WEBINAR TRANSCRIPT

LORETTA KELLY:  Welcome, everyone. I'm Loretta Kelly, director of Strategic Marketing for Blue Diamond's Global Ingredients Division. Thank you for joining us today. As we unpack the latest market trends and insights impacting the food and beverage industry.  

Blue Diamond's Global Ingredients Division is the industry's first choice for value-added almond Ingredients. That's because we understand what you need from an almond supplier- not just the highest quality almonds and almond products, but a true partnership.  

Only Blue Diamond offers you applied almond expertise. That's how we leverage our knowledge and experience to help you use our products to enhance yours. Our market, product and consumer insights can help you find new ways to use almonds to drive consumer appeal on the label and demand for your product.  

Blue Diamond offers an unparalleled array of almond forms and varieties from sliced, diced, slivered or whole almonds, to almond protein powder, almond flour and almond butter. And for virtually any application, we provide unmatched product knowledge and service.  

Our focus and resources ensure that the features and benefits of almonds shine through, and that helps you derive more value from your purchases with us. 

Thank you again for being with us today. And remember that you can submit your questions for the live Q&A in the chat box on the side of the screen. Now, please join me in viewing today's webinar.  

[presentation begins]  

Hi. Thanks for joining us. I'm Loretta Kelly. Today we'll be discussing the trend of non-dairy foods and why growth is being driven by more than vegan lifestyles.  

Did you know that 60% of American and British consumers who buy non-dairy foods wouldn't call themselves vegan?  

That's why, in this webinar, we'll talk about where we're seeing growth in non-dairy foods, patterns in the consumers who are buying them and how almonds can help you formulate products to grow your business.  

Let's start with number one, the growing non-dairy market.  

As you may know, "non-dairy" is an FDA-recognized term for products that don't contain milk or cream (though they may contain a caseinate milk derivative). Because it has been clearly defined by the FDA, it has become more acceptable to the industry than general terms like "dairy-free," which aren't regulated.  

Non-dairy alternatives exist for everything from yogurt to frozen desserts and many other foods. And beverages and yogurt and cheeses are some of the biggest areas of growth.  

According to Grandview Research, non-dairy yogurt is expected to reach $6.5 billion in revenue by 2027 - and by 2028, non-dairy cheese could be valued at over $2 billion, with double-digit market growth for both products. The more classic areas of non-dairy products are still growing, too; non-dairy frozen desserts could grow by more than 6% by 2027, and about one out of every six U.S. households regularly buys non-dairy frozen desserts already.  

Non-dairy chocolate and confectionary markets are smaller today, but they're expanding fast, with expected values reaching over $1 billion each in the next few years.  This explosive growth is being fueled by consumer preferences for food they perceive as better for them and for the environment. 

Now, many of us are familiar with the consumer perception of plant-based foods as healthier options. In fact, almost two-thirds of consumers who choose to consume fewer animal products do it for their own health. 

But according to the Good Food Institute, one out of every three consumers say they're eating more plant-based foods to be kinder to the environment. And globally, 63% of consumers are choosing plant-based non-dairy products because of sustainability claims. 

That means food formulators and brands could be very successful by offering non-dairy products to their target consumers. But not all of those consumers will respond to the same appeals. Let's talk about number two, the ways different generations are approaching non-dairy choices. 

It's probably no surprise to you that Millennial and Gen Z consumers are driving the non-dairy trend. Well over half of both generations say they're choosing more plant-based diets. 

Those younger generations spend a lot of their money on food. Half of Gen Z consumers say their top monthly expenditure is on restaurant food, while over 80% of Millennials say they're buying groceries to cook at home. 

Baby Boomers and Gen X aren't seeking non-dairy products specifically, but they do say they care about healthy options. This means there's a great opportunity to capture those generations by marketing dairy products with health claims. 

Which brings us to number three, the benefits of including almonds in your non-dairy formulations. 

We know that consumers care about both how their food tastes and how it can improve their health. An almond protein powder and almond butter can help make everything from non-dairy cheeses to frozen desserts and to healthier indulgent options. 

But notably, almond protein powder has a neutral taste, which allows the flavors of the finished products to shine without masking agents. That's crucial to consumers! More than half say taste is still the most important reason they choose one product over another. And while many customers actually prefer the taste of non-dairy foods, almonds can also help make your products taste better to consumers who prefer a more traditional flavor profile. 

Blue Diamond has spent more than 110 years growing almonds and the almond marketplace, and our network of growers and supply chain partners is ready to assist in solving your taste, texture and functionality challenges with versatile almond ingredients. 

Thanks for joining me today. I hope you found these powerful insights and our applied almond expertise helpful. 

