BGL Insider Special Report Food & Beverage: 2023 In Review

Despite the unprecedented supply chain troubles of the past few years, the Food and Beverage industry has proved far more adaptable and resilient than ever imagined, according to an industry report released by the Food & Beverage investment banking team from Brown Gibbons Lang & Company, in conjunction with REACH. Read the full Food & Beverage industry report below.

I. Introduction

Overview

Despite the unprecedented supply chain troubles of the past few years, the Food and Beverage (F&B) industry has proved far more adaptable and resilient than ever imagined. The global F&B market retained its position and has shown strong growth figures from $6,729.5 billion in 2022 to $7,221.7 billion in 2023 growing at a CAGR of 8.7%. As per the Food and Drink Federation’s latest report, despite the long-term challenges of subdued investment and climate change, business confidence in the F&B market has started moving in a positive direction. According to a survey, ~84% of businesses believe production levels will be maintained or increase over the next year.

In 2023, F&B trends were mainly focused on health and sustainability. These trends are driven by an increased awareness of food’s impact on personal health and the environment. Consumers are more conscious about the food they consume and its impact on their health and the planet. Some of the noteworthy trends are 1) Increasing focus on sustainability, 2) Continued consumer preference shift to healthier alternatives with cleaner labels, 3) Mindful eating, and 4) Rise of global flavors.

Global Flavors and Fusion Cuisine

• In an increasingly interconnected world, consumers are eager to explore unique and diverse flavors from across the globe. The popularity of fusion cuisine, blending various culinary cultures, is on the rise, further amplified by Instagram foodies and influencers who are rapidly propelling this trend forward.

Demand for Functional beverages Continues to Grow

• Functional beverages help enhance body functionalities, including the immune system, weight management, etc. Functional beverages are seeing incredible expansion, especially for those who want to explore a sober lifestyle. With this, drinkers are trying to reduce their alcohol consumption, and many enjoy non-alcoholic beverages.

Transparency on the Food Supply Chain

• There is a growing desire among consumers to understand the origins of their food and the methods behind its production. This has spurred a demand for clear and comprehensible labeling that details the journey of food from the farm to their plates. Consumers are interested not only in the ingredients that compose their foods but also in the nature of the workforce, including the types of workers and laborers, that companies engage. This shift emphasizes the importance of transparency throughout the entire food supply chain.

Minimalistic Product Communication

• Customers are seeking clarity and straightforwardness in how products are communicated. In response, brands are streamlining their messaging and packaging. Recognizing this crucial shift towards simpler packaging allows companies to enhance their brand visibility while also reducing expenses.

In this 2023 ‘Year in Review’ newsletter, we will explore the dynamics of the following key F&B segments:

Key Trends to Look for in 2024

Interest in Global Flavors Surge

• Continual exploration of global flavors is ongoing, with an increasing interest in diverse tastes worldwide. According to Trendspotters, consumers are not only embracing new flavors but also seeking deeper cultural connections through food.
• According to a survey by Innova Market Insights, 1/3rd of consumers say that they are influenced by new, unique, or different flavors, and one-quarter want interesting or exotic flavors.
• Consumers are most likely to experiment with sauces and seasonings, desserts, ice cream, and sweet bakery. However, three in ten say they will try new tastes even in everyday foods such as bread and cheese.

Interest in Global Flavors Surge

• The popularity of spicy food is on the rise, with a variety of hot peppers available in every grocery store. Peppers like Carolina Reapers, Scorpion Peppers, Guajillo, and Hungarian Goathorn Peppers can be found in a wide range of products, from traditional pasta sauces and hot sauces to unconventional offerings like cured meats, snacks, relishes, and even hot honey.
• The culinary world is on the lookout for the next big flavor trend, such as Calabrian chili peppers, which are poised to take the spotlight. Marketers are now turning their attention to many such vibrant and versatile peppers.

Focus on the Comeback of Frozen Foods

• Consumers are showing a growing interest in frozen products that are natural and organic, driven by the desire for cleaner labels and healthier choices in the diet.
• Frozen breakfast sandwiches accounted for $2.3 billion in sales in 2023.
• Kid-friendly frozen food generates ~$248 million in annual sales, up 122% since 2019.

