks and to better alert shoppers to the offer.
In Australia, companies like Australia’s Own Organic which is part of the Freedom Foods Group of brands that specialises in food focused on health and nutrition have been enjoying enormous success in this space. Leading the way is its Almond Milk product which contains organic almonds with the benefits of no added cane sugar, no gluten and no lactose. It is available in a 1-litre carton and in 250ml cartons in a three-pack. The company also sells unsweetened almond milk, a coconut almond milk blend, rice milk, and unsweetened soy milk.
Similarly, Sanitarium has been seeing sales of its dairy free milks under the So Good brand soar. Its So Good soy milk products are available in the long life milk aisle of supermarkets and come in a range of regular, light and flavoured variants. Other big sellers are So Good Coconut Milk Unsweetened which is made from coconut cream, and So Good Almond & Coconut Milk which is made from almonds and coconut cream and is low in fat and saturated fat. The brand has also introduced a range of flavour variants to add interest to the category, and these include Almond Milk Dark Chocolate Flavoured, Almond Vanilla Coconut, and Almond Milk Date & Caramel Flavoured, all of which come in 375ml packaging.
While Sanitarium’s So Good Almond Milk has been selling exceptionally well, the fact that it has mainly been doing so through supermarkets indicates the enormous potential dairy-free drinks still have through other channels. Nielsen Scan data shows that So Good Almond Milk has seen growth of more than 40% in grocery, but remains a largely untapped opportunity in convenience.
Marketing the milk
The most effective way for convenience stores to lift sales of dairy-free milk is to display them next to, and with, fresh cow’s milk in the dairy cabinets.
Non-dairy drinks are bought by a range of consumers, including those convinced by the better-for-you message, and those who choose to avoid dairy products due to ethical or environmental concerns. According to previous data from market researcher, Euromonitor International, Australia is now the third-fastest growing vegan market in the world. There is also an increased demand from those who do not want to commit to a full vegan or even vegetarian lifestyle, but would rather pick and choose to suit their lifestyle, social life or health conditions. A growing number of consumers identify themselves as flexitarian or lessitarian, meaning that they’ve cut back on their consumption of animal-based foods and beverages.
There also those who have a lactose intolerance and therefore struggle to digest lactose, a type of sugar found in dairy milk. Other people may have a milk allergy so they experience an immune reaction to the proteins in dairy milk.
The rise of dairy-free milk then can be attributed to a number of factors. The market research company Innova Insights says that, across the globe, half of recently launched dairy alternatives were positioned as lactose-free, nearly 40% as vegan, and just under a quarter as Genetically Modified Organism (GMO) free.
“The dairy alternatives market has seen rising levels of interest in recent years, spurred mainly by consumers increasingly looking for lactose-free, dairy-free and plant-based/vegan options as healthy lifestyle choices, rather than regarding them as simply for those with allergies or intolerances,” said Lu Ann Williams, Director of Innovation at Innova Market Insights. “The category has been further boosted by the growing availability and promotion of plant-based options to traditional dairy lines … particularly beverages.”
Alice Yu, a research analyst at Euromonitor International, agrees that the driving force behind the trend is not hard to see.
“This has really been driven by consumers looking to reduce animal fats in their diets,” she said.
“In addition, consumers are demanding almonds and other nuts as a healthy protein snacking option, which has had flow-on effects to demand for nut based milks like almond milk.”
While the base of dairy-free milk consumers is constantly expanding, Nielsen Homescan data indicates the segment currently skews slightly toward health-conscious females. The data also reveals that around one third of Australian households have at least two types of milks in their fridge. This ties in with recent research carried out in America by Mintel last year which suggests that it isn’t necessarily an ‘either or’ situation when it comes to dairy milk and dairy-free milk.
“Our research reveals that nearly all non-dairy milk drinkers also drink dairy milk,” said Elizabeth Sisel, Beverage Analyst at Mintel.
“Revealing that consumers are turning to non-dairy out of preference as opposed to necessity.”
America is, of course, a very different market to Australia but the trends there do contain lessons and perhaps indicators of what the future here might hold. According to Dairy Australia figures, the average Australian still consumes around 105 litres of fresh milk per year, one of the highest rates in the western world. In the United States there has been a far sharper decline in traditional milk and Mintel research shows that 49% of Americans do, on occasion, consume non-dairy milk, including 68% of parents and 54% of children under age 18.
And, according to just released data from market research firm, Packaged Facts, plant-based dairy alternatives will come to represent 40% of the combined total of dairy and dairy alternative beverages in the US in 2022, up from 25% in 2016. The firm said that, in recent years, the plant-based dairy beverage alternatives category in the United States has seen an expansion of several nut- and legume-based milk alternatives beyond soy, rice, coconut, and almond to include varieties made from cashews, hazelnuts, macadamias, peanuts, pecans, and tiger nuts. In addition, there are non-dairy milks being offered made from bananas, cassava, oats, and potatoes, among others.
While there is a long way to go to reach the sort of penetration seen in the United States, all the indications are that demand for, and sales of, non-dairy milks will continue to grow here in Australia, as well. According to research from Euromonitor International, the retail value of Milk Alternatives in Australia at current prices was $173.3 million back in 2012 and this had soared to $276.2 by this year. The company forecasts that, at constant 2017 prices, the retail value of the category will have risen again to $315.8 million by 2022.
“Although fresh cow’s milk is still the largest in terms of actual sales,” said Alice Yu from Euromonitor International. “Other milk alternatives, largely driven by almond milk, have seen the strongest value growth of 6% in 2017 to reach AUD$276 million … and are expected to continue to grow at a 5% compound annual growth rate (CAGR) until 2022.”
Fresh dairy milk then has been at the heart of Australian convenience stores’ profitability and personality for many, many decades. While it may not be about to be pushed out of the convenience store milk fridge any time soon, the rapid rise of a variety of dairy-free alternatives suggests that dairy may at least have to get used to the idea of having some very interesting company.
* Convenience & Impulse Retailing magazine would like to thank Sanitarium and Euromonitor International for supplying information for this article.
AT A GLANCE
- Convenience can lift sales of dairy-free milks by improving ranging.
- Key consumers of non-dairy milks include health-conscious people, those who avoid dairy products due to ethical or environmental concerns, those with lactose intolerance, and those with a milk allergy.
- The most effective way for convenience stores to lift sales of dairy-free milks is to display them next to, and with, fresh dairy milk in the dairy cabinets.
- Euromonitor International sows that milk alternatives, largely driven by almond milk, have seen growth of 6% in 2017 … and are expected to continue to grow at a 5% compound annual growth rate (CAGR) until 2022.
Leading dairy-free milks
- Soy milk – contains more protein than most dairy free milks. Most soy milk brands are also fortified with similar levels of calcium to dairy milk. Some also contain vitamins D, B2 and B12.
- Almond milk – lower in kilojoules than dairy milk, and also low in saturated fat. It has lower amounts of protein than soy and not all brands contain similar levels of calcium to dairy milk. Varieties with no added sugar are also available.
- Coconut milk – has higher amounts of saturated fat (from the coconut) and compared to many other dairy free milks, is lower in calcium and protein.
- Rice milk – most brands are fortified with calcium. Rice milk is low in saturated fat, but also low in protein. It also tends to have a high level of natural sugar, almost double that of soy milk.
- Oat milk – low in saturated fat but it also has lower protein. Not all oat milks are calcium-fortified and may not be suitable for those sensitive to gluten.