[presentation ends] 

TOBY STONELAKE:  Welcome everyone from around the globe, and thank you for joining us today. I am Toby Stonelake, Senior Product Marketing Manager for Blue Diamond Global Ingredients Division, and you just watched the video portion of Webisode 5, Explosive Growth in Non-Dairy and What It Means for Formulators. 

We are now moving to the live Q&A portion of our program, where I will be your host and moderator and we will get to hear from our expert panelists.  

First, I'd like to introduce Loretta Kelly, Strategic Marketing Director of Blue Diamond's Global Ingredients Division. Feel free to share a little bit more about yourself, Loretta. 

LORETTA KELLY:  Hi everyone, Loretta Kelly. I am the Strategic Marketing Director. I've been working in the food industry for the past 20 years on everything from high-fructose corn syrup to dietary fibers. Good to be here with everyone today to talk about non-dairy trends. 

TOBY STONELAKE:  Thank you so much, Loretta. 

Second up is Laurie Colin. She's our Senior Technical Business Development Manager for the Global Ingredients Division. Can you tell us a little bit more about yourself, Laurie? 

LAURIE COLIN: Sure could, yeah, thank you so much. 

My name is Laurie Colin. I have basically been in the food industry for over 25 years, in a multitude of responsibilities - R&D, sales, technical support. I've been with Blue Diamond for about a year and a half, and I am very happy to be here today. 

TOBY STONELAKE:  Thank you, Laurie. 

Next, I'd like to introduce Dr. Dan Sonke. He's our Director of Sustainability here at Blue Diamond. Dan, the floor is yours. 

DR. DAN SONKE: Hi, everyone. As you heard, I'm Director of Sustainability. I've been working in sustainability in food and agriculture for over 20 years now, including a decade working with CPG companies on agriculture sustainability and food sustainability. Glad to be here. 

TOBY STONELAKE:  And rounding out our Blue Diamond team of panelists; Kurt Waananen, Director of Research and Development here at Blue Diamond. Kurt, if you'd like to share some more? 

KURT WAANANEN:  Certainly. Hello, everyone. I'm Kurt Waananen, R&D Director at Blue Diamond. I'm a food engineer by education, and I've been working in the food industry and working on product and process development for over 30 years now. And [I'm] also very happy to be with you today. 

TOBY STONELAKE:  Thank you for those introductions, panelists. 

We are now going to jump into some of our questions. I wanted to thank everyone for submitting some questions ahead of time. So again, thank you for those, that we have a bank of questions we're going to try to work from. 

But if you have questions today, please go up to the top of your toolbar within Teams; you'll see a little Q&A button. Go ahead and click on that, enter your question, and we will do our best to get to those questions. 

So our first question for today is - and this is up for any of our panelists - why do you think we are seeing consumers who are not vegan or strictly plant-based consuming non-dairy formulations? 

LORETTA KELLY:  I can take that. 

Well, I think from a standpoint… when you think about vegetarians and vegans, they account for about 15% of all consumers. And that amount of the population is growing, but not growing as rapidly as the amount of people who are actually considering themselves flexitarians or lessitarians. 

These people are cutting out the amount of animal-based foods and beverages that they're consuming. They're considering like, you know, plant-based Tuesdays or, you know, they have reduced the amount of animal-based products they've decided to consume from a dairy perspective, or just having Meatless Mondays. In this group, people are seeing a significant shift from that whole non-dairy to that plant-based sector. 

And when you start thinking about this group and breaking it down from a generational standpoint, the majority of them are Millennials and Gen Zs. And this group chooses to consume non-dairy or plant-based options based off of their diet, social or environmental reasons, preference reasons, just various different reasons, but a lot based off of just some of their opinions related to climate change and the carbon footprint. So millennials tend to be more concerned about these areas, and they are really, traditionally, not really focused on consuming some of those dairy-containing products. 

Gen Zs are also concerned about those areas as well. In fact, Gen Zs are more likely to wear the plant-based badge on their sleeve, literally. In fact, two-thirds of Gen Zs have changed their purchasing behavior and changed some of their other, like, personal behaviors based off of perceived climate issues. So you're seeing a large growth in the population consuming more of these plant-based items because of that. In fact, you'll see that the latest numbers are more than half of consumers are more likely to purchase a plant-based food option. 

TOBY STONELAKE:  Great. So it really has to do with health and wellness, so the personal body. But beyond that, what's going to be healthy for the environment and sustainable. That's great. And would any panelist like to add to that? I have another question ready, if not. 

DR. DAN SONKE:  And this is Dan, I could just jump in there with some of the generational differences that we're seeing with sustainability, marketing, sustainability, purchasing. You know, I've been in a space for a long time. I find it kind of fascinating… as Loretta said, obviously the millennials and Gen Z, they've been empowered with buying power previous generations didn't have at their age. They've got social media that provides more information and accelerates food trends in ways that weren't possible before. And that, as was said, you know, climate is a big focus. And so these generations have a very high intent to purchase around sustainability compared to previous generations. 

