As consumer demand for healthy, convenient snacks continues to drive the market for on-the-go dairy products, market research providers, Euromonitor International, Packaged Facts and Innova Market Insights, and industry experts from the U.S. Dairy Export Council Senior, Idaho Milk Products, Cargill and Arla Foods take a closer look at present and future dairy-finished product applications, ingredients and target demographics.

Beyond yogurt-centric products, the dairy space is composed of a comprehensive, finished-product mix of beverages, snacks, dips, soups, cheese and more. As Millennials, Generation Z and Boomers increasingly look to products that support their healthy and active lifestyles, clean label, high-protein and low-sugar dairy products are on-trend.

Today’s consumer, however, expects more bang for its dairy buck, and thus, clean-label products with low sugar and added nutritional benefits, such as protein, are popping up in stores. This can present a formulation challenge for food and beverage manufacturers, which is why Cargill Project Manager Brian Surratt said ingredient selection in the dairy category is paramount now more than ever.

“Customers want a short ingredient statement with pantry-friendly ingredients that consumers know and trust,” Surratt explained. “However, we’re not making these products in the family kitchen; we’re using large manufacturing facilities. As an ingredient supplier, we have to find and use ingredients that can provide the functionality and shelf life our customers need—and we have to do it in the most minimalist way possible.”

The global market

Dairy has been on the move globally. In the United States, sales have moved slightly downward; Euromonitor International recorded a decrease in overall packaged dairy product sales by a half percent in its 2016 to 2017 Passport Packaged Food database. However, in the same database, international growth of packaged dairy product sales increased by 4.9%.

Except for the United States, yogurt remains a finished dairy product front-runner. While yogurt sales decreased by 1.4% in the United States during 2016 and 2017, the Passport Packaged Food database recorded international yogurt sales as the largest dairy growth category, with a 7.2% increase.

Manufacturers, such as Unilever, Kraft Heinz and Nestlé, have responded to these sales trends. For example, Unilever recently acquired key U.S. ice cream assets and put labels, such as Bertolli and Skippy, for sale, according to reports from Euromonitor International. Following its 2015 merger, Kraft Heinz publicly launched a focus on two categories, and dairy was one of them. And for Nestlé South America, dairy products now make up its largest share of food sales.

Geographically speaking, Latin America represents one of dairy’s fastest growing regions, even though it accounts for less than 15% of global dairy sales. Cheese and fruit yogurt is driving sales in this region, according to Euromonitor International. The market research provider predicted the Middle East and Africa to be the second-largest growth regions in the next five years, fueled by Saudi Arabia, the United Arab Emirates, Egypt and South Africa. The market data firm also reported slowing dairy sales in China and Eastern Europe. Yet, Euromonitor International’s data showed cheese, drinking milk products and sour milk drinks driving dairy sales growth in Poland.

Dairy is showing a slight decrease in U.S. sales; however, niche categories exhibit growth, according to Idaho Milk Products marketing manager Ron Hayes. He attributed the high-protein, low-sugar ice cream trend to the recent increase in ice cream sales, and pointed out whole-fat yogurt has re-emerged as well.

“People are really focusing on avoiding carbs and adding more protein to their diets,” Hayes said. These products let them do so without sacrificing taste or experiencing the chalky feeling commonly associated with past products with added protein.

Market trends

Experts noted three main features trending in dairy end products: clean label, low sugar and high protein.

Clean label

“The front runner, by far, is clean label,” said Pam Stauffer, Cargill global marketing programs manager. “Consumers want more choice and transparency in their food. They want to recognize the ingredients, understand what purpose they serve in a product and even know where the ingredients come from.”

Stauffer cited a Mintel study that showed non-GMO (genetically modified organism) as one of the fastest growing claims in the U.S. food industry and a Packaged Facts report predicted demand for non-GMO products will grow 12% annually through 2018.

She added, “Interest in organic and non-GMO products is a further reflection of this overall trend in consumer purchase decisions.”

Arla Foods Ingredients category and application manager, Claus Bukbjerg Andersen, said consumers are leveling-up clean label expectations. 

