Plant-based Dairy Alternatives - Motivating Factors

Part
01
of two
Part
01

Plant-based Cheese Market - Market Drivers

Five major factors responsible for the growth of the plant-based cheese market in the United States (and globally) are an increase in self-diagnosed lactose intolerance, an increase in veganism, the availability of more dairy-free options, environmental concerns, and animal welfare concerns. Details of these factors follow.

INCREASE IN SELF-DIAGNOSED LACTOSE INTOLERANCE

  • The number of Americans suffering from lactose intolerance has not changed much in nearly two decades. A 2001 report from the U.S. Department of Health and Human Services indicated that between 30 and 50 million Americans suffered from lactose intolerance, while the FDA currently provides that exact same estimate for 2019.
  • What has increased, however, is the number of self-diagnosed cases of lactose intolerance, which has driven consumers to cut out dairy and reach instead for non-dairy products such as plant-based cheese.
  • In fact, DairyHerd stated in a February 2019 article that "there is a growing epidemic of American’s self-diagnosing themselves as being lactose intolerant."
  • Increased access to the Internet has provided nearly everyone with the ability to find information on lactose intolerance and decide that is what is causing their digestive symptoms.
  • According to a 2015 Pew Research Center study, almost 35% of Americans diagnose themselves with at least one condition and of them, 81% use the Internet to make that diagnosis.
  • Medical professionals state that lactose intolerance cannot be self-diagnosed, even using tests available for consumer purchase on the Internet.
  • They also say that only 50% of self-diagnosed cases of lactose intolerance are actually confirmed with a medical diagnosis.
  • The most common response to self-diagnosed lactose intolerance is to "eliminate dairy from their diet completely," which means they need to find a replacement for the dairy products they used to enjoy.
  • The replacements for dairy cheese are taking the form of plant-based cheese, thus driving growth in the industry.

INCREASE IN VEGANISM

  • As of December 2017, Forbes indicated that veganism was entering the mainstream and due to its focus on animal welfare and its positive environmental impact, was "starting to become the norm."
  • At the time, Forbes indicated that veganism was just starting to make its mark, suggesting that the number of vegans in the United States would continue to climb over the next few years.
  • In 2018, veganism moved into the mainstream and it shed its judgmental and exclusivity labels, which had kept it part of the counter-culture for years before.
  • This seems to be the case, since according to the Economist, 2019 is the Year of the Vegan and will be the year that "veganism goes mainstream."
  • A record number of people (250,000 in 93 countries) signed up for "Veganuary" 2019, which is a month in which non-vegans attempt to live on a plant-based diet for at least 30 days.
  • Based on a 2018 Nielsen study, 3% of Americans are following a strictly vegan diet and 6% are following a strictly vegetarian diet. Both segments are driving the purchase of plant-based cheeses, but veganism is the primary driver.
  • Nielsen also found that "the number of consumers adopting vegetarian or vegan lifestyles is increasing, predominantly among young and diverse consumer groups."
  • Compared with the average American, African Americans are 48% more likely to incorporate plant-based foods into their diet, followed by Asian Americans (47% more likely) and Hispanic Americans (46% more likely).
  • White millennials are also 47% more likely to incorporate plant-based foods into their diet compared with the average American.
  • In 2019, 25% of Americans between the ages of 25 and 34 (millennials) say they are vegans or vegetarians.
  • In 2017, vegan food sales growth outpaced the total food and beverage growth at 4.1% (compared to 0.6% for food and beverage sales).
  • Vegan dollar share of the total food and beverage market increased from 10.9% in 2014 to 12.0% in 2017.
  • In the first half of 2018, the sales of vegan foods in American had risen 10 times faster than food sales as a whole.

MORE DAIRY-FREE OPTIONS AVAILABLE

  • According to industry publication PreparedFoods, the "sheer numbers of creative plant-based options to traditional dairy lines" are fueling market growth.
  • Rich Hardy, head of campaigns at Veganuary, stated that vegan products are getting a lot better and it is becoming a lot more convenient to have a tasty plant-based diet," which is one reason why people are becoming more comfortable with plant-based cheeses as well as other products.
  • Soy originally dominated the plant-based cheese market, but other plants such as "cereal grains such as rice, oats and barley; and nuts, such as almonds, hazelnuts, cashews, walnuts and macadamias, are competing for market share, even though soy still holds more than half of the market.
  • Specialist brands such as Daiya, Go Veggie!, and Kite Hill are responsible for many of the mainstream plant-based cheese products.
  • Plant-based cheese startups are entering the market with solutions for taste, texture, and variety.
  • Violife, a Greek plant-based cheese startup, recently entered the U.S. market with its Parmesan cheese product that is "refreshingly familiar to mainstream taste and appeal."
  • Miyoko’s is a California-based startup that is known for its cashew and coconut cheeses, but has recently expanded their line to "nut-free cheeses made of legumes, seeds and potatoes."
  • In 2017, California startup Perfect Foods was on a quest to inoculate a yeast strain with 3D printed DNA that mimicked cow's milk protein. Then, after fermentation, the substance would be "treated with plant-based fats and nutrients to create vegan whey and casein."
  • In 2019, New Culture, a startup based originally in New Zealand, is attempting to sustainably recreate the proteins found in cow's milk to "make amazing tasting vegan cheese that is better in taste, structure, and function when compared with dairy cheese — as well as being healthier, far more sustainable and able to be enjoyed by everyone."
  • Spero Foods, Mondarella, Eclipse Foods, Mooliss Vegan Cheese, Heidi Ho, Ripple, Wegan Foods, and Cowvathi are just some of the other startups in the plant-based cheese industry.
  • In addition to more plant-based cheese startups entering the market, Forbes stated that "smart animal agriculture businesses are getting in on the plant-based revolution by buying or investing in plant-based brands," which means that established brands are producing additional dairy-free options as well.
  • For example, Japanese pharmaceutical company Otsuka purchased plant-based dairy brand Daiya and Danone, a "multinational food company with a focus on dairy," purchased plant-based company WhiteWave to become DanoneWave.
  • Nestle recently invested in Miyoko's and General Mills invested in Kite Hill as these two food giants attempt to gain a footing in the plant-based cheese market.

ENVIRONMENTAL CONCERNS

  • Public awareness is growing about the "massive amount of land, food, energy and water required to raise animals for human consumption. Consumers are beginning to believe this is unsustainable and are therefore searching for more sustainable food sources.
  • In particular, millennials and generation Xers are seeking more transparency about where their food comes from and are seeking solutions to the fact that "an animal-based diet is not sufficient to meet the protein demands of a growing world population."
  • Cory Booker, current U.S. Senator and 2020 presidential candidate, agrees that the "planet simply can’t sustain billions of people consuming industrially produced animal agriculture because of environmental impact."
  • He believes that by offering viable plant-based alternatives to traditional foods Americans will naturally make the choice to eat vegan foods. He said, "The growth of vegans in America is not proportional to the growth of vegan options that are out there. What’s happening is that Americans are just making the choice for health reasons, they’re making the choice because of their environmental consciousness, they’re making the choice because it tastes incredibly good."
  • Even though some plants require significant environmental resources as well, such as almonds, these generations are turning to a plant-based diet to protest the impact of traditional farming methods.
  • Miyoko Schinner, founder of Miyoko's vegan cheeses, created her company as a way to "displace animal products for animal welfare and environmental reasons." She states that plant-based diets are more about "planetary health and the right of all species, not just domesticated animals, but wildlife, to preserve their habitats and let them live their lives according to their desires."
  • Rich Hardy of Veganuary suggested that "stark warnings from scientists about the environmental cost of meat had persuaded many people who would not previously have considered veganism to give it a try."
  • In May 2018, scientists declared that avoiding meat and dairy products was the best action people could take to improve the environment.
  • Joseph Poore, a scientist at Oxford University who led the study stated, "A vegan diet is probably the single biggest way to reduce your impact on planet Earth — not just greenhouse gases but global acidification, eutrophication, land use and water use. It is far bigger than cutting down on your flights or buying an electric car."

ANIMAL WELFARE CONCERNS

  • Animal Welfare has long been a major driver behind the choice to eat plant-based foods and it "continues to play a role as more consumers have become sensitive to the conditions in which animals are raised and harvested."
  • In addition, regulations on animal welfare requirements for food production is driving up costs, which is leading consumers to find less expensive plant-based food products. In turn, this is leading to more products entering the market, which is another driver of growth.
  • Senator Cory Booker, is a vegan and cites animal welfare as a major reason behind his choice. He said, "I think that what we see happening in America is an awareness growing about the negative impacts that our current food system have on animals, and it’s great to see that consciousness and how people are demanding a change."
  • If he is elected president, he intends to continue to fight for animal welfare legislation and indicates his work would be a reflection of what the American people want. He stated, "I believe that Americans do care about the cruelty to animals, and that’s why you see public movement to stop pig crating, which is harmful and violates our collective values as a country."
  • Booker also feels there is "a lot of bipartisan support for animal welfare bills," which indicates that both Republican and Democrat voters have increasing awareness about the condition of animals that are raised for food.

RESEARCH STRATEGY

To identify major factors responsible for the growth of the plant-based cheese market in the United States, we began with formal research reports from sources such as Nielsen, Variant Market Research, Bharat Book Bureau, and Globe Newswire, among others. What we discovered, though, is that these reports typically concentrated on the global plant-based cheese market rather than the U.S. market. As such, we continued on to industry publications like One Green Planet, Plant Based News, Veg News, Prepared Foods, Sprouted Ventures, and more, but we quickly found that these sources often cited the global research reports instead of focusing on the U.S. We did find some details that pertained to the U.S. here and there, but nothing that was mentioned as a key driver of the market.

Therefore, we turned back to the global reports to determine if the drivers mentioned in those publications applied to the U.S. What we discovered in this search is that North America is the largest market for plant-based cheese. This data informed our assumption that North America was a primary driver of the growth indicated on a global basis. Thus, the drivers identified in these global reports would apply to North America (and the U.S.) by extension. Then, we focused on finding U.S.-based data that would support the indicated drivers. This was successful, as there was plenty of information available in industry publications and reputable media articles that supported the main plant-based cheese market drivers found in Variant and Bharat Book Bureau global research reports.

Please note that the main drivers of the plant-based cheese market are similar to the main drivers of the overall plant-based market, which means that in many cases, our sources spoke in general terms of plant-based diets, which encompassed the plant-based cheese segment. As such, we have included as much data as possible that is specific to the plant-based cheese segment, but in some cases, we refer to a plant-based diet in general.
Part
02
of two
Part
02

Plant-based Dairy Alternatives - Motivating Factors

American consumers purchasing plant-based dairy alternatives are driven by their better flavor, nutrition, and organic characteristics in comparison to dairy products. Additionally, consumers purchasing decision of plant-based dairy alternatives are motivated by lifestyle choices as well as their interest in new food products.

FLAVOR

  • 48% of consumers purchasing non-dairy plant-based milk consider the flavor as a critical purchasing factor.
  • Rice-based dairy alternatives have been found having the best sweet flavor among plant-based dairy alternatives.

NUTRITION

  • One in five Americans is consuming less dairy milk for plant-based dairy alternatives driven by health reasons.
  • 43% of consumers purchasing non-dairy milk consider the high vitamins and minerals content as critical to their purchasing decision.
  • 42% of consumers purchasing non-dairy plant-based milk consider the high protein content as a purchasing factor.
  • Most of plant-based dairy milk alternatives have 25-63% less fat than dairy milk except hemp-based milk.
  • Almond, pea, and flax seed-based diary alternatives have more calcium than dairy milk.

ORGANIC AND NATURAL CHARACTERISTICS

  • 33% of consumers purchasing plant-based dairy alternatives identify the organic nature of their purchase as a driver of their purchasing decision whereas 46% of consumers purchasing plant-based dairy alternatives identify that their purchases are driven by their products being natural.
  • In separate research, 43% of purchasers of plant-based dairy alternatives seek out the products because of their organic and natural characteristics.
  • 65% of plant-based dairy alternatives purchasers base their decision on their preference for foods without natural additives.

LIFESTYLE CHOICES

INTEREST IN NEW FOOD PRODUCTS

  • Majority of consumers of dairy milk and dairy milk alternatives consumers are interested in new food products.
  • However, a larger portion of plant-based dairy alternatives consumers (63%) have an interest in new culinary adventures.

RESEARCH STRATEGY

In order to determine the motivating factor of plant-based alternative purchases, your research team focused on building insights from news sources and research reports reviewing the topic that included Mintel and Packaged Facts research reports. We sought to identify five factors motivating consumer purchases and backed our research with factual data. Importantly, we did not include sources that presented research from market industry players.

Sources
Sources

From Part 01