An 18-month research project conducted by Lund University in Sweden, and funded by packaging major Tetra Pak, has come to an end.
The ‘Global Trends Affecting Dairy Strategies’ study sought to identify plausible scenarios for the dairy industry in the coming decade.
In the first part of FoodNavigator’s Plausible futures of dairy article (13 October 2020), two plausible scenarios were outlined: ‘Green Dairy’, in which the future world is characterised by strong socio-environmental restrictions, and ‘Dairy Evolution’ – a scenario not dissimilar to a business-as-usual approach.
Now, FoodNavigator is homing in on the two remaining scenarios, both which put technology front-and-centre: ‘New Fusion’ and ‘Brave New Food’.
New Fusion: ‘Technological disruption is high’
In the New Fusion future scenario, the world is characterised by weak socio-environmental restrictions and oppositions, Christian Koch, a postdoctoral researcher at Lund University School of Economics and Management (LUSEM), told delegates during a Tetra Pak webcast last week.
At the same time, in this scenario, technological disruption and transformation is ‘really high’. Consequently, a plethora of new products and technological solutions are made available within the industry.
“As with all exponential technologies, change happened at a faster speed than predicted,” explained the researcher, referring to developments in lab-grown and fermentation-based dairy companies. In New Fusion, these businesses succeed in producing dairy cost-effectively and reaching mass market scaleability.
“Farming takes many forms now,” said Koch, “cow- and plant-based, as well as lab-grown dairy, co-exist to boost nutritional quality and precision nutrition”. Further, lab-grown dairy brings ‘protein independence’ to regions which used to import most of their dairy proteins and products, he elaborated, “since dairy brewing is feasible in any climate or geography now”.
Concerning traditional dairy and plant-based alternatives, fluid milk for consumption remains the ‘last bastion’ for the conventional dairy industry. Artisanal, craft dairy and cheese making continue to thrive.
There is moderate plant-based growth, noted Koch, despite advances in the category’s nutritional profile and texture. “Plant-based reaches its natural limits, since it does not deliver on the taste that is so important for the mainstream compared to now successful cultured dairy products.”
From a consumer standpoint, many value the fact that animals are not required to produce high quality dairy proteins, and enjoy vegan, lactose-free products with smaller environmental footprints than conventional dairy.
Notably, fusion products – whereby cow-based, plant-based, and lab-grown dairy is mixed and matched with personalised nutrition in mind – are also on the rise.
“In short, we can summarise New Fusion as a tech-driven food system change scenario,” we were told.
Licensed tech, methane inhibitors, and China’s dairy self-sufficiency
So what are the implications for industry? In this scenario, the researchers say the first dairy brewing facilities will launch across the US to produce dairy protein components. “The tech alternative’s immediate success and proof of concept uncovers the mostly oldl and inefficient system of animal agriculture,” we were told.
Of course, the first consumer products containing ‘animal free’ dairy have already hit the market in the US. This year, San Francisco-based Smitten Ice Cream and The Urgent Co launched frozen dessert and ice cream products, respectively, using animal-free dairy produced by Perfect Day. The Californian foodtech produces dairy proteins, including casein and whey, via fermentation.
In New Fusion, major food companies worldwide now source their dairy ingredients from lab-grown dairy fermentation factories to save costs and improve their sustainability image. Further, a major global dairy brand owner licenses the technology, said Koch, to produce artificial lab-grown dairy ingredients in-house.
This scenario also sees a reduction in traditional dairy production, which has a knock-on effect for the feed industry. Some suppliers partially recuperate losses by switching to produce the inputs required for lab-grown dairy production, the researcher elaborated.
Innovations are not limited to the laboratory, however. ‘Avant-garde’ scientific breakthroughs are possible in this new scenario, including methane inhibitors, methane vaccines, and lower methane emitting animals. Yet Koch says such innovations will be out of reach of most farmers, considering their already tight margins.
Notably, China – which boasts the largest yogurt market in the world – reaches dairy self-sufficiency, as well as environmentally-sound conditions through the help of lab-grown fermentation factories.
“And the long-term mission of US-based Impossible Foods, to replace the use of animals [with] food production technology by 2035 [no longer] seems utopian,” we were told.
Concerning percentages of market share, cow-based dairy accounts for 40% in this scenario, plant-based for 25%, and lab-grown dairy a significant 35%.
Koch continued: “Given the high degree of technological inputs to changes, the expected consequences of the New Fusion scenario are a further reduction in cow-based dairy products and a significant portion given to both plant-based dairy and lab-grown dairy.”
Brave New Food: New tech, but strongly regulated
A fourth plausible future for dairy, the Brave New Food scenario, is somewhat of a conflictual future, said Koch. While it results in a multitude of new products and technological solutions, they are strongly regulated.
“In Brave New Food, only a few mega factory farms are able to remain profitable, considering technological and regulatory pressure,” we were told. Premium conventional dairy, however, finds a strong market – particularly in artisanal craft dairy and cheesemaking.
At the same time, and similarly to New Fusion, cultured dairy protein companies now product cost effectively and reach mass market scaleability across a wide spectrum of dairy categories in Brave New World.
“Even highly functional cultured liquid milk has been developed,” noted Koch, “considering cost advantages of heavily taxed animal-based food products”.
With regards to plant-based, there is ‘strong’ growth, which can be associated with nutrition, improvements in taste and texture, and sustainability – which is a key purchasing factor. “The most environmentally friendly and nutritionally rich solutions have competitive advantages in the highly regulated food and protein tech environment.
“Public policy nudges steer producers and consumers away from animal-based agricultural products, leading to lasting behavioural change.”
Implications for industry
The researchers identified plausible developments over time in the Brave New World scenario, including governments around the world supporting animal-free food production – and its demonstrable environmental and health benefits.
‘Massive’ investments are made in cellular production, as well in the development of ‘new, super protein crops’, said Koch.
“Winston Churchill predicted the rise of synthetic foods already in 1931. While it took longer than expected, his prediction is coming true, with both meat and dairy protein derived from various cellular and agriculture processes becoming the norm.” - Christian Koch, postdoctoral researcher at Lund University School of Economics and Management (LUSEM).
Food safety is another area that sees increased attention, as is novel products and their improved quality over time. Regulatory intervention of governments accelerate the change towards a new food system, we were told.
In the Brave New Food scenario, plant-based dairy alternatives account for 30% market share, whereas cow-based dairy drops to just 20%. Lab-grown dairy, however, takes 50% market share.
“Given the radical basis for changes, the Brave New Food scenario is likely to produce the greatest change in the distribution of product origins” said Koch. “Lab-based or fermentation-based products may reach as much as half of the market, plant-based a respectable part, and traditional cow-based products will be rather low.”
The ‘Global Trends Affecting Dairy Strategies’ study was undertaken by Thomas Kalling, Matts Kärreman, Magnus Johansson and Christian Koch, from LUSEM. The team analysed six global markets – the US, UK, China, India, Nigeria, and Brazil – to come up with four plausible scenarios: ‘Green Dairy’, ‘Dairy Evolution’, ‘New Fusion’, and ‘Brave New Food’.
FoodNavigator investigated ‘Green Dairy’ and ‘Dairy Evolution’ scenarios in the first part of its Plausible futures of dairy article.