Premiumization and ‘Story’ Behind the Brands

• Consumers are increasingly interested in the narratives behind the origin of their food and beverages. Aspects such as locality, organic practices, sustainability in sourcing, corporate practices, diversity, and environmental impact hold varying degrees of significance in shaping consumer preferences.
• Premiumization has become an increasingly popular way for brands to diversify and innovate, paving the way for new unique flavors, sensations, and experiences.

II. Review by Sector

Baking

In 2023, the baking industry demonstrated remarkable resilience in the face of challenges such as labor shortages, supply chain disruptions, and inflation. Despite these difficulties, there’s positivity in the industry, with small and medium-sized bakeries, as well as entrepreneurs, gaining momentum. The labor challenge has been significant, with difficulties in finding and retaining qualified workers. However, there are signs of improvement as bakery leaders increasingly turn to technology and automation to address labor shortages. The industry is moving from struggling to find workers to focusing on retaining them and ensuring they have the necessary skills.

Supply chain issues continue to impact the industry, but companies are adapting with more flexible and resilient strategies. The pandemic has forced a shift from just-in-time manufacturing to a more robust approach, incorporating contingency planning.

The use of data-driven approaches is becoming more important for efficiency and waste reduction, appealing to a younger, tech-savvy workforce. Regulatory challenges also persist, with the ABA actively engaging with agencies to advocate for the industry. Upcoming regulations, such as those from the Environmental Protection Agency on renewable fuels, continue to be a focus.

Market Overview

The global bakery and confectionery market is expected to grow at a CAGR of 5.2% between 2023 and 2027 to reach $1,216.8 billion by 2027.

Regional Overview

• Europe: The European bakery products market is projected to register a CAGR of 3.1% between 2024 and 2029. The emerging markets of Eastern Europe are fueling demand for biscuits and bread, while the developed markets of Western Europe are matured and saturated.
• Asia Pacific: Asia-Pacific was the largest region in the bakery and confectionary market. It is projected to grow at a CAGR of 8.7% between 2024 and 2029 to reach $247.4 billion.
• North America: The North American bakery market is projected to grow at a CAGR of 2.1% between 2023 and 2028 to reach $110.3 billion. Consumers are placing a greater emphasis on taste, health, and convenience, often opting for grab-and-go bakery snacks to satisfy their hunger during hectic days or as meal replacements.

Market Drivers

Key Growth Trends

1. Health-Conscious Indulgence
   • There’s a rising demand for snacks that offer health benefits without compromising on taste. These include organic, vegan, gluten-free, and sugar-free chocolates.
   • Functional ingredients are also on the rise, with an increasing number of products
     featuring functional claims, such as high-cocoa, low-calorie, and ingredient-based
     confectionery.
2. Wellness Meets Indulgence
   • Consumers are seeking ways to manage their health driving a demand for baked goods that offer a balance of nutrition and health with indulgence and novelty
   • Moreover, simple pleasures are gaining importance, with a focus on everyday moments of happiness. Preferences vary across countries, emphasizing on sensory attributes like texture and flavor, and the role of packaging in enhancing the consumption experience.
3. Organic Evolution
   • The demand for organic and clean label snacks is growing, with consumers increasingly seeking organic chocolates that are free from added chemicals
   • Major confectionery companies are responding by expanding their product range to include functional ingredients, tropical fruit, flavor fillings, and exotic flavors.
4. Nostalgic Treats With a Twist
   • Bakers are rejuvenating classic favorites by adding unique or unexpected ingredients. For instance, black sesame is used for its savory, exotic flavor
   • Other examples include creative flavor combinations like pistachio-cardamom scones and seasonal homemade pop-tarts in unique flavors.
5. Sourdough That Goes Beyond Bread
   • The popularity of sourdough is expanding beyond traditional bread. Bakers are now using sourdough starter in other baked goods like cookies, cinnamon rolls, or doughnuts to add a unique tangy flavor.

