Markets

The rise of dairy alternative drinks in Australian supermarkets

By Sofia Omstedt

Australians love dairy products and consume more dairy per capita than most other developed countries.

In 2018 Australians drank close to 102 litres of milk per person with a proportion accounted for in coffees.

More recently there has been an increased presence of plant-based drinks or non-dairy ‘milks’ in the market. Over the 12 months to March 2019, Australians purchased about 5.3 litres per person of dairy alternatives in supermarkets.

Traditional dairy products continue to make up the dominant part of the average consumer’s diet, however, sales of dairy alternatives have grown quickly as companies extract ‘milk’ from an increasingly wide selection of nuts.

During the past four years, sales of dairy alternatives grew 48 per cent to 132 million litres. In stark contrast, sales of white milk grew four per cent over the same period to 1.3 billion litres.

White milk still represents close to 90 per cent of the entire market. Even though non-dairy drinks are growing exponentially, they still only account for a small portion of the entire milk market.

Product development has been a key feature in the spike in demand for non-dairy products.

In 2007, soy was the principal product sold with more than 80 per cent share of the non-dairy market.

In 2008 almond drink was first introduced to Australian supermarkets and since then a wide range of alternatives have followed. These include milk alternatives made out of coconut, quinoa, macadamia and more recently pea and hemp.

The bourgeoning range of dairy alternatives has had the impact of intensifying competition within the non-dairy market and has resulted in soy losing market share to alternatives, particularly almond.

In the 12 months to March sales of soy drinks made up 41 per cent of the non-dairy segment while almond beverages grew to account for 37 per cent of the market.

There are currently close to 200 different products available in supermarkets for consumers who want to purchase dairy alternative beverages.

While sales of non-dairy drinks have grown, it is important to note that consumers are not necessarily ditching dairy in favour of these products.

Research conducted for Dairy Australia shows that only five per cent of consumers purchase alternatives exclusively, while 67 per cent only purchase milk.

Cross-purchasing (buying both regular milk and dairy alternatives) is becoming more common.

Currently, 31 per cent of all consumers’cross-purchase dairy and dairy alternatives. One retailer reported their consumers on average purchased between three and four different kinds of ‘milks’.

The research also indicates that alternative beverages are more likely to appeal to people who live in metropolitan areas, who are millennials and female, compared to traditional dairy.

Such consumers are also more likely to have children in the household compared to dairy consumers. What may come as a surprise is the primary grounds they cite for purchasing dairy alternatives. The reasoning behind this decision is not animal welfare concerns but the perception that these alternatives are healthier. Social media and mass marketing for these beverages have led consumers to believe they are more natural and healthy than milk.

While it may be disheartening to hear that consumers view non-dairy drinks as a healthier alternative to milk, it provides the dairy industry with an opportunity. These nut beverages contain a wide range of ingredients, all added to imitate the nutritional benefit of dairy. This is why it is becoming increasingly essential for the dairy industry to talk about the health benefits of consuming dairy.

It is important to remember that despite growth in recent years, the alternative market remains a niche market. While some choose to buy their coffees with plant-based milk, most Australian consumers still want traditional milk with their latte.