Almond and soy milk are established options as dairy alternatives but with the growing interest of consumers, the number of origin plants is also increasing. Legume-based varieties produced from hazelnuts, peanuts, cashews, macadamias, pecans, and peas are now available in the stores providing customers variety to choose from. Leading producers of ice cream have launched frozen desserts (dairy-free) incorporating almond, coconut, and soy ingredients. Non-dairy milk produced using flax, hemp, barley, pea, and quinoa is also gaining attention in the youth as they offer high protein and nutrient content and are manufactured using sustainable production methods. Innovation is and will continue to be the driving force in the dairy alternatives market. The demand is expected to grow more with manufacturers bringing in new products offering additional health benefits and a variety of flavors.

Plant-based dairy alternatives manufacturers face a major legislative challenge in terms of the labeling of their products. The traditional dairy producers in the United States have requested Food and drug administration exclude plant-based beverage manufacturers from using the term milk in their labeling in 2018. The federal court ruled against the request stating that it is not deceptive as any reasonable customer would understand the absence of dairy components in beverage products sourced from plants. However, European Union, the United Kingdom, and Canada still don’t allow plant-based manufacturers to use milk for their products as they reserve the term for animal-derived products. No clear legislation for the labeling of plant-based milk derivatives restricts the market growth.

Non-dairy formulations generally require fine-tuning to attain the desired texture and taste. The textural differences created by the plant proteins can be managed but require the mixing of other ingredients in the products. For example, canola lecithin is used to provide emulsification which is needed to mix almond paste and water for the production of almond milk. A plant-based yogurt will require the addition of pea protein to fulfill the protein content expectation of the consumers. The procurement and addition of other ingredients increase the overall production costs and thus act as a restrain for the market growth.

By source, the coconut segment is expected to hold the second largest share during the forecast period. Coconut-based dairy alternatives aid weight loss, strengthen the immune system, prevent heart disease, and promotes gastrointestinal health. They are being employed in various industries including confectionery, beverages, and bakery owing to their tropical and creamy flavor. Coconut oil is incorporated in the production of various cosmetic products, pharmaceutical products, and functional foods owing to its antioxidant properties that assist in fighting free radicals. The increasing use of coconut-based dairy alternatives in various industries led to the growth in market share for the segment.

The APAC region is expected to grow with the highest CAGR during the study period.Increasing awareness amongst people regarding the nutritional benefits of dairy alternatives, and growth in the adoption of special diets for animal welfare such as vegan are major growth drivers in the region. In addition, the availability of a plethora of flavors and appealing packaging attract people to dairy alternatives in the region.