Key Insights

Beverages

In 2023, the beverage industry faced economic challenges and shifting consumer preferences. Rising inflation led consumers to seek affordable options, impacting spending patterns and profitability for suppliers and retailers. Despite these challenges, the market is projected to grow at a CAGR of 3.5%, driven by a demand for healthy, low-alcohol, and sugar-free drinks, alongside a rise in dietary supplements like energy drinks.

The year 2023 also saw distinct trends shaping the beverages industry. Conscious consumption became a significant factor, with consumers making purchasing decisions based on their personal values, leading to more sustainable and responsible practices in the industry. Companies that invested in brand building emerged as leaders in the market. The Ready-to-Drink (RTD) segment, particularly in cocktails, experienced explosive growth. Additionally, functional beverages continued to gain popularity, catering to specific consumer needs focused on health and wellness. These trends highlight a significant shift towards health-conscious and value-driven consumer behavior, influencing the strategies and product offerings of beverage companies.

Market Overview

The global beverage market is estimated at $2,619.4 billion in 2023 and is projected to reach $3,009.0 billion by 2027, growing at a CAGR of 3.5%.

Regional Overview

• Europe: The market for beverages is projected to expand at a CAGR of 2.5% from 2023 to 2027, culminating in a value of $576.2 billion. This growth is primarily attributed to a rising population of health-aware consumers who are seeking healthier beverage options, along with a growing preference for plant-based products.
• Asia Pacific: The market for beverages is projected to expand at a CAGR of 4.4% from 2023 to 2027. This growth is primarily attributed to economic expansion, particularly in emerging markets like India, Indonesia, the Philippines, and Vietnam.
• North America: The market for beverages is projected to expand at a CAGR of 3.9% from 2023 to 2027, culminating in a value of $934.6 billion. The market is witnessing a rising demand for innovative products such as plant-based and lactose-free beverage offerings.

Key Growth Trends

1. Conscious Consumption
   • Consumers are increasingly making purchasing decisions based on personal values, leading to a focus on sustainable and responsible practices in the beverage industry.
   • This includes sustainable packaging, ethical sourcing, transparency, and carbon footprint reduction. Examples include biodegradable packaging by JUST Water and Carlsberg Group, and sustainable agricultural practices by Nespresso.
   • 85% of consumers have started to shift their beverage purchasing behaviors toward more sustainable options.
2. Ready-to-Drink (RTD) Growth
   • The RTD beverage market has seen significant growth, expanding beyond cocktails into various categories like craft sodas, energy drinks, sports drinks, tea, coffee, and juice. The convenience factor is a major driver, with companies like Jim Beam, ABinBev, and Bacardi launching new RTD products.
3. Functional Beverages
   • Consumers are increasingly turning to functional beverages as a convenient means to support their health and wellness objectives. The industry has responded by introducing a wide array of new use cases and flavors to address daily concerns. Hydration, a key focus in 2023, has expanded to encompass holistic health beyond just water-based products.
   • In the energy sector, companies are innovating by offering caffeine-free options,
     utilizing alternative ingredients for similar effects without caffeine-related downsides, such as mushroom-based drinks gaining traction. Adaptogenic
     beverages promoting calmness and CBD- or THC-infused drinks have experienced steady growth.
   • Functional beverages offer a simple way to access extra nutrients, energy, or health benefits without the need for additional supplements or dietary changes.
4. Innovations in Low and Non-Alcoholic Drinks
   • There’s significant growth in low alcohol by volume (ABV) products and nonalcoholic RTD mixed drinks. Brands like Mocktails and Molson Coors are introducing healthier living options without sacrificing taste or function.
5. Influencer-Backed Beverage Brands
   • Influencers are increasingly co-owning beverage brands, using their social media presence for marketing. Examples include Prime Hydration co-founded by Logan Paul and KSI, and a rumored beverage launch by YouTuber MrBeast.
   • In just over a year, Prime Hydration was already estimated to have about 1% of the market share in ready-to-drink beverages.

