In this environment, the biggest opportunity for innovation in the dairy market is to formulate products for consumers who purchase both dairy and dairy-alternative products, according to a dairy flavors and ingredients report from market research firm Mintel.

Overall, food trends around simple ingredients and microbiome gut health have helped fuel growth in innovation and will continue to do so, according to Jesse Merrill, co-founder and chief executive officer of Good Culture, Irvine, Calif. He said there is increasing research linking cultured food – including his company’s cottage cheeses – to greater microbiome diversity, which can boost gut, brain and heart health while also reducing inflammation and supporting the immune system.

Good Culture launched a lactose-free line of cottage cheeses and sour creams last August to help the estimated 65% of the population who have trouble digesting lactose, and Merrill said all Good Culture innovation needs to be anchored in health, nutrition, cleanliness and taste to appeal to the community.

“Clean label products add complexity and cost, so we worked hard to develop proprietary formulations that deliver thicker and creamier products without the use of thickeners, gums or chemical preservatives,” Merrill said. “Our commitment to our consumers is real, simple ingredients, and more and more consumers are demanding that.”

In another effort to target the specific nutritional needs of consumers, Horizon Organic, Broomfield, Colo., recently introduced its Growing Years line of milk and yogurt products that was developed with pediatricians for children transitioning from breastmilk or formula to dairy milk. All the products are made with certified organic milk from pasture-raised cows, and every serving contains 50mg of DHA Omega-3 along with choline and prebiotics. The company also launched its organic dry whole milk, which is a powdered milk product designed to have a longer shelf life, toward the beginning of the pandemic.

Stonyfield Organic, Londonderry, NH, has introduced Organic YoBaby as a product that promotes self-feeding and is an easy on-the-go option. The company’s other newer products include Organic Kid Toppers and Organic High Protein Parfaits as other on-the-go options.

While introducing new products has come with challenges in recent years, companies are carving out a niche for nutritional products that meet specific needs, offer a plant-based alternative, or even span categories. According to the Mintel report, consumers are increasingly purchasing both dairy and dairy-alternative products and desire unique flavor experiences with functional benefits.