Plant-based milk and other dairy products are gaining popularity and market space in the UK. The demand for these products is increasing across all age groups. Consumers with lactose intolerance and allergen to cow or buffalo milk are adopting plant-based dairy products. Additionally, rising veganism is triggering the demand for plant-based milk and dairy products.
According to a study conducted by Garden of Life in 2020, around 7% of Brits follow a vegetarian diet, 4% follow a pescatarian (people who consume only seafood as their meat and are otherwise vegetarians) diet and only 2.8% follow a vegan diet. The survey also revealed an increase in vegan diet and people increasingly taking the flexitarian approach. As a result, demand for plant-based milk ingredients such as soy, almond, hemp, quinoa, spelt, oat, and coconut is increasing. Companies are showing interest to launch new products in this segment to cater to this rising trend.
In October 2020, the European parliament voted in favor of Amendment 171 banning the use of phrases such as does not contain milk, alternative to butter, dairy free, creamy texture and free from milk. This would prohibit the UK plant-based dairy producers from using such descriptive terms for their plant based products. Players such as Oatly, ProVeg International and Flora margarine-owner Upfield are opposing the ban specifying that this would make it difficult for customers to choose plant based products. If approved the Amendment 171 could impact the plant-based food packaging that looks similar to dairy foods.
Increasing popularity of vegan, and flexitarian diets is bolstering demand
The emergence of the flexitarian consumer (people who still consume meat and dairy but seek to reduce the levels they consume), as well as increased numbers of vegans are driving the plant based dairy alternative market in the UK. Consumers who practice veganism are also looking for cruelty-free products for them and their families. Hence, companies are gearing up to capitalize on the trend.
The dietary changes among consumers are increasing the demand for plant based dairy alternatives which have less carbon footprint. Reducing animal based product intake and adding more plant-based foods in diets is further pushing demand for plant-based proteins. Flexitarian diet is increasing which expands the UK-based plant-protein manufacturers’ consumer-base which in turn increases profitability.
Additionally, the easy availability of vegan and vegetable food products in almost all leading stores is also supporting the demand for plant-based dairy products in the UK. The market is likely to grow considerably going forward which would attract more investment in the sector.
Rising prevalence of lactose intolerance and allergen to cow or buffalo milk among the UK public
Consumers are swapping dairy products with plant based products due to the rising prevalence of lactose intolerance among the UK public. Companies are responding to this by offering products which are lactose and allergen free to support this trend. In the alternative plant-based dairy market, companies are using different ingredients such as soy, coconut, oats, rice, almond, and hemp to produce plant-based milk. Therefore, consumers’ allergen to one ingredient can opt for another product made from a different ingredient. Also, demand for dairy products has decreased in the UK posing an opportunity for market players to offer dairy alternative products. Hence, a wide range of plant based ingredients and flavors are expected to attract more consumers over the period.
Oat and almond milk gaining popularity in the UK
The consumption of plant based milk in the UK has been increasing due to dietary or health reasons. As per Oatly’s estimates, the plant-based milk market in the UK hold 15% of total European market and this is expected to double from £226 million in 2019 to £497 million in 2025. Also, consumers are becoming increasingly aware of health benefits of such products and its role in sustainability. Until recently, these dietary changes were led by Millennials and Generation Z, but the demand has now increased among all age groups. More and more brands are launching plant based milk products as it offers huge opportunities for players as the consumption continues to increase.
Of the various plant based milk types, almond milk is the most popular in the UK. Supermarkets, local brands, large multinationals and supermarkets’ own labels have forayed into almond milk market to cater to the rising demand. Apart from this, oats milk is gaining consumer interest in the UK owing to better sustainability practices claims and product developments within the category. Investments in Oatly by Jay-Z, Oprah Winfrey and Natalie Portman, further reflects this trend. Also, Oatly announced to establish a plant based dairy factory in the UK in 2023. The factory will produce upto 450m litres of oat milk a year. This move was in response to rising demand for plant based dairy in the UK.
Consumer interest in vegan ice-cream on the rise
Customers in the UK are actively looking for plant-based alternatives and search for vegan ice cream continues to increase in the recent years. Responding to the rise in consumer demand, companies such as Ben & Jerry, and Oatly have already introduced vegan ice creams. In March 2021, Halo Top introduced a range of oat milk ice cream tubs in the UK. Similarly, ice cream brands such as Coconuts Organic and Banana Scoops have launched plant-based ice creams across various supermarkets in the UK, June 2020. Earlier, in January 2021, Magnum unveiled vegan sea salt caramel ice cream bars in the UK.