Key Insights

Condiments, Dressings & Sauces

Condiments, dressings, sauces, and seasonings enjoy widespread popularity globally as consumer tastes and preferences evolve, there is an increased demand for a wide range of flavors & and culinary experiences.

The increasing young demographic and the rapidly evolving trend of regularly exploring diverse inter-state and inter-country cuisines have created numerous growth prospects. Further, adopting sauce, condiments, and dressings in ready-to-serve meals and street foods has increased in popularity.

The category is divided into three subsegments: flavor enhancers, snacking partners, and general food applications.

Market Overview

The global sauces, condiments, and dressings market is expected to register a CAGR (2023-2029) of 4.9%. Rising knowledge regarding the health benefits of sauces and growing cultural influence continue to drive overall market growth. An increasing shift toward spicy food products is expected to significantly boost the demand for various condiments, sauces,
and dressings.

Regional Overview

• Europe: The European Sauces, Dressings, and Condiments market is expected to add $11.6 billion from 2023 – 2028. Changing consumer tastes across the UK and rising interest in trying dishes from other continents is anticipated.
• Asia Pacific: Asia Pacific is the fastest-growing market for sauces, dressings, and condiments, with a CAGR of 5.5% from 2023 to 2030. Sauces and condiments are expected to be one of the fastest-growing markets in India for both domestic consumption as well as exports.
• North America: The US sauces, dressings & and condiments market is expected to add more than $9.8 billion by 2023-2028, driven by the country’s diverse population, with a wide range of cultural backgrounds and culinary preferences.

Key Growth Trends

1. Rising Popularity of International Flavors
   • International flavors have seen a boom ever since the pandemic changed the way consumers could explore different cuisines.
   • There has been an evident surge in the popularity of global flavors, the demand for East-Asian flavors has experienced remarkable growth in the past two years.
2. Hot Sauces and the “Swicy” Trend
   • Hot sauces are enjoying a moment, tied to the “Swicy” trend that combines sweet and spicy flavors. Research indicates that a significant percentage of shoppers purchase hot sauces regularly, underscoring the ongoing popularity of spicy products and their role in adding excitement and complexity to meals.
3. Rising Popularity for Hot Sauces
   • A research from Tracklements revealed that 53% of shoppers are buying
     hot sauces at least every three months.
   • Demand for sauces that feature hot ingredients such as turmeric, ginger,
     and apple cider vinegar, which have anti-inflammatory and digestive
     benefits have increased.
   • From the smokey depth of chipotle to the intense heat of ghost peppers,
     spicy condiments, and sauces are becoming pantry staples.
   • The quest for the perfect balance between heat and flavor is driving
     culinary innovation worldwide.
4. Renaissance in Fine Food
   • Condiments are experiencing a renaissance, especially in the fine food world, moving beyond being an afterthought to becoming integral in adding depth and richness to dishes. This trend is driven by consumer desire for enhanced dining experiences, where condiments are used to elevate the flavor profiles of meals.
5. Diet-centered, Organic, and Non-GMO Product Lines
   • Health-consciousness remains a strong influence when it comes to sauce choices. Consumers increasingly turn to diets that align with their health and wellness goals and better sauces are right on top of their agenda
   • According to the 2023 Food and Health survey by IFIC, 62% of Americans consider healthfulness a key driver for food purchases.
   • Health-conscious and environmentally aware consumers are driving the adoption of organic, low-sodium, and sustainable condiment options.
   • The demand for organic condiments has grown significantly due to the increasing awareness of the adverse effects that chemical-based products can have on our health.

Food Ingredients

Food ingredients are substances that are added during food processing to improve taste, texture, and appearance and achieve specific technical or functional goals during production, storage, or packaging. These are used to improve safety & freshness and maintain the nutritional value of the food.

The demand for food ingredients is experiencing rapid growth, driven by the increasing popularity of processed and packaged foods. Ready-to-eat and instant-prepared foods are notably influencing the market for these food ingredients.

