Demand for non-dairy milk has risen over the past few years, with a growing number of plant-based options becoming available to consumers.
Where once it was just soy, there is now a fridge full of plant-based alternatives including oat, almond, coconut, rice, and even hemp.
This demand has been fuelled not just by consumers’ concern for their wellbeing, but with a desire to purchase a more ethical and sustainable product.
A study by the University of Oxford found that producing a glass of dairy milk creates nearly three times the amount of greenhouse gas emissions than any plant-based alternative and uses nine times more land.
David Tyack, Managing Director at Vitasoy Australia, believes there is a number of reasons why Australians are turning away from traditional dairy milk.
“Consumers are choosing plant-based products for a wide variety of reasons, including sustainability, lifestyle choices or even taste preference. Plant-based milk is no longer niche, and now exists in over 40 per cent of Australian households[i].”
Bex Sanders-Clarke, Head of Sales at Inside Out, says non-dairy milks are no longer just for those who are lactose intolerant, and while that could still be a reason, there are many others.
“There are the environmental factors. Plant-based milks tend to be lighter and lower in calories and saturated fat than dairy, so there is the health side. Also, given that the quality of non-dairy milk products has improved significantly over the last few years, a lot of people are now choosing it due to a taste preference.”
A new company that has identified the recent rise in plant-based milk, is hemp-based milk alternative h.alt, founded in Manly by Lauren Chapman, a long-time passionate influencer and campaigner for plant-based nutrition.
“I think people in the mass market are now looking for alternatives to dairy, but they have big expectations. Switching them to plant-based milk must start with coffee. They rightly want to retain their coffee ritual without changing taste or texture. They want health benefits (especially low in sugar), and they are looking for dairy alternatives that are better for them as well as better for the planet. I discovered hemp could deliver on all this.
“One trend I have noticed when talking to people is the shift towards a more flexitarian or plant-based diet. A lot of people I know are doing meat-free Mondays or only drinking dairy milk on weekends to help reduce their carbon footprint and live a healthier, more balanced life.”
Chapman, knowing the health benefits of hemp, began making her own at home to go with her morning coffee, but quickly saw the gap in the market that her home-made milk could fill.
“I knew for hemp milk to gain mainstream adoption we would need to create two products tailored to the most important usage occasions – one crafted with baristas to go perfectly with coffee and one that was developed with nutritionists for everyday use at home, in smoothies, cooking and poured on cereal.”
The need for a plant-based milk to complement coffee is something Vitasoy has recognised, with penetration of plant-based on-the-go coffee options rising from seven per cent in 2017 to 24 per cent of all milk-based coffees[ii].
“Given coffee is a key recruitment area for triallists, it’s critical that the milk used complements the coffee bean as well as the techniques and technology being used by both baristas and self-serve options. This has seen the rise of specially formulated plant-based products which strive to deliver a perfect plant-based coffee, like the Vitasoy Café for Barista range,” explained Tyack.
Category growth
Of all the variations available, Tyack says that oat milk is emerging as the biggest trend in plant-based milk, doubling in size over the last 12 months[iii], while total plant milk in the P&C channel accounts for roughly $1 million in annual retail sales[iv].
“Vitasoy Australia has 48 per cent market share in this space and is growing ahead of category value on an MAT basis to 26/12/2021 (16.3 per cent vs. 14.5 per cent)[v]. Our white milk take-home and flavoured milk on-the-go portfolios contribute equally to this,” says Tyack.
Sanders-Clarke agrees that oat milk has had the biggest impact in the category in recent times.
“Soy milk was the original non-dairy milk, but about six years ago, almond milk popped up as the new kid on the block. More recently still, oat milk has been the biggest disruptor in the category.”
An obstacle Chapman believes she will face in getting h.alt to shelves, is convincing retailers and coffee shops why they need another plant-based alternative when they already have so many varieties.
“We believe hemp offers something the other alternatives have never been able to due to the natural limitations the other ingredients come with. H.alt hemp milk has the ideal taste and texture to complement the perfect coffee and from initial feedback – baristas and consumers are saying it’s the best tasting plant milk they have tried. Furthermore, it delivers on all the health and sustainability expectations from today’s consumers being low in sugar and carbon footprint.”
Tyack believes the biggest challenge in the coming year will be how businesses respond in the current Covid environment and ensuring their business continuity plans are maintained and relevant. Despite this, Tyack says there is definitely opportunity.
“The biggest opportunity remains the ongoing recruitment into plant-based milk via oat milk to leverage one of the biggest macro food and beverage trends, being plant-based nutrition.”
Whereas Chapman sees the fact that h.alt being one of the first to market hemp milks, is a great opportunity, as she has only come across four brands worldwide that offer hemp milk, but believes they represent the best of what hemp milk has to offer.
“I think our biggest opportunity is that we are the first to market hemp milk that has been crafted for baristas to really hero the taste of coffee. Our hero ingredient hemp has so many health benefits as well as being a carbon-negative crop, making h.alt milk a better option compared to other milk on the market.”
Sanders-Clarke believes they are lucky to be working in the plant-based category, which is seeing demand increase organically and that with the right strategy in place for its core range, and NPD, there is real headroom for growth.
Always space in the fridge
The P&C channel has long been a traditional stomping ground for on-the-go milk products and Tyack says that it still holds incredible importance in the plant-based milk category.
“Given coffee is a big recruitment ground for plant-based milk triallists, this presents a huge opportunity for the P&C channel. In a similar sense, the on-the-go format is also a massive opportunity to recruit new consumers using traditional iced chocolate and iced coffee offerings with popular plant milks including soy, almond, and oat.”
The category’s growth and prevalence due to Australia’s changing dietary preferences make it an important category for convenience, explains Tyack.
“With more players in the category, consumers are looking for products that are more than just plant-based, they are looking to trusted brands and products that don’t compromise on taste, so the advice to retailers is to ensure you range trusted brands that taste great and offer non-dairy drinkers a variety of options.”
Chapman also acknowledges how brand loyal consumers are.
“We’ve identified that consumers of plant-milks are very brand loyal compared to other shopper segments and they will often hunt down their plant milk brand of choice and leave a cafe or retailer that does not stock their preferred brand.”
Sanders-Clarke says the P&C channel is very important to Inside Out as it has significant reach and forms a large component of the company’s plans. She also offers some advice for retailers when it comes to positioning and selling plant-based milk.
“We’ve seen it work well when there’s a dedicated and central healthy/vegan destination in-store because the health-conscious consumer often isn’t visiting the standard drinks fridges.”
The sector will always play a key role in the behaviours of the Australian consumer, concludes Tyack.
“We’re seeing this increase post-Covid as people shift away from the mass supermarket experience. Having a credible portfolio that delivers on taste will naturally recruit both avid and curious consumers.”
This article originally appeared in the February/March edition of Convenience & Impulse Retailing magazine.
[i] IRI Aztec, IHP Total Soy & Grain Household Penetration % MAT to 07/11/2021
[ii] Café Pulse Report: AUSTRALIAN CAFE MARKET PULSE REPORT 2021
[iii] IRI Aztec T. AU Grocery Value (000s) MAT to 26/12/2021
[iv] IRI Aztec T. AU Convenience Value (000s) MAT to 26/12/2021
[v] IRI Aztec T. AU Convenience Value (000s) MAT to 26/12/2021