Sales of vegan ice cream are growing due to health awareness. Plant based has become a way of life and is no longer a dietary need among consumers. Moreover, Northern Bloc, an ice cream brand based in the UK, received funding from Mobeus Equity Partners in January 2021. The investment will help the company grow its plant based business and increase its production capacity which will further support growth of plant based ice cream in the country.
Key players
In the UK, plant-based protein producers are focusing on product innovation and new product launches as a part of their growth strategies. The rising demand for plant-based dairy is encouraging existing companies to expand their product lines and new companies to enter the market with whole new products. Also, companies are expanding their manufacturing capabilities to strengthen and deepen their product portfolios.
In the plant protein market, emerging ingredients are capturing the market of traditional ingredients.For instance, demand for pea and hemp is increasing among dairy-free milk market. Previously soy, almond, coconut used to main ingredient for plant-based dairy products. To cater to growing demand for pea milk, companies such as Devon Garden Foods, the UK based startup, unveiled pea powered drinks made from yellow split peas in August 2020. The startup looks to use various plant proteins to provide high nutritional value to customers while maintaining environmental and ethical standards.
As per a study conducted by Tea and Coffee Company, in June 2020, hemp milk online sales more than doubled since the beginning of January 2020. The study also revealed that hemp milk has become one of the top 5 dairy alternatives in the UK due to its creamy texture and high nutritional value. Good Hemp, a hemp milk producer in the UK, added Oat + Hemp combo milk to its dairy-free portfolio in November 2020. The product is available at Waitrose supermarket.
Alpro is one of the key brands in the UK plant based dairy alternatives market and positions its products in low price range where competition is high. Apart from offering plant-based milk alternatives, chilled coffee drinks, dairy-free desserts and ice cream in the UK, the company also offers oat-based yogurt alternative.
Alpro has been focusing on launching plant based dairy alternatives and running marketing campaigns to promote its products. The company also announced plans to invest €30 million in its production facilities in the UK and Belgium. At the UK site the company plans to develop high speed packaging to manufacture 75 million extra packs of soya, oat, rice and coconut drinks each year.
Also, major food giants such as Unilever and Nestle have been focusing on increasing their plant-based dairy product range. Unilever has received various awards for its plant based dairy products including its vegan Magnum ice cream was awarded Best Vegan Ice Cream in the UK by PETA in 2019 and Hellmann’s Vegan Mayo and Ben & Jerry’s Coconutterly Caramel’d Dairy-free were recognized as one of Nielsen’s top 25 Breakthrough Innovations in Europe for 2020. Also, Nestle launched a vegan Carnation condensed milk alternative in the UK in September 2020.
Oatly, another key player in the UK mainly offers oat drinks, ice cream, cold coffee, yoghurt substitutes, and cooking cream in the UK. The company recently announced to build a plant based dairy factory in the UK which could produce upto 450 million litres of oat milk per year. The UK factory is part of company’s broader initiative to establish futuristic factories with least impact on the environment and efficient use of resources. Also, the company plans to open for Initial Public Offering (IPO) in May 2021 seeking a valuation of $10 billion.
Meadow Foods announced to establish a separate facility at its Chester site, the UK, to produce plant based ingredients, July 2020. The ingredients would encompass milks, yoghurts, creams, and custard, with opportunities to include sour creams, soft cheese and a base for mousse in its portfolio.
Some other brands operating in the plant based dairy alternatives market include Ecomil, Plenish, Provamel, Nature's Finest by Nutrisslim, CO YO, The Coconut Company, and Nush Foods.
Higher profit margin and customer loyalty have encouraged retailers such as ASDA, Sainsbury’s, Morrisons, and Tesco to launch private label brands in the plant based dairy sector. Going forward, private label product launches are expected to increase.
As per a recent survey on availability of vegan choices in the UK supermarkets by Garden of Life, Tesco offers the widest range of plant based products including dairy alternatives, and desserts. Also, ASDA offers a comprehensive range of dairy alternative products, making it an industry leader in this category as per the survey.
Further, Morrisons entered the plant based market in the UK in 2018 and has been competing with its peers ever since. As per the survey, Morrisons stood ahead in terms of affordability with its V Taste Free From Vanilla Ice Cream available at 80p per tub, which is atleast 3 times cheaper than other own-brands. Recently, in January 2021, Morrisons introduced vegan essentials food box featuring dairy alternatives, meat-free options, and vegan snacks.
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