The dairycase may involve cold products—but it’s a hot category when it comes to new R&D initiatives. Some of Innova Market Insights’ latest reports show the dairy alternatives category is a key battlefront in a war for consumer spending. Likewise, Innova says new frozen dairy desserts are making headlines.

Flexitarian Appeal

Innova Market Insights says lactose avoidance is still a more important issue than veganism, although the vegan juggernaut is certainly not slowing down and will inevitably play a growing role in future demand.

But it is the flexitarian movement—led by western markets—that appears to be having most impact on current growth: in nine countries surveyed, an average of 32% of consumers said they bought dairy alternatives simply “because they’re healthier” and 27% “because they bring variety to my diet,” helping to incorporate more plant ingredients.

Purchasing of dairy alternatives is still most frequent in Asia and Latin America, which are home to the greatest incidence of lactose intolerance, but these markets remain dominated by milk alternatives, with diversification and segmentation of the category focused on more developed regions. There is an above-average focus on dairy free yogurts in Europe, for example, while ice cream represented almost one-third of all dairy alternative launches in North America in 2018.

“There is real variety in the products emerging in the European and North American markets,” said Lu Ann Williams, director of insights and innovation at Innova Market Insights. “And within the past year or two, we have even seen mainstream brands joining the fray, something that many consumers will see as an endorsement of their own emerging interest.”

We All Scream!

Pleasure is still the driving force behind ice cream purchases, with consumers naming its taste, the fact that it’s a treat and makes people feel happy as the top three reasons for buying it. In the contemporary consumer environment, however, the balance between health and indulgence is increasingly important.

As far as the key macronutrients are concerned, for example, the focus within ice cream development is clearly shifting from fat to sugar. Through 2015-2019, global launches of low sugar ice creams increased at a CAGR of 48%. In contrast, launches of low/no/reduced fat ice creams dropped at a CAGR of 12% during the same period.

The non-dairy movement also is impacting on ice cream innovation as significantly growing numbers of consumers explore plant-based eating.

“Non-dairy ice creams tripled their share of total ice cream launches in North America between 2015 and 2019, reaching a significant figure of 18% penetration,” reports Williams. “Meanwhile, Australasia and West Europe are other important stamping grounds with 15% and 9% non-dairy penetration, respectively.”

Even within these healthier ice cream categories, however, indulgence is never far away and the idea of “permissible indulgence” is leading to the combination of healthier formulations with decadent tastes.

For example, salted caramel is an indulgent flavor that has exploded into the mainstream in recent years. It was ranked as the fifth most popular taste within launch activity in 2019, up 10 places since 2015. However, it is even more popular in helping to deliver an indulgent image to guilt-free products, taking fourth place in non-dairy ice cream launches, third place in low fat ice cream and second place in low sugar NPD.