During the post-COVID era, the popularity of organic and functional food ingredients has increased among the global population. Consumers are aware of the benefits and are looking for functional and organic food to add to their diet to improve their health.

Market Overview

The global food ingredients market reached $335.3 billion in 2023 and is projected to reach $511.3 billion by 2032, growing at a CAGR of 4.8%.

Regional Overview

• Europe: In 2023, Europe emerged as the second-largest regional market for specialty food ingredients. Countries in the region such as France, Italy, and Belgium are some of the largest importers of specialty ingredients.
• Asia Pacific: Asia-Pacific held the largest revenue share in 2023, accounting for 33.9% of the global ingredients market. The surge in demand for emulsifiers in the food industry is being fueled by the growing preference for convenience foods. Additionally,
  factors including a large population, evolving consumer eating habits, and a rise in per capita income in developing economies are contributing to the region’s expansion.
• North America: North America accounted for the third largest revenue share in 2023, due to the growing demand for food ingredients that are multifunctional.

Market Drivers

Key Growth Trends

1. Alternative Sweeteners
   • With sugar playing a key role in obesity, Type 2 diabetes, and other health concerns, a survey has found that nearly half of consumers are trying to reduce sugar consumption.
   • Plant-based sweeteners like stevia and monk fruit, along with low-calorie
     options such as sucralose, are becoming increasingly popular as appealing
     alternatives to artificial high-intensity sweeteners like aspartame.
2. Highly Functional Ingredients
   • These components are recognized for their clean label, absence of gluten and allergens, catering to the preferences of consumers focused on health and nutrition. They offer enhanced nutritional benefits while maintaining wholesomeness.
   • A notable example is Scoular’s functional chickpea flour. This innovative flour mimics the properties of a protein isolate but is priced similarly to regular flour. It enhances the extrusion process, can substitute for eggs, and reduces the rate of bread staling, all while being used in minimal quantities.
3. Upcycling Ingredients
   • Upcycling ingredients has become a noted trend across the industry, with groups like the Specialty Food Association, Whole Foods Market and the International Food Information Council expecting a similar increase in use.
   • The sustainable practice can especially increase interest from Gen Z consumers, among which more than 65% say sustainability has an impact on their food and beverage choices.
4. Components Transparency
   • Component transparency is a growing trend in the ingredients industry due to increasing consumer awareness and desire for trustworthy products.
   • Businesses across sectors adopt clean labels to provide detailed ingredient information, including sourcing details and potential health or environmental impacts. This transparency improves consumer trust and supports informed purchasing decisions.
5. Non-Dairy Substitutes
   • With the increasing lactose intolerance, dietary restrictions, and animal welfare concerns, the demand for nondairy substitutes is growing.
   • To respond to the shifting landscape, the ingredients industry leverages emerging technologies to create a diverse range of dairy alternatives. These technological innovations offer both nutritional value and taste satisfaction while being sustainable.
6. Wellness Ingredients
   • There is a rising need for ingredients in foods and beverages that aid in sleep, stress reduction, and mood support. The growing interest in women’s health has led to an increased demand for ingredients such as ashwagandha and turmeric.
   • The demand for wellness-related products will also lean on the use of botanicals, a group of ingredients that include herbs, flowers, and roots.

Health & Wellness

The global health and wellness sector is capitalizing on the surge in demand for healthy options, as consumers increasingly shift towards alternatives with clean ingredients and make purchases focused on preventive nutrition, immunity, clean eating, and overall health and wellness. The expansion of the health and wellness industry can be largely attributed to the rising prevalence of physical and mental health issues, including anxiety and depression.

The health and wellness market is witnessing significant growth as a greater number of individuals adopt healthier lifestyles, involving regular healthcare checkups, exercise, and healthier dietary habits, in response to the increasing prevalence of various diseases.

Additionally, the increasing popularity of spas and the consumption of functional foods and beverages for personal care, coupled with rising disposable incomes and the growing influence of social media platforms and influencers promoting healthy lifestyles, fitness routines, and wellness products, are contributing factors creating a favorable market outlook globally.

Market Overview

The Global Health and Wellness Food market is expected to grow from an estimated $5.6 trillion in 2023 to almost $8.0 trillion in 2030, at a CAGR of 5.4%.

Market Overview

Key Segment Global Market Size and Growth, 2023 – 2030

Regional Overview

• Europe: The Health and Wellness Food market in Europe is expected to grow at a CAGR of 5.0% from 2023 – 2030, reaching to $2.0 trillion by 2030.
• Asia Pacific: The Asia-Pacific region is projected to grow at a CAGR of 6.2% from 2023 – 2030, reaching to $2.8 trillion by 2030.
• North America: The North American health and wellness food market is forecasted to grow at a CAGR of 5.6% from 2023 – 2030, reaching $2.5 trillion by 2030.

Market Drivers

Key Growth Trends

1. Health at Home
   • At-home diagnostic tests are appealing to consumers because they offer greater convenience than going to a doctor’s office, quick results, and the ability to test frequently.
   • According to McKinsey, 24% of US consumers are interested in testing for cold and flu symptoms at home and 35% of consumers in China reported that they had even replaced some in-person healthcare appointments with at-home diagnostic tests.
2. Interest in Weight Loss Medication
   • With drugs like Ozempic and natural options like berberine receiving a ton of press for promoting weight loss, we’re expecting a clear uptick in weight loss medications.
   • Datassential reports that 14% of consumers are becoming more interested in GLP-1 receptor agonist prescription drugs, including Ozempic and Wegovy.
3. Sustainable & Affordable Nutrition
   • Research indicates that some consumers are willing to pay more for foods with lower environmental impact.
   • Since demand for healthy food remains high, there is an increased focus on “affordable nutrition” innovation in new ingredients, foods, and beverages that provide a health benefit but at a lower cost.
4. Clinical Over Clean
   • Around half of consumers in the UK and US identified clinical effectiveness as a primary factor in their purchasing decisions, with only approximately 20% expressing the same preference for natural or clean ingredients.
   • Customers prioritized clinical efficacy for digestive medication, topical treatments, and eye care products, while preferred natural and clean ingredients for supplements, superfoods, and personal-care products.

Snacking

Snack foods are emerging as a top category in the global fast-moving consumer goods sector. The Circana 2023 Snacking Survey highlights that snacking remains a lifestyle in the US, with 49% of consumers consuming 3+ snacks per day.

Despite inflation and price increases, the volume of snacking has seen little change. Consumers continue to indulge in snacks, often preferring unique flavors and smaller portion sizes. The Fourth Annual Mondelēz State of Snacking report supports this, showing that 75% of consumers always find room in their budget for snacks, and 55% make a meal out of snacks at least weekly.

Cultural diversity and globalization have expanded the range of snack options available worldwide. Technological advancements and the availability of snacks through various retail channels, including online platforms, have also contributed to market expansion. The snacking industry is evolving rapidly, with consumers’ preferences and behaviors shaping its future. Despite economic challenges, the desire for indulgence, unique flavors, and convenience continues to drive the market.

Key Product Categories

Key Trends

Market Drivers

Key Growth Trends

1. Healthy Snacks as a Priority
   • Health-conscious consumers are seeking snacks to satisfy and satiate their cravings.
   • There’s a growing demand for snack options that align with health-conscious lifestyles.
   • According to Circana, 54% of consumers say snacks are an important part of their healthy eating plan throughout the day.
2. Using Flavors to Differentiate
   • Extreme flavor innovation in snacking is happening on social media via viral trends and ease of discovery.
   • Snacks are also becoming more adventurous in incorporating global flavors, with a big focus on Korean and Japanese flavors.
   • When it comes to flavor, spicy offerings are posting strong unit growth across numerous snack categories.
3. Snacks Move to the Center Plate
   • More consumers are integrating their favorite snack products into meals, up 35% over the previous year.
   • Once a week, more than half of consumers use snacks as a key ingredient in no-prep dinners, while more than one-third seize this opportunity multiple times a week.
4. Private Label Brands
   • As consumer budgets get tight, consumers are increasingly willing to spend more on private label products.
   • Several snack categories have experienced positive gains for both dollars and units over the past 5 years.
   • Private label brands have moved away from their traditional role as the budget-friendly, knock-off alternative to branded items and are now offering reasonably priced items that are of notable quality.
5. Superfood Snacks
   • Snacks are being seen to promote overall well-being and assist with mood enhancement. Healthconscious consumers are opting for snacks that will improve their physical and mental states.
   • Consumers are beginning to prefer snacks that promote cognitive, digestive, heart, joint, and immune health.

