IFF trends report: Added value key to success in inflation-hit dairy space

New research into dairy and alternative dairy trends has highlighted the advantages of offering functional health benefits and connecting with consumers’ values

Amidst a challenging economic climate, IFF has unveiled a report that reveals the evolving consumer trends in the dairy and alternative dairy categories.

The report, derived from a comprehensive quarterly global survey of 21,000 consumers and monthly market data*, highlighted how brands can win over budget-conscious consumers by offering health benefits and resonating with consumer values.

“In the face of a global cost-of-living crisis, dairy and alternative dairy brands have found a silver lining by focusing on quality and value,” said Richard Neish, head of global futures for consumer intelligence at IFF. “It is not about competitive pricing; it’s about delivering products that enhance wellness and align with consumer values ─ a strategy that is proving to be a game-changer.”

The report identifies five key trends that will drive market changes and product innovation with Better-Being as a leading trend, reflecting a significant shift in consumers’ health preferences. Six in ten respondents said they were always or often influenced by health labelling in their product choices. ​
​​
​Dairy has been one of the categories worst hit by inflation, with value compound annual growth rate (CAGR) outstripping volume CAGR. Despite inflation’s impact on the dairy industry, the report highlighted that since 2022, consumers have prioritised quality over cost, with many opting for premium brands that promise uncompromised quality.

Private label dairy products have also emerged as a popular choice during the economic downturn, with 35% of consumers gravitating towards budget-friendly options without sacrificing quality. On the other hand, 63% of respondents said they started, or continued, to buy more expensive dairy brands in Q4 of 2023, and 52% said they preferred to pay more to ensure that quality is not compromised. The report emphasised the strategic importance of integrating functional wellness ingredients such as probiotics, to add value beyond pricing.

The IFF insights also reveal a narrative of brands “driving value with values”, resonating with consumers who seek to express their personal beliefs like sustainability and authenticity, through their food choices. This is reflected in 61% of respondents, and it is particularly true for Gen Z consumers, with 67% emphasising the importance of aligning purchases with values. In addition, the report highlighted a shift towards indulgence and convenience, reflecting consumer desire for pleasurable experiences and consume on-the-go products like ice cream.

* Quarterly consumer surveys were conducted by leading research company, GlobalData, with 21,000 consumers across 42 countries. ​The latest data used in the report was collected in Q4 2023. GlobalData also track market trends with their data updated monthly. ​The results were combined with insights from the IFF Panoptic Framework, the company’s in-house trend intelligence tools to identify the key trends shaping dairy and alternative dairy in 2024 and beyond.