“Whereas previously, it was enough for an ingredient to be considered clean, if it was derived from a natural source, shoppers are now raising more questions about the nature of that source,” Andersen explained. “They understand that the raw material–milk–is natural, but, increasingly, they want to be reassured that it’s also wholesome and safe. They’re now asking: ‘How was the product formulated? How was it processed?’ Dairies must be ready to answer those questions, but they can only do so if they source their dairy ingredients from trustworthy sources.”

Sugar reduction

Sugar reduction and low sugar is another important sentiment driving dairy product development.

“Clearly, the redesign of the nutrition facts panel with the inclusion of added sugar will create opportunities for innovation in the dairy category,” noted Wade Schmelzer, Cargill principal scientist. “Dairy processors will likely explore reformulations aimed at either targeted levels of added sugar or calories.”

Schmelzer said he believes innovation might parallel the 100-calorie approach from the recent past; however, he added this round will need to identify nutritional features that resonate with consumers and deliver great taste.

“In truth, dairy customers have already been proactively exploring opportunities—not just for sugar reduction, but also in the development of less-sweet alternatives,” Schmelzer added. “In yogurts, for example, we’ve seen products such as Icelandic yogurt, with more sourness and less sweetness.  Similarly, chocolate milk with lower sweetness and less sugar has been offered by dairy processors to school districts for years.”

High protein

With weight management and active lifestyles at the center of consumers’ minds, it is no surprise high-protein dairy products are trending. And, with good cause, said Vikki Nicholson-West, senior vice president, U.S. Dairy Export Council. She noted a recent University of Illinois study that demonstrated dairy’s protein quality (Br J Nutr. 2017 Feb;117[4]:490-499). The study used digestible indispensable amino acid scores (DIAAS) to assess eight protein sources: whey protein concentrate, whey protein isolate, milk protein concentrate, skimmed milk powder, pea protein concentrate, soy protein isolate, soy flour and whole-grain wheat. The dairy proteins tested stood out as higher-quality protein than the other tested sources. The proposed DIAAS method is not the only protein scoring method that ranks dairy as high-quality. The current protein digestibility-corrected amino acid score (PDCAAS) also gives dairy proteins a higher score, compared with most other protein sources.

Finished products

Emerging in the lineup of dairy products that deliver on these trends are beverages, especially bottled water, ready-to-drink (RTD) tea and coffee, Nicholson-West added. She’s seeing reformulation of existing products for high-protein package claims.

In fact, globally, flavored bottled water launches increased 10.3% in five years, according to Innova Market Insights. And, Nicholson-West pointed out dairy ingredients can boost protein content in products, while maintaining a clean, transparent label in fast-rising categories.

“One brand introduced a bottled water that uses whey protein isolate (WPI) to achieve 20 g of protein,” she explained, noting the milk and honey bedtime beverage was featured as a U.S. Dairy Export Council prototype at the Institute of Food Technologies (IFT) 2017 Annual Meeting and Food Expo.

“This beverage uses milk protein isolate (MPI) and micellar casein concentrate (MCC) to achieve 20 g of protein and fits within the popular ready-to-drink category,” Nicholson-West said. “The U.S. dairy industry has a large ingredient profile to accommodate different processing/formulation types and continues to evolve.”

Hays also noted an increase in niche yogurt products, and added, “Another trend is protein-enhanced cold-brewed coffee, protein-enhanced flavored milk and other RTD beverages.”

Ingredients

One of the most popular application trends is the use of added functional ingredients in dairy products, noted Michael Bush, president and CEO of Ganeden. “Consumers want health benefits in products they consume every day—in fact, a 2017 Survey Sampling International (SSI) Consumer Survey showed 98 percent of consumers would purchase a product with a health benefit if priced the same as one without. Using functional ingredients in a product gives consumers the benefits they want in options that fit their dietary preferences and lifestyles.”

According to Nicholson-West, among the ingredients used in these trending dairy applications is MCC, which is isolated from milk through filtration. It has functional benefits including wetting, dispersibility, heat stability at a neutral pH and solubility.