Key Insights

Dairy

The global dairy industry, a key cornerstone of the food market, is in a state of constant evolution. However, it encountered a range of changes and challenges in 2023.

The long-term outlook for the global dairy industry remains optimistic. Rapid urbanization, increasing awareness about health and nutrition, significant technological advancements, the rising popularity of dairy-based snacking, shifting dietary preferences, and favorable government policies and regulations are some of the major factors propelling the market.

However, the dairy industry has faced significant challenges due to inflation in 2022 and 2023. Escalating input costs have resulted in diminished profits for dairy farmers and elevated prices for consumers. As a result, it becomes crucial to emphasize values like sustainability or functionality, with a preference for multifunctionality (such as promoting both gut health and increased energy). Additionally, there is a heightened focus on exploring cost-effective alternatives to meet the varied demands of customers.

Market Overview

The global dairy market reached $944.7 billion in 2023 and is expected to reach $1,459.3 billion by 2032, growing at a CAGR of 5.0%.

Regional Overview

• Europe: Europe dominates the market with a value share of 33.8%, which was 10.9% more than North America in 2023. The Milk market in Europe is projected to grow by 5.1% (2024-2028) reaching $70.9 billion by 2028.
• Asia Pacific: Asia-Pacific is the second-largest dairy market globally. The region is projected to grow by 14% from 2024-2027. In Asia-Pacific, the dairy market is expanding rigorously due to the strong demand for dairy products and the presence of leading dairy producers.
• North America: The North American dairy products market is expected to grow at a CAGR (2024-2029) of 3.7%. Dairy products with organic and pasture raised labels continues to be a key driver of demand.

Market Drivers

Key Growth Trends

1. Cultured Dairy for Immune Health
   • In the post COVID era, consumers are keeping cultured products as a regular part of their diets.
   • Besides the perceived immune system benefits through its influence on the gut microbiome, cultured dairy is a popular choice for consumers concerned about digestive health.
2. Clean Label and Natural Ingredients
   • Consumers are increasingly seeking dairy products made with clean and natural ingredients, avoiding products with artificial additives, preservatives, and synthetic flavors, and purchasing products with organic and pasture raised labels more frequently.
   • Dairy processors are responding by formulating products using simpler and more natural ingredients, eliminating or reducing the use of additives, and opting for clean-label claims to meet consumer preferences.
3. Animal-Free Dairy
   • Plant-based dairy products have proliferated in the market in recent years, starting with plant-based milks and expanding to plant-based yogurt, cheese, and ice cream.
   • As plant-based brands persist in introducing innovative flavors and ingredients, a new contender is emerging. Animal-free dairy milk, crafted using whey proteins from cellular agriculture, is set to debut.
4. High-Protein Dairy Beverages
   • High-protein dairy RTDs are also expected to do well in 2024. These protein-fortified drinkable yogurts, shakes, and flavored milks can be used as a healthy protein snack or as a meal replacement for consumers returning to their busy, on-the-go lifestyles.
   • They can also be used to support workouts due to their high protein levels. Known for their variety of indulgent flavors, high-protein dairy RTDs also meet the need for conscious indulgence.
5. Dairy for Weight Management
   • Consumers are seeking foods that aid in weight management, and dairy products, particularly those high in protein and low in sugar, are well-suited to contribute to this solution.
   • Dairy processors are developing low-sugar and low-fat options, reduced-fat cheeses, and low-fat milk varieties, ensuring that consumers can enjoy dairy products while maintaining a healthier diet.