5 Consumer Trends to Inform your Innovation Pipeline

Many food & beverage macro-trends have drastically evolved following the impact of COVID-19, which has been felt in almost every aspect of life. From where consumers eat and work, to how they shop, the pandemic has brought about a wave of change and the dairy industry has been no exception.

The industry has faced challenges, from disruption to supply chains, distribution channels and global markets as well as dampened purchasing power in the face of a recessionary environment. However, the resilience of the industry and changes in consumer lifestyles and needs, provides opportunity for industry players to rise to the challenge for growth in a post-pandemic era.

1. Accelerated E-commerce Adoption

The growth in adoption of ecommerce after 2020 signalled changes in the online retail landscape for dairy, as capabilities and infrastructure around deliveries strengthened. In South East Asia, partnerships between dairy manufacturers and online shopping marketplaces like Lazada, Shopee and Tokopedia are becoming crucial for brands to expand their presence in local markets.

COVID-19 brought about shifts in consumer lifestyle, fuelling demand for convenience and safety as global markets grappled with nation-wide lockdowns and restrictions.

Figure 1. E-commerce penetration (% share): Dairy Products and Alternatives (2018-2021)¹

2. Renewed Focus on Functional

Health and wellness trends have become a key focus area to cater to consumers looking for additional benefits from their regular food choices. We’ve seen that COVID-19 has significantly heightened the emphasis on preventative health with growing interest around food with functional nutrients. Consumers are also searching for healthier and more natural food options to keep health issues at bay. 

Figure 2. Dietary Preferences for Consumers Globally ²

For example; Vinamilk’s ProBeauty yoghurt range in Vietnam offering added collagen for ‘firmer’ and ‘more elastic’ skin. Functional nutrition is a feature that manufacturers can offer to excite and spark interest in consumers for dairy products to drive value growth for the industry.

3. ‘Natural’ and ‘Clean Label’ are Growing More Important.

The rise of plant-based dairy alternatives is primarily being driven by some consumers perceiving them as a healthy option that might be better for the environment. Despite ‘healthiness’ being one of the primary drivers of plant-based alternative growth, we see consumers still value the nutritional superiority of dairy³.

Figure 3. Ingredient Preferences of global consumers in Packaged Food ⁴

As per Euromonitor International Health and Nutrition survey, around 20% of global consumers prefer packaged food with 'clean label' in 2021. 

The dairy industry should focus on educating consumers on its superior nutritional profile and its clean label nature to win consumers that are driven by health credentials. New developments include the Remarkable Milk Company in Australia which launched O3 milk with no additives and naturally occurring Omega 3 for added nutritional benefits, achieved by designing highly beneficial pasture for the cows. Alternatively, the majority of consumers occupy a middle-ground choosing both plant-based and animal-based proteins, leaving room to create blends or partnership offerings.

Figure 4. Preferences for Clean Label In Packaged Food ⁵

 4. Finding Excitement Through Food. 

There is an opportunity for the dairy industry to drive growth by enhancing the consumption experience and catering to newer eating occasions by creating novel sensory experiences,

We have seen several interesting flavours in response to this trend, including within yoghurt like bubblegum and salted caramel by Brownes Dairy in Western Australia, and Banoffee Banana Caramel Fresh Flavoured Milk by Lewis Road Creamery in New Zealand.

The exciting part of this trend is the possibilities are seemingly endless on how you can transform flavour and formats to bring a new experience to your consumers.

 5. Consumers Want to Know Where Their Food Comes From. 

Consumers are more conscious about supporting local suppliers and producers as they want to reduce supply chain dependency and support local economies. Consumers are drawn to products with local origins as they are positively associated with authenticity, quality as well as transparency in terms of the journey of the food they are consuming.

The EU is discussing plans to make country of origin labelling mandatory for dairy products by 2022. Similarly, Chile amended regulations requiring dairy products to include country of origin indications in 2020. This will help local and independent manufacturers and producers build relationships with consumers by placing emphasis on traceability, provenance, sustainable production practices and animal welfare as a way to create value for both producers and consumers.

Disclaimer: The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same. This articleis based on insights and data provided by Ayusha and Euromonitor, the world’s leading independent provider of strategic market research. Unless otherwise referenced, this content is derived from Ayusha’s own analysis and Euromonitor’s database.