“Microfiltration produces a range of compositions, depending on the amount of milk-derived whey protein removed,” she explained. “Further concentration and diafiltration can increase the total protein content and decrease the amount of lactose in the final ingredient to create higher protein products for consumers with lactose sensitivity. New dairy proteins make formulating protein-fortified products even easier and strategic.”

Andersen explained whey protein has emerged over the past decade as a true superstar ingredient.

“It’s derived from cows’ milk, so its use is widespread and compatible in dairy applications where it can enhance the quality and nutritional profile of products, such as milky drinks, cheese, yogurt and desserts, without compromising clean labels,” Andersen explained. “Whey proteins are perfect, for example, for reducing fat levels in yogurts, desserts and cheeses without impacting taste and texture. They can also solve specific challenges. Take cottage cheese, for example. We’ve developed a whey protein ingredient that solves the long-standing problem of watery, low-fat cottage cheese and, in doing so, eliminates the need for stabilizers.”

And, while Cargill offers several ingredient solutions, such as chicory root fiber, pectin and functional native starches, that align with these trends, like Stauffer said, its stevia sweeteners are at the forefront of innovation.

“Dairy manufacturers will soon have a new option for zero-calorie sweetness: EverSweet sweetener,” Stauffer announced, noting the company’s food scientists invested more than 150,000 hours studying the stevia leaf to uncover the optimal balance of sweetness and taste.

“Through our research, we found trace amounts of the glycosides reb M and reb D in the stevia leaf, which offer heightened sweetness and a taste closer to real sugar,” Stauffer added. “While these glycosides are rare in the stevia plant, we can produce them through fermentation.”

Cargill’s EverSweet, which will be commercially available in 2018, provides sweetness without bitterness or a licorice aftertaste, according to the company, and offers a more rounded taste profile with faster onset of sweetness.

Bush noted probiotics continue to be a top, functional-ingredient choice for dairy applications, due to the rise in consumer awareness and demand for them, and science showing health benefits that certain strains provide. He noted Ganeden’s shelf-stable, probiotic ingredient, GanedenBC30® (Bacillus coagulans GBI-30, 6086), has been used in both traditional dairy products and new options, including milk, yogurt, kefir, dried yogurt snacks and powders, dips and cheese bites.

“The health benefits probiotics provide are strain specific, meaning there must be science and testing behind the specific strain being used showing its efficacy and survivability. For example, GanedenBC30® has over 25 published studies demonstrating its safety, stability and health benefits,” Bush said.

Demographics

Who is buying these convenient, low-sugar, high-protein dairy products with clean labels? Millennials, seniors and Generation Z, explained Nicholson-West. That’s because, for these populations, the benefits are real.

“For the active Millennial and gym-focused adults, reducing hunger, increasing strength, enhancing recovery, and sparking relaxation and focus is top-of-mind,” Nicholson-West said, explaining these benefits are no longer packaged into one item. “Specialty foods and beverages are segmenting each protein benefit to offer products targeted at different consumer types. This gives manufacturers multiple areas to introduce high-protein products, including weight management, meal replacers, satiety, midday/night pick-me-ups, sustained energy and exercise recovery.”

She also noted consuming a moderate amount of high-quality protein at each meal can help seniors fight the effects of sarcopenia, the age-related progressive loss of muscle mass and function. Nicholson-West pointed to research that showed eating about 25 to 30 g of high-quality protein at each meal is suggested to preserve muscle health (Nutr Metab (Lond). 2011 Oct 5;8:68). Consuming 40 g of protein, (while considering consumption limits) after resistance exercise is recommended for older adults to maximize muscle protein synthesis (Br J Nutr. 2012 Nov 28;108(10):1780-8).

Dairy products are becoming increasingly popular as convenient, on-the-go snacks. In addition to beverages, cheese and yogurt, dairy’s clean-label ingredients are popping up in applications, such as snacks, dips and soups, and providing vehicles to boost protein, pre- and probiotics, vitamins and more, while providing added benefits, such as flavor and sugar reduction.