Milk and dairy products are considered key components of the human diet. Post-COVID-19 consumer trend suggests a desire for novel foods to improve health and provide additional nutrients. With the marketing of numerous functional foods, the dairy sector‘s expansion is a valuable asset. Milk components contain active components, such as protein, protein fractions, amino acids, probiotic microbes, and prebiotic substances, among others, with the potential to be added to dairy products to boost their overall nutritional value.
Today’s health and wellness trend demands products that impart functional benefits to create market differentiation and a holistic approach to dietary patterns.
Introduction to Functional Dairy Ingredients
Functional dairy products dominate the functional food market because they exist in the food industry. The demand for “functional” compounds or microorganisms such as probiotics, prebiotics, phytosterols, minerals, vitamins, and bioactive peptides has been experiencing a surge as functional dairy ingredients in the industry. These ingredients are bioactive compounds utilized to fortify dairy products to enrich and enhance their functionality.
The popularity of functional dairy is influenced by customer interest in health, greater awareness, and perceived self-efficacy. Innovations in the food industry support developing and advancing functional ingredients that promote optimal health.
What Is Driving the Market for Functional Dairy Ingredients?
The COVID-19 pandemic influences consumers’ proactive inclination towards a healthy lifestyle. The trend shows consumers inclining towards better-for-you functional products, leading to the surge in demand for dairy-based ingredients such as protein. This, in turn, is also spurring innovations in the functional dairy segment. Entities are diving deeper into product innovations to keep up with the rising demand for functional dairy products.
The market for whey and casein dominates the key functional ingredients sector. These ingredients are popular among fitness enthusiasts as their go-to muscle recovery choice. Notably, the current demand for functional dairy ingredients is leading to innovations in ingredients such as lactoferrin, which exhibits additional nutritional properties and creates product differentiation compared to traditional ingredients such as whey and casein.
Figure 1: Key Market Forces Driving the Demand for Functional Dairy Products
Tapping Into A Few Potential Functional Dairy Ingredients
1. Lactoferrin – Lactoferrin (Lf) is a glycoprotein belonging to the transferrin family found in mammalian milk. Lactoferrin is commercially manufactured by precisely controlling the extraction and purification of the protein from raw materials such as skim milk, cheese whey, or “native” whey, which is whey made directly from skim milk via membrane filtering. The lactoferrin molecule is heat-sensitive, and its functionality is significantly reduced if the protein is denatured.
Entities and research associations working continuously towards innovation are exploring novel ways to use various bioactive whey components, such as lactoferrin. Lactoferrin is a rapidly expanding market with an increasing number of manufacturers due to its high-end demands. Companies such as Morinaga Milk Industry Co. (Japan) have increased their production capacity to enhance lactoferrin production. Several scientific studies point towards lactoferrin’s potential health benefits and associated antibacterial, antioxidant, and anti-carcinogenic characteristics.
2. Lactalbumins and Lactoglobulins- α-Lactalbumin and β-Lactoglobulin. Lactalbumin has distinct structural properties, excellent biocompatibility, and safety. Its techno-functional qualities and bioactive potential make it ideal for use in the food and pharmaceutical industries. More study is needed to fully realize α-lactalbumin’s potential, including its incorporation into functional meals for health advantages. Additionally, β-Lactoglobulin is a high-quality protein significantