Deliciously Balanced: How to Elevate Taste and Nutrition in Dairy-Based Functional Foods

Standing out in the competitive world of dairy-based functional foods and beverages means developers must master the delicate balance of delivering delicious taste and meaningful nutrition. Like an Olympic athlete, achieving this balance requires skill, precision, and the right strategy and ingredients to attain a successful outcome.

Our insights team investigated growth segments within functional dairy to identify innovation opportunities. We also talked with our application scientists and flavorists to learn how flavor solutions can help create a winning product.

Opportunities in Dairy-Based Functional Foods and Beverages

Dairy plays an essential role in global nutrition, and our first blog of 2024 highlighted dairy’s renaissance. Because many people want more than fundamental support from foods and beverages, they often choose products that improve their health and wellness. Functional dairy products represent a vital expansion for brands striving to keep pace with evolving needs.

SCOPE OF DAIRY-BASED FUNCTIONAL FOODS AND DRINKS

Globally, functional dairy products generated U.S. $44 billion in 2023, or about 5% of the total U.S. $945 billion dairy market. Functional dairy forecasters predict 5 to 6 percent growth in market value, outpacing dairy’s 4 to 5 percent annual gains over the next ten years. Functional dairy brands can anticipate sales of more than U.S. $67 billion by 2033.

Some well-known ingredients formulators add to dairy-based products to boost functionality include probiotic microorganisms and prebiotic fibers. Phytosterols, conjugated linoleic acid, omega-3s, minerals, and bioactive peptides are gaining traction to address health concerns from gastrointestinal health to controlling hypertension, reducing cholesterol, and enhancing immune system response.

WINNING LANES IN FUNCTIONAL DAIRY

The fastest-growing functional dairy segments build on familiar segments like milk and yogurt and emerging products like kefir and purposeful ice creams. Each sector presents developers with formulation challenges!

*Vitamin-and-mineral-added, A2 in Flavored and Unflavored Milk vs Unfortified Flavored and Unflavored Milk

**Kefir, Dairy-Based Protein Drinks, Drinkable Yogurt, and Lactose-Free Dairy vs Traditional Milk, Flavored Milk and Dairy-Based Smoothies

FUNCTIONAL YOGURT HOLDS SIGNIFICANT CATEGORY SHARE

Although yogurt has inherent functional characteristics, some brands enrich yogurt with vitamins, minerals, omega-3, prebiotics, or plant extracts. Others are adding texture and fiber through ingredients like chia seeds, flaxseeds, pumpkin seeds, or plant proteins.

What’s Next in Functional Yogurt? Buffalo milk-based yogurt, a staple across the Middle East, Asia, and Southern Europe, offers innovation opportunities. Buffalo milk provides 58% more calcium, 40% more protein, and 43% less cholesterol than cow’s milk.

FORTIFIED MILKS EVOLVE TO BOOST NUTRITION AND DIGESTIBILITY

Since the 1930s, many milks sold in North America have added vitamins to address nutritional deficiencies. Although Vitamin D fortification remains optional for U.S.-produced fluid milk, Canadian brands must add “2 micrograms (mcg) of vitamin D per 100 milliliters (mL).”      In both countries, milks with lowered fat values must add vitamin A to at least the “nutritional equivalence” level of whole milk.

In the mid-2000s, some whole and reduced-fat milk brands began promoting DHA (docosahexaenoic acid), an omega-3 fortification that supports brain and eye health. DHA usually originates from algae oil, although early efforts relied on DHA-rich cattle feed to increase its presence in milk.

A recent innovation (circa 2015) in fortified milk is A2 milk. Brands source from cows only producing milk with the A2 type of beta-casein protein, an ingredient associated with easier digestibility (vs. A1 protein in traditional milk)

What’s Next in Fortified Milk? Milk’s neutral palette gives developers more room to personalize the beverage’s nutritional benefits. We’ve seen brands launch ‘growing milks’ for children with choline and prebiotics or add turmeric to boost the anti-inflammatory properties of adult milks. A review of social discussions reveals people are exploring “moon milks” with added ashwagandha to support relaxation and sleep which may be another innovation opportunity.

DAIRY-BASED BEVERAGES ALIGN WITH FUNCTIONAL FOODS TRENDS

The dairy-based beverage category includes variations designed to give shoppers a personalized assortment to fit their lifestyle and nutritional needs, like lactose-free milk, protein drinks, drinkable yogurt, and kefir.

Lactose-free milk brands, which have been available since the mid-1980s, continue to innovate to enhance functionality and taste appeal to North Americans with lactose intolerance. Some brands are crossing into new segments, incorporating functional ingredients or higher protein levels to deliver multi-purpose milk.

Protein drinks often use ingredients such as milk protein concentrate and calcium caseinate to deliver a milk-like experience, while some incorporate cream. Protein levels in recent North American launches reported by Mintel show brands offer 15 to 30 grams per serving.

Drinkable Yogurt and Kefir are emerging functional foods in North America with the right mix of convenience, taste, flavor versatility, and health benefits. Both fermented products offer support for digestive health along with calcium, protein, and B vitamins. The fermentation process reduces the lactose content, making drinkable yogurt and kefir more palatable for some lactose-intolerant people. The beverages are getting more buzz in the social landscape (Tastewise), but the taste, texture, and sugar content are deterrents to some buyers. Availability is increasing in North America, which should boost acceptance.

What’s Next in Dairy-Based Beverages? As dairy-based beverages continue to track with functional foods trends, expect formulators to explore new pre-pro-and-postbiotics strains and different protein sources. Additional vitamins (like K2 for bone health) and adaptogens may feature in innovations. Flavor development will continue as brands look for ways to differentiate and link with evolving tastes.

THE UNTAPPED POTENTIAL OF FUNCTIONAL ICE CREAM

Although only some North American ice cream or frozen yogurt brands have offered recent functional innovations, forecasters anticipate growth in the next few years. Ice cream will remain an indulgent treat, but some shoppers will value options that deliver a bit more. Protein ice creams led the way, and start-ups continue to explore formulations with higher protein levels. Researchers are investigating pathways ice cream developers can take to provide added functionality.

Talk with FlavorSum about Your Dairy-Based Functional Foods Challenges

Dairy products’ unique mix of nutrients like protein, fatty acids, vitamins, and minerals gives the category a ‘leg up’ in the functional foods arena. The growth of dairy segments reflects the recognition of dairy’s positive health benefits, from boosting immunity to reducing the risk of cardiovascular disease and bone mass loss. Dairy-based functional foods represent an active (and exciting) opportunity for brands to create meaningful and lasting connections with shoppers. If you want insights support as you map your strategy or need to explore flavor and applications solutions, connect with our team to learn more.