Fragmentation a ‘defining force’ of dairy industry in 2016, report says

By Hal Conick

- Last updated on GMT

Fragmentation will be a theme in dairy for 2016.
Fragmentation will be a theme in dairy for 2016.

Related tags Nutrition

Fragmentation of the dairy industry will be one of the biggest trends in 2016, according to a recent report from New Nutrition Business.

The report, titled 10 Key Trends in Food, Nutrition & Health 2016, said there is “enormous scope”​ to both reposition and reinvent traditional dairy foods.

“Just don’t expect to have a huge mass-market success – so fragmented is the market becoming that a niche or ‘big niche’ product is far more likely,”​ the report said.

Why the fragmentation?

Julian Mellentin, Director of New Nutrition Business, told DairyReporter that there are multiple reasons for this fragmentation in dairy, including more diverse consumer taste, a willingness to experiment with new products and the fact that fragmentation is now a “defining force”​ of food and beverage markets.

“Consumers create their own definition of what is a healthy diet – mixing health and indulgence, or vegan and meat-eating – and experimenting with new tastes at a pace that larger companies struggle to keep up with,”​ he said.

In addition, Mellentin said easy access to information via technology has allowed consumers “to become their own experts on matters of healthy eating.” ​This has given a greater sense of empowerment as to what they want and allowed the average consumer to make their own decisions about health.

“Having seen ‘set in stone’ dietary advice about dairy fat and eggs overturned, consumers are sceptical about the ‘expert opinions’ of dietitians and nutrition researchers, and that means they allow themselves more freedom to create their own health rules, while at the same time using the internet to decide for themselves what is healthy and what is not, and even to self-diagnose,”​ according to Mellentin.

Low-fat vs full-fat

Full-fat dairy is making something of a comeback due to the aforementioned informed consumer base, Mellentin said. Its main growth will come in the way of yogurt and other forms, while the liquid form (whole milk) will see minimal sales increases.

However, this doesn’t mean low-fat yogurts will lose their dominance anytime soon. He said the older consumer, those 50 and older, grew up in the “low fat era”​ and likely will not change their minds on fat anytime soon. He also cited public health professionals who are “in denial about what science is telling us.”

“However, they will go into long-term decline as the more informed consumers slowly turn away and younger consumers grow up without the low-fat dogma in their ears and as more people understand the sugar levels of low-fat yogurts,”​ he said. “Low-fat yogurts will be around for the next 30-40 years.”

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