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Plant-based Dairy & Egg
Overview
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 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 (PBD&E) 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 Covid-19 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 been recent developments in cell-cultured milk production, with a few companies leveraging cellular agriculture to not only develop sustainable alternatives to cow’s milk but also human breast milk. These products have not been commercialized yet and need to overcome regulatory hurdles as well as cost implications before reaching the market.
Industry Updates
Market Sizing
The US Plant-based Dairy & Egg market could reach USD 6.1 billion–8.9 billion by 2027
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Market Mapping
Most plant-based dairy startups focus on milk and cheese substitutes, while plant-based butter has attracted less activity partly 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 with 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 expansion stage of business development. Although initially slower compared with dairy, the plant-based egg industry has made headway with several companies successfully launching alternative egg products.
Ingredient supplier
Milk
Cheese
Butter
Ice cream
Yogurt
Egg
The Disruptors
Oatly, a Swedish alternative dairy brand, leads the plant-based dairy space with a market capitalization of USD 616.9 million, as of November 2023. Among startups, expansion-stage companies Perfect Day (USD 712 million), NotCo (USD 433 million), and Ripple Foods (USD 264 million) secured significant funding. These startups have introduced products across various segments such as plant-based milk, cheese, ice cream, and yogurt.
Established plant-based meat companies are also leveraging their expertise to produce plant-based dairy. Fazenda Futuro launched Futuro Aveia, a new range of oat beverages, in July 2023, while Nature’s Fynd launched a dairy-free cream cheese made using Fy protein in February 2021.
Eat JUST, with its widely available flagship product, “JUST Egg”, leads the alternative eggs industry with a 99% market share, having sold ~400 million egg equivalents, as of September 2023. The company has raised USD 6.5 billion to develop alternative eggs and cell-cultured meat products.
The market currently offers limited alternatives to chicken eggs compared with dairy substitutes. This is because replicating the complex chemical structures found in eggs presents a challenge. While products such as JUST Egg have specific use cases, they lack the versatility of traditional eggs. However, industry disruptors are actively working toward creating identical physical forms of eggs. Once this achievement is reached, we expect a rise in new egg substitute products entering the market.
Funding History
Competitive Analysis
Incumbents
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 among the partnerships that have emerged 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.
Notable Investors
