Dairy ingredients are critical to the future of dairy exports. Ingredients constitute 81% of all U.S. dairy exports and protein ingredients tend to command a higher marketplace value.

In supermarkets around the world, emerging plant-based ingredients such as pea, algae and hemp are appearing on ingredient labels on a wide variety of products at an increasing rate, but are they a threat? How will these emerging plant proteins affect global demand for dairy protein ingredients?

USDEC, in collaboration with the National Dairy Council, has been studying this question over the last year. We are analyzing key market drivers utilizing market research reports, patent activity studies, nutrition literature reviews and functionality comparisons among others.

While the research is ongoing, I will give our first presentation on the topic at the American Dairy Products Institute (ADPI) and American Butter Institute (ABI) Annual Conference in Chicago on Tuesday, May 1.

In this article, I want to provide USDEC members a first glance of our preliminary findings.

In the near term, from 2019-2021, soy and dairy will continue to be the world's most demanded protein ingredients on a volume basis according to Giract's study of protein ingredient supply and demand. Dairy protein ingredients will gain an additional 100,000 MT globally from a base of just over 890,000 MT, while emerging plant proteins experience much smaller growth gains.

After 2021, dairy protein ingredients will be challenged.

The misconception that diets higher in plant based proteins are better for the planet as well as better for health is gaining momentum among thought leader communities and certain consumer groups. In the next five years, it is likely that this belief will trickle down and reach the broader consumer base and shift perceptions of health and sustainability.

Protein ingredients used for categories such as meat and mainstream functional foods that are most directly associated with animals and/or are most susceptible to the latest health trends will most likely be affected and may experience growth deceleration.

To counter this misconception and protect growth opportunities, the dairy community must continue to engage with thought leaders most involved with shaping the sustainable food systems dialogue. USDEC in-market activities and relationships engage regional opinion leaders to sculpt local perceptions of sustainable nutrition. And, other dairy organizations including Dairy Management Inc. and Global Dairy Platform are taking a top-down approach and complementing this work by engaging with key international thought leaders. Through this coordinated, multi-lateral approach we can change the rhetoric to illustrate the importance of a food system that is inclusive of both animal and plant protein sources. This will help U.S. dairy to continue to grow protein ingredient exports.

Over the next couple of months, we will be sharing additional findings of this research and work with members on applying this research to support sales of U.S. dairy ingredients.

Katie Phelan joined USDEC five months ago as part of the Strategic Development Team to help evaluate and build export opportunities after spending two years with Dairy Management Inc. supporting the creation of new thought leadership and insight capabilities. Prior to dairy, Katie was in the finance sector, leading new product launches and identifying new market opportunities. Katie is passionate about furthering a sustainable food system that is inclusive of both animal and plant agriculture.

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The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. The password-protected article above is intended for USDEC member organizations only and should not be shared with anyone outside your organization.