Mistaking the niche for the trend
Credit: Fage
The food industry has been misled over the last 10 years into treating plant-based alternatives as if they were a serious and major growth opportunity, rather than what they are, which is a niche business with limited upside. And who did the misleading? The big consulting firms and university academics who hoped to turn alternatives into a revenue stream, the former from consulting projects, the latter from taxpayer-funded government grants. Also at fault is the media, which mostly reproduces press releases and when they do write stories employ journalists with scant knowledge of the subject.
All over the world, companies are quietly unwinding their meat and dairy alternative strategies, taking the hit on the costs incurred so far (with no return on that investment) and re-deploying staff to more worthwhile activities. But you might say, haven’t brands like Oatly become present everywhere? That’s true, but Oatly has achieved that only by throwing away enormous amounts of money, which is why it has total losses of US$1 billion sitting on its balance sheet, and why the original investors are likely never to get a return of that investment.
Unilever acquired Dutch meat substitute brand the Vegetarian Butcher (VB) back in 2018 and in 2020 stated that it would achieve plant-based sales of over €1 billion by 2025. Needless to say, VB, despite millions invested in marketing by Unilever, has fallen short by a long way and in late 2024 Unilever announced its intention to get out of the plant-based business.
Unilever’s exit isn’t surprising. In 2024, the US alternatives market was down 6.8% by value and 8.8% by volume, its fourth year of decline. Over those four years the category has shrunk by 40%. Meat alternatives have a sub-1% market share of the meat market. It’s a similar story in the UK, where the meat alternatives category has fallen by 21% over four years and there’s no sign of the decline stopping. And very few brands achieve break-even – even Quorn, Europe’s market leader, has experienced falling sales for four years and has been running at a loss for the last two.
In dairy alternatives it’s a similar story. In the US, sales of plant-based cheese alternatives fell 5.2% by volume in 2024, the third year of decline. The alternatives share of the cheese market has fallen below 1%. Consumers have clearly declared their preferences: while plant-based fell in 2024, the US natural cheese market grew 3.3% by volume and reached US$14.6 billion in value.
Track the drop
In fact, almost every plant-based category, with the exception of creamers, is in multi-year decline. For example, plant-based ice cream alternatives, which have a 2.6% share of the US ice cream market, were down 4.6% by value and 4.9% by volume in 2024, the third year of decline for the category. Measured over the period 2021-23, it was down 23% by value and 28% by volume. Meanwhile, regular dairy was up in both volume and value.
Plant-butters, the plant-based marketers’ new name for margarine, experienced a fall of 21.2% by value and 16.1% by volume in 2024, taking its market share to below 1.5%.
The US market for plant-based milks is the world’s biggest, but even this has now begun to decline. Volumes fell in 2022, 2023 and 2024, with a cumulative 16% decline.
Instead, consumers are turning to lactose-free dairy milk, which grew 10.9% by volume in 2024, its tenth straight year of growth. In 2025, sales of lactose-free dairy milk are likely to surpass those of plant milks. It’s all the more impressive when you remember that lactose-free dairy sells at a 10% premium to plant milks. For the mainstream consumer, plant milks are akin to margarine and lactose-free dairy akin to butter – more natural and with a shorter ingredient list.
In the UK market, dairy is also experiencing a revival of demand, while plant-based is stalled. Examples include: natural cheese, which has increased 6.6% by value, and 5.4% by volume. Yogurt, meanwhile, is up 12.5% by value and 7.5% by volume, and cottage cheese has soared 20.8% by value and 13.3% by volume.
The Violife brand, the biggest cheese alternative brand in the UK, experienced a 13.5% fall in sales in 2024, for the third year of decline.
Sales of high protein dairy yogurt have surged in the UK. The biggest Greek yogurt brand, Fage, enjoyed a 40% jump in sales to a total of £105 million, while Arla Dairy’s protein business was up by 25% to £77 million.
As we explain in New Nutrition Business 10 Key Trends 2025…
Read the full story on our March issue
