Consumers across the US and beyond are already well acquainted with plant-based dairy products. From the first commercial soy milk facility in 1917 in New York to Sweden’s Oatly oat milk taking coffee shop culture by storm, consumers worldwide have demonstrated an almost singular openness to experimenting with plant-based substitutes. Now experimentation is beginning to expand beyond the grocery store milk aisle to all aspects of dairy and egg products.
Plant-based dairy and egg products currently under development incorporate a broad range of ingredients, including peas, mung beans, soybeans, chickpeas, almonds, coconut, sunflowers, potatoes, and sesame, among others. These alternatives are vying to replace traditional cheese, yogurt, ice cream, butter, spreads, and creamers, while a wave of new startups are attempting to produce a substitute for chicken eggs.
This revolution is being driven by an increasing focus on health, animal welfare, and climate change. Outbreaks of zoonotic diseases, such as the COVID-19 pandemic and the African swine fever, have also drawn attention to the growing animal-free food production industry, with plant-based foods taking center stage.
In addition, there have also been recent developments in the field of cell-cultured milk production, with a handful of companies leveraging on cellular agriculture to not only develop sustainable alternatives to cow’s milk but also human breast milk. These products have not been commercialized as yet, and need to overcome regulatory hurdles as well as cost implications before reaching the market.
Most plant-based dairy startups focus on milk and cheese substitutes while plant-based butter has attracted less activity in part due to consumer aversion to plant-based fats over health concerns. Disruptors attempting to develop plant-based dairy alternatives from new ingredients—beyond a standard set of soy, almond, cashew, coconut and oats—have attracted significantly more funding compared to the rest of the industry.
More than half of the plant-based dairy startups we analyzed have brought a product to market with a few companies reaching the growth stage of business development. The plant-based egg industry, on the other hand, is far less developed with fewer new startups and only a handful successfully bringing a product to market.
Plant-based dairy: All incumbents in the plant-based dairy space have released in-house developed products into the market using their R&D capabilities and industry expertise. Most companies have turned to almond milk as the main protein source for their plant-based dairy products, pivoting from the initial industry favorite of soy milk. In recent years, oat milk has gained traction in the market due to its similar taste and texture to cow’s milk.
Direct investments and partnerships are two widely used strategies by large CPG companies to expand their presence in the plant-based dairy space. Danone leads in this area with the most investments and several M&As. The collaboration between Kraft Heinz and NotCo stands out as a significant partnership that has emerged recently within the sector.
Plant-based egg: Plant-based eggs are still nascent compared with plant-based dairy and have a far smaller incumbent presence. Nestlé's liquid egg alternative under its Garden Gourmet brand and Upfield Group’s partnership with OGGS are among the reported incumbent activities in this space.