Dairy products remain a staple of North American life. Though U.S. consumers have been drinking less fluid cow’s milk per person since the 1940s, the overall rate of dairy consumption (including butter, cheese, yogurt, and ice cream) has increased. According to the USDA, the average American consumed 655 pounds of dairy products in 2020. Plant-based dairy sales are also on the rise, with 32% of consumers using it at least once a week and 48% saying they buy both plant-based and dairy milks.
Let’s take a closer look at the dairy product market, how consumer behavior is shifting across generations, and how formulators can stand out with flavorful dairy innovation that meets demand and inspires repeat purchases.
Consumer Behavior & Generational Changes
The global dairy product market was valued at $481 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 2.5% from 2020 to 2027 (Grand View Research). As the report notes, more consumers are turning away from meat and toward dairy for protein needs. Dairy products also offer health-related benefits like being rich in calcium, riboflavin, vitamin D, vitamin A, niacin, potassium, and phosphorus. Innovation around low-fat and no-sugar dairy products is also expected to increase milk consumption in North America.
Seeking Healthier Options
Consumers continue to seek food options that align with their health and wellness goals. Although the trend has been in the spotlight since the early days of the pandemic, it is expected to accelerate as younger generations (Millennials and Gen Z) increase their share of global spending. A 2022 McKinsey Sentiment Survey found that younger generations seek a range of wellness characteristics from foods and beverages. Millennials, especially, are interested in organic foods and supporting fair trade.
Seeking Healthier Options
Consumers continue to seek food options that align with their health and wellness goals. Although the trend has been in the spotlight since the early days of the pandemic, it is expected to accelerate as younger generations (Millennials and Gen Z) increase their share of global spending. A 2022 McKinsey Sentiment Survey found that younger generations seek a range of wellness characteristics from foods and beverages. Millennials, especially, are interested in organic foods and supporting fair trade.
Flavor Remains a Driving Force
Flavor remains the most significant factor shoppers consider when purchasing dairy or dairy-like products. Three out of four global consumers consider flavor the most important factor in an ice cream purchase, and more than a quarter of U.S. consumers say a new flavor inspires them to try a yogurt or yogurt drink (McKinsey 2022 Sentiment Survey).
Stand Out with Flavor, Planted-Bases, & Functional Ingredients
Classic Flavors Hold Steady, But Get Ready for More Complex Tastes
Simple flavors like vanilla, chocolate, and strawberry make regular appearances in dairy subcategories. Cookies & Cream is also a popular choice for ice cream and flavored milk while fruit flavors take four of the five spots in spoonable yogurt. The chart below lists the top five flavors by number of launches in 2021.
| Top Five Flavors by Number of Launches in North America – 2021 (Mintel) |
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| Dairy-Based Ice Cream & Frozen Desserts | Spoonable Yogurt | Creamers | Flavored Milk |
| Vanilla | Strawberry | Vanilla | Chocolate |
| Chocolate | Vanilla | Hazelnut | Vanilla |
| Cookies & Cream | Blueberry | Sweet Cream | Strawberry |
| Strawberry | Peach | Caramel | Cookies & Cream |
| Caramel (Salted) | Raspberry | Pumpkin Spice | Almond |
While classic flavors, like strawberry or vanilla, remind consumers of simpler times, more complex or globally inspired flavors can help consumers explore new tastes and experiences. Flavors such as Italian sweet cream or ginger and turmeric are gaining popularity in dairy categories. Subcategories like ice cream and plant-based frozen desserts are primed for flavor innovation, with more than 250 new flavors launched in the last 52 weeks (Mintel).
Recent launches also show sweet flavors taking the lead with bakery crossovers like banana pudding and salted caramel brownie, local highlights like berry cobbler or dulce de leche, and tie-ins with brands and themes gaining traction.
Launch Spotlight: Ice cream flavors from Creamalicious like “Porch Light Peach Cobbler” and “Slap Yo’ Momma Banana Pudding” are inspired by traditional Southern desserts. Jeni’s Ice Cream combines lemon, passionfruit, and tangerine for a themed flavor similar to a “ray of sunshine.”
Make Way for More Plant-Based Options
With roughly two-thirds of Gen Z Americans wanting to adopt a plant-forward diet (McKinsey 2022 Sentiment Survey), the plant-based milk market is expected to grow at a CAGR of 11.9% from 2022 to 2029.
Formulators can stand out in the competitive and rapidly growing market by creating plant-based alternatives that more closely match the taste and texture of real dairy (Mintel). And exploring up-and-coming bases like chickpea, lentil, mung bean, and pumpkin seed can also inspire consumer trial (Innova).
Launch Spotlight: Forager launched a drinkable vanilla bean flavored cashew milk yogurt in April 2022. Wicked Kitchen’s cookie dough ice cream is powered by lupini beans.
Functional Benefits Align with Health & Lifestyle Goals
Dairy products with functional and environmental claims can help shoppers feel they are working toward their health or lifestyle goals through their food choices. Most functional wellness claims for dairy (traditional and plant-based) focus on characteristics inherent in the products like ‘free from’ dairy for plant-based and free-from hormones for dairy-based frozen treats. For dairy-based ice cream, frozen yogurt, and creamers, high/added protein is the leading claim, with plant-based beverages focused on added vitamins and minerals.
| Functional Wellness Claims as a % of Overall Launches (Mintel) |
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| Dairy-Based Ice Cream & Frozen Dessert | Plant-Based Frozen Dessert | Creamers | Plant-Based Dairy Like Beverages | |
| Ethical | 32% | 38% | 61% | 84% |
| Free From | 13% | 88% | 48% | 71% |
| Minus Negatives | 13% | 9% | 38% | 66% |
| Plus Positives | 2% |
0% |
3% | 47% |
| Functional | 3% |
0% |
10% | 6% |
Adding functional ingredients represents an opportunity that’s not mainstream (yet). Because mood-boosting and emotional wellbeing claims fit well with sweet treats, ice cream is a good candidate for other functional ingredients that support wellbeing like dark chocolate, tryptophan, magnesium, omega’s, protein, or l-theanine. Ice cream and yogurt could also deliver digestive health support either through removing lactose or adding ingredients like probiotics.
Environmental, health, and animal welfare concerns come together in shoppers’ growing interest in dairy-free and plant-based yogurt and ice cream. Shoppers who frequent the dairy aisles are willing to pay more to support their values (McKinsey Center for Future Consumption).
Launch Spotlight: Clover Sonoma’s Golden Moon Organic Turmeric Ginger Flavored Milk features magnesium and tryptophan to support wellbeing and relaxation. The manufacturer also claims to be the first dairy in the U.S. to be American Humane Certified. So Delicious invites consumers to enjoy their “chill time” with mixed berry coconut milk yogurt featuring chamomile extract and certified non-GMO ingredients.
Is Your Next Innovation On Trend?
The journey toward a successful food or beverage product launch can be both exciting and challenging. Whether you’re analyzing market trends, looking for some flavor inspiration, or need help overcoming formulation challenges, FlavorSum’s team is here to support you. Download our Innovation Journey Road Map or contact us with any questions.