But as a Gen Xer, I just want to remind us that, hey, the Baby Boomers invented Earth Day over 50 years ago now. My generation came along and we were celebrating the 20, 25th-year anniversary of Earth Day when we were college age, and so our generation kind of revitalized Earth Day. And those trends still continue with Boomers and Gen Xers. Their intent to purchase might not be quite as strong, but there is strong evidence that even these previous generations are interested in sustainability aspects of their food. 

So I want us to keep that in mind, it's not an either/or. It's a trend that crosses all generations. 

TOBY STONELAKE:  Yeah. Both, and. Absolutely. Great. Thank you for that, Dan. All right. I'm going to move to the next question up for anyone. What are some of the most common challenges when it comes to non-dairy formulations? 

KURT WAANANEN:  I can take that question. You know, I think probably the biggest challenge when it comes to formulating a non-dairy is really matching the sensory and functional attributes of those dairy reference products. 

So it's very application-dependent, but as you start to work with non-dairy formulations, you're really thinking about matching flavor attributes, mouthfeel, texture, maybe even attributes like stretchability or melting properties. So that gets quite complicated and application-dependent. But really matching those properties of those dairy references is always a good challenge for food formulators. 

TOBY STONELAKE:  Beautiful. Would any other panelists like to add? 

LAURIE COLIN:  Yeah, I'd like to add to Kurt's comment, definitely. Kurt is absolutely right, yes. I think one of the most challenging aspects of formulating non-dairy alternatives is basically mimicking or replicating the functional properties that dairy proteins bring into those types of products. You know, they have a specific - they're going to provide a specific stretchability, a mouthfeel, a richness, a thickness. 

So duplicating that with plant-based ingredients can be very challenging. However, one aspect that I can definitely share with you is that there seems to be a light at the end of the tunnel, because we know that almond ingredients, specifically our almond protein, actually has some functional benefits that can be applied into these types of applications. 

It has excellent gelling properties, so it's going to provide some of that nice mouthfeel and thickness that is expected from dairy proteins. And it also contributes to providing that rich, creamy feeling that you're going to find like in a dairy yogurt. So when you're trying to formulate a non-dairy yogurt with almond protein powder, our almond protein powder is going to offer some of those benefits. 

And also in non-dairy cheese. As a matter of fact, we actually do have some products out in the market that are using our almond protein, very successfully. So definitely lots of benefits with our almond ingredients. 

LORETTA KELLY:  I can also add to that as well. You know, I think as a consumer of plant-based foods and beverages, one of the key things that I see out there from a formulation standpoint: it really does come back down to what Kurt and Laurie are saying. It's the sensory textures. Particularly around one category right now that I've been trying to find the right one for myself, it's non-dairy cheese, right? And cheese is such a broad category. I think there's hard cheeses, soft cheeses, spreadable cheeses, and so, you know, you're trying to find the right one that has the right texture for what you're trying to consume. 

I do know that cheese itself as a category has grown 7% from a dollar sales standpoint over the past year, and over the past three years, it's grown 85% as a dollar sales standpoint. So I think it's a really growing category in the plant-based market. But like really it always comes back to plant-based foods for me, it's texture, right? 

TOBY STONELAKE:  Absolutely. So. Loretta, I want to try to pin down another thing. So you mentioned non-dairy cheese really being kind of that high-growth category. Does it have the highest growth potential as well? Or is it just the one that's grown the most, most recently? 

LORETTA KELLY:  You know, that's an interesting question, Toby. You would think - we're all going to the grocery store on a regular basis, we're seeing the non-dairy sector of the refrigerated case continue to grow and expand. And you think things like cheese and yogurt, they're growing rapidly. 

And they are, you know, like, yogurt's grown 41% over the past three years, and they've grown 3% from a dollar sales point over the past year. 

But the actual fastest growing area of the non-dairy category are those spreads, dips, sour cream kind of things. Those sauces. They're growing at 83%. And I think that's one of those biggest areas for growth that is interesting for the non-dairy category itself. I think people are looking for tons of options across the space, everything from plant-based eggs to plant-based milk. 

But I think when you think about one of the fastest-growing categories, it's actually the dips and the sauces. And when you think about that, people are trying to go home and trying to find alternative solutions to what they've typically put on, say, their taco or they put on their yogurt or some other kind of, like, food, kind of condiment thing. 

But just to give you some details about the plant-based food market in general, you know, it's grown $7.4 billion. It's worth $7.4 billion right now and it's up 6.9 billion from last year from a retail standpoint. According to the Good Food Institute, plant-based foods has grown 6% in the past year and 54% over the past three years. And what's interesting is that their sales of plant-based foods has grown three times faster than the total food sales industry. 

TOBY STONELAKE:  Thank you. Glad we went down there, I think that was really helpful. So shifting gears a little bit, how does Blue Diamond help food developers innovate non-dairy formulations? 

KURT WAANANEN:  I can take that one, again, or I'll start with that one. You know, one of the things about Blue Diamond is that we focus on all these things. And so, because of that, we've been able to develop, you know, deep expertise in how almonds work in a variety of these application areas, these non-dairy challenges that we've been talking about. 

So for food developers, if you are looking at non-dairy applications that you're interested in working with almonds, you definitely can tap into our experience and learning by connecting with us, starting with your ingredient marketing or sales contact. And then they can pull in others from the Blue Diamond team, you know, to kind of lean on that past experience. 

TOBY STONELAKE:  That's great. Thank you, Kurt. 

Again, want to let our viewers know you can go to the top of the toolbar within the Teams viewing page. There is a little Q&A button; you click on that, and that is how you can submit some questions. We do have a few more that have come in here, and we'll get through those right now. 

So here's a question for you all. How closely do sustainability and non-dairy formulations tie together? So where does that tie come together? 

DR. DAN SONKE:  I'll take that one. It's fascinating to me to watch this trend. As someone who's been in the space a long time, I've heard this for a long time, but I think consumers are increasingly hearing that - for, let's just compare protein to protein, for a plant-based protein versus an animal-based protein, it takes about twice as much to almost 50 times as much land (depending on the protein involved) to grow an equivalent unit of protein as a plant-based versus animal-based, because you're growing feed crops, feeding it to animals, you lose some efficiency in that regard. And all the impacts of growing those crops are involved.  

So consumers are hearing this and making the mental leap that a simple way to improve their environmental footprint is to purchase plant-based foods alternatives. You look at something specifically like almond milk, it's about a 78% reduction in greenhouse gases to produce almond milk versus an equivalent amount of conventional dairy. 

So again, the climate impact is pretty significant, and consumers want that easy decision, that easy purchase decision of how to improve their environmental footprint. Consumers have always connected sustainability for the planet with their own health, whether you're talking about pollution or the effects of climate change on food supplies, consumers make that mental leap that what's good for the planet is also good for them, and when you can add an actual nutritional benefits like come from almonds, all the better. 

TOBY STONELAKE:  Perfect. So to layer in the Blue Diamond piece, how do we here at Blue Diamond offer ingredients that help contribute to sustainable offerings? 

DR. DAN SONKE:  Great question. So, almonds have been documented in multiple studies as being a low-carbon protein source. We're really proud of that. We're growing trees just like trees in a forest, trees in an almond orchard sequester carbon dioxide out of the atmosphere through photosynthesis. They turn it into wood and lock it in that wood for 25 years. 

That's about how long a tree, an almond tree lives. And then they're reversing climate change in that manner while the tree is alive. There are other things that you can do to make the orchard even more sustainable, even more climate-friendly. 

And so we're doing things like encouraging our growers through financial incentives to plant cover crops down the middle of the row, which, those plants also can help fight climate change. They also can make the soil more biodiverse. They can help capture water to make the orchards more water resilient. One of the key reasons we plant them is to benefit pollinators and to have biodiversity available for pollinators, for pollinator health. So looking at all these practices and combined benefits for sustainability, it's very exciting position to be in at Blue Diamond right now as someone who specializes in sustainability. 

TOBY STONELAKE:  Perfect. Thank you, Dan. OK, my next question is about ingredient provenance - so, where ingredients are sourced from. And the question is, do you find the consumers want to know where you source your non-dairy options and, as a follow-up, does local matter for those types of products? 

Open to any panelist. 

DR. DAN SONKE:  This is Dan. I'll take that again as a start, anyway. 

In sustainability in particular, people have always connected the origin of their food to sustainability. And the more they can understand where food comes from, the higher level of confidence they have, especially when you tie it to the provenance of a place like California that has a reputation, rightly deserved, as focusing on sustainability and safety and human rights and such, I think that augments that story. 

And so we are proud to represent our almond farmers as, first of all, we are a co-op, so we are owned by the farmers. Most of them are family farms. The average size is under a hundred acres. And when consumers hear this, they feel more comfortable about where their food comes from because they can mentally connect that ingredient to a farmer and a location. 

TOBY STONELAKE:  Beautiful. 

I want to thank our panelists. It looks like we are at time. So thank you very much for sharing all your information with us today, and your insights. 

Thank you all for joining us, viewers, to learn more about the growth in non-dairy and non-dairy trends. If you're hungry for more food and beverage insights, visit our Ingredients Insights page at bdingredients.com/insights and check out our podcast Grown in California, the Blue Diamond Almond Podcast. 

Again, thank you all for tuning in, and we will see you next time. Bye for now.