Non-dairy drinks: NPD to beat the competition

- Last updated on GMT

Related tags: Organic food, Marketing, New product development, Organic monitor

New report confirms the growth of the non-dairy drinks sector as
the health and nutrition trend gains pace growth. Competition in
the burgeoning sector is set to increase, with the big players
turning to new product development as a means to capture market
share.

As the health and nutrition trend gains pace, growth is set to continue in the non-dairy drink sector with sales projected to expand by 22 per cent to €228 million in 2002, according to new research by Organic Monitor.

Growing intolerance to lactose, associated health and nutrition benefits of dairy substitutes, and lifestyle changes are all contributing to a growing demand by European consumers for non-dairy products, the report continues. Marketing efforts by the industry and new product development are to be key drivers of market growth in the coming years, the report predicts.

Italy and the UK have witnessed the highest growth in the non-dairy drinks market since the late 1990s. The British market is the largest in Europe, valued at €71 million. The Italian market, although it remains one of the smallest, has seen non-dairy drink volumes expand over ten-fold since 2000.

Organic products have the lion's share of the non-dairy drinks sector taking over two-thirds of the market share in non-dairy drink volumes. This sector has benefited from high consumer interest in organic foods with volumes showing a 184 per cent increase since 1998. Non-dairy drink revenues are forecast to show compound annual growth rate of 13.2 per cent to top €400 million in 2007. Volumes are projected to approach 250 million litres at that time.

It comes as no surprise to learn that the darling of the health industry, soy, is equally popular in the drinks sector. Soya drinks, claims Organic Monitor, dominate the European non-dairy drinks market, accounting for a whacking 86 per cent of total volumes. Its popularity as a dairy milk substitute and the well publicised health benefits of soya are factors behind consumer appeal for soya drinks to broaden, the report adds. Continuing scientific research into soya-based products and new product development are expected to fuel market growth over the forecast period.

Far from sharing the same popularity are rice drinks. According to Organic Monitor, although this is the second largest segment consumer interest remains limited - clearly hindering market growth. The other major products - oat drinks and nut drinks - are also suffering from low consumer awareness and are rarely found in mainstream retailers.

Organic Monitor​ was in accordance with the growing realisation that supermarkets have overtaken the specialist retailers as the most important marketing channels for non-dairy drinks. Sales have traditionally been from health food shops however there has been a large rise in the number of European supermarkets marketing non-dairy products in recent years.

The non-dairy drinks industry remains highly concentrated in spite of a number of new companies entering the game. According to the report, new entrants are causing the market shares of the leading companies to erode and this is most evident in the Italian and German markets. Taking up arms to combat this erosion the big players are using new product development to boost their novel non-dairy drinks portfolio.

Related topics: Market Trends

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