Functionality and ‘flexitarianism’ are driving innovation in plant-based dairy – a category valued at $22.7 billion globally in 2025, led predominantly by the booming milk alternatives segment according to Euromonitor. As the industry works to bolster its resilience in the face of challenges such as labelling legislation and sensory hurdles, this exclusive feature from FoodBev Media's The Plant Base magazine takes a deep dive into the current state of the market.

Though volume growth in the plant-based dairy sector has slowed in recent years, demand remains strong – particularly within milk alternatives, which have become the most mature segment within the category. Rising adoption of ‘flexitarian’ diets has led to significant market penetration within this subcategory.

Analysis of Euromonitor data by the Good Food Institute highlights that the Asia Pacific region was estimated to account for over one-third of plant-based dairy sales in 2025, followed by Europe and North America.

Meanwhile, research from ADM’s Global Protein Discovery Report last year found that 78% of global ‘plant-forward’ consumers (defined as flexitarians, vegetarians or vegans) have tried dairy alternatives, and 88% consume them at least weekly. Trial rates were found to be highest in Brazil (85%) and Australia (83%), followed by the US and UK (78%), South Korea (76%) and Germany (68%).

Robin Redelin, senior category marketing manager for dairy and plant-based dairy at ADM, said that demand is evolving beyond an “all or nothing” mindset.

“Consumers are increasingly flexitarian, seeking both plant- and animal-based proteins, and they’re prioritising higher protein intake,” he told The Plant Base. “Health remains a leading driver, alongside growing expectations for better taste and texture.”

Caroline Cotto, director of alt-protein non-profit organisation Nectar, commented: “What we’re seeing in the data is that demand is strongest where products deliver on a familiar use case and a familiar sensory experience. Barista milk, creamers and milk are the clearest examples of that.”

“The category is becoming less about novelty and more about everyday replacement, which is where real volume growth comes from.”

In comparison to meat alternatives – another plant-based food category that has matured significantly and plateaued after its initial boom around 2020 – Cotto noted that alt-dairy is currently “in a stronger position in terms of purchase intent and sensory progress.”

“In our research, plant-based dairy outperformed plant-based meat on purchase intent, and that’s partly because the category has more clearly solved certain everyday occasions, especially beverages and breakfast moments,” she pointed out.

“I think the reason is simple: dairy is a more modular system. Consumers can try a plant-based milk in coffee without changing the whole meal, and have easier access to try products at a coffee shop, which makes experimentation easier. Meat alternatives often have to carry more of the culinary and cultural burden of the entire plate, so the sensory bar is even higher. That said, from a market penetration standpoint, our highest performers in both sectors are on pace with one another.”

Swedish oat milk brand Oatly, one of the leading milk alternative brands in Europe, has reported growth in the UK from both new shoppers and existing shoppers buying increased quantities. Bryan Carroll, general manager for UK and Ireland, described plant-based milk as the “engine of the category,” accounting for 53% of total plant-based dairy market value.

“Plant-based milks tend to be the most widely adopted product within the category and usually act as a first step for consumers entering the plant-based space,” he explained. “From iced drinks to matcha and beyond, we are seeing how new taste experiences, both in and out of homes, are leading to increased demand.”

“These profiles align with consumer perceptions of vitamin C and immune support, reinforcing yogurt’s existing health halo,” he added.

Nutrition and functionality are major drivers, with ADM’s research finding that nearly 40% of plant-forward consumers are interested in seeing enhanced health benefits from future plant-based options. High-protein options are dominating, with many consumers prioritising protein consumption across food and beverage more broadly.

“The resurgence of high-protein dairy – cottage cheese being the obvious example – has caught consumers’ attention and shone a light on where plant-based cheese currently falls short,” said Honestly Tasty’s Moore.

“For some cheeses, we’re actively exploring formulations that bring protein levels up meaningfully without sacrificing the taste and texture…it’s a tricky technical challenge, as higher protein content tends to affect mouthfeel, but we’re making progress and think it’ll prove to be a real area of differentiation for us.”

Gut health is also fuelling growing interest in health-led alt-dairy innovations, with an increasing number of gut health claims appearing on shelves – particularly in yogurt and beverages.

“This is fuelling demand for pre, pro and postbiotics, as well as dietary fibre,” said ADM’s Redelin. “Globally, 69% of consumers actively seek to increase fibre intake.”

The Coconut Collab tapped into this interest with the launch of a dairy-free kefir drink this spring, made by fermenting coconut water and coconut milk to create a ‘creamy and tangy’ drink. It includes vitamins D, B6 and B16, and offers a source of fibre alongside ‘billions’ of live bacteria.

The product builds on the success of the brand’s Gut Health Yog, launched in 2022, which has seen 57% growth in the last year.

Joe Farrar, marketing manager at The Coconut Collab, said fibre has emerged as an increasingly relevant trend. “Over 60% of our shoppers are looking to incorporate more fibre into their diets, with 96% of the UK not getting the recommended 30g of fibre a day.”

“While most dairy products are reflected quite well in the dairy-free space, kefir hasn’t had the same love,” he added, noting that the combination of kefir’s distinct tangy flavour and the gut health benefits are a notable technical challenge in dairy-free.