Roland Berger's study 'The Protein Revolution' zooms in on the increasing demand for protein. To meet this demand sustainably, sources of alternative protein are on the rise.
Plant-based dairy: high-potential or hype?
An insight into the plant-based dairy market, its trends, challenges and opportunities
The plant-based dairy market is on the rise. As consumers become more health conscious and environmentally aware, they are increasingly turning to plant-based substitutes. The maturity of this market varies significantly, among products and even among Western European countries. This shift presents both challenges and opportunities for companies in the dairy and dairy alternatives space. Leading brands address this by implementing a range of effective differentiation strategies.
"The rise of plant-based dairy reflects a profound shift in consumer preferences towards sustainability and health, which paves the way for innovation and growth in the market."
High growth market
In 2023, the retail market size of plant-based dairy in Western Europe and North America reached EUR 10.7 billion. This is a significant increase from EUR 6.8 billion in 2019, reflecting a compound annual growth rate (CAGR) of 12%. The main driver here has been plant-based beverages, which account for approximately 60% of the total market, followed by yogurt and cheese.
Despite its impressive growth, the plant-based dairy market is a mere fraction of the traditional dairy market, which was valued at EUR 33.6 billion in 2023. While milk substitutes have reached 12% penetration¹ of the traditional milk market, other categories like yogurt, butter and spreads, and ice cream occupy 4% or less. The maturity of the plant-based dairy market also varies significantly across Western countries, highlighting ample growth opportunity, as well. If we look at per capita spending, for example, Finland spends EUR 34.20 per capita per year, whereas France only EUR 5.90 driven by multiple factors such as awareness, brand strength and availability of plant-based dairy brands in addition to consumer preferences. Indicators such as these point to a substantial opportunity for dairy alternatives.
[1] Penetration is the ratio of the euros spent on dairy substitute products over the total euros spent on dairy products.
Strong and sustainable drivers
The rise of plant-based dairy is largely driven by shifting consumer preferences, mainly where health, sustainability and ethics are concerned. Regional tastes and the appeal of premium plant-based products also play a significant role. Additionally, the retail and hospitality sectors are embracing dairy alternatives, and we are seeing substantial innovation in terms of taste, texture and nutrition. These trends are strong and sustainable, giving plant-based dairy products robust footing for further growth.
Barriers and switching potential
In late 2024, we conducted a global consumer survey of around 500 people to identify the drivers behind and barriers to the wider acceptance of plant-based dairy. We found that while a significant portion of the population already uses plant-based dairy products, 58% are open to making the switch.
Despite its growing popularity, several significant barriers inhibit consumers from making the switch to plant-based dairy. The primary challenges are taste and texture, which 57% of respondents identified as a key issue. This is closely followed by limited availability in stores, with 55% indicating that they struggle to find plant-based options. High price is another major factor, as 37% of consumers perceive plant-based dairy products to be more expensive than traditional dairy. Additionally, 29% of respondents believe that plant-based products are overly processed, which affects their willingness to switch.
Unlocking the full potential of plant-based dairy
Several leading brands are already well underway towards capitalizing on the market's growth potential. For example, Danone (Alpro) focuses on innovation and expanding its product range across multiple categories, while Oatly leverages its early-mover advantage by concentrating on its hero product, milk. Olga (Sojasun) targets eco-aware and health-conscious consumers by maintaining product consistency. Unilever Ice Cream (Magnum, Ben & Jerry’s) capitalizes on its brand equity and global scale to maintain a strong market position. Flora Food Group (Violife) aims to establish a leading position in the cheese segment. These strategies appear to be effective, with plant-based dairy brands gaining increasing recognition among consumers. Our survey shows that brands like Alpro and Oatly enjoy high aided awareness, with Alpro recognized by 83% and Oatly by 82% of respondents. For plant-based dairy to make a real dent in the dairy market, it is clear that brands must take a targeted approach. Strategies could include:
- Partnering with suppliers to optimize protein crops and improve extraction technologies to enhance product quality and reduce costs
- Focusing on recipe innovation to improve taste and texture, making plant-based options more appealing to consumers
- Continued efforts in brand building and expanding distribution channels to increase awareness and availability of plant-based products
- Offering smaller packs to attract new customers
- Drive product innovation to tap into consumer trends (e.g. high protein) and open new market opportunities, also in categories beyond milk
These and other targeted strategies can unlock the full potential of plant-based dairy. If you would like to dive deeper into our research on the promise of plant-based dairy, get in touch with one of our experts.
Further readings
_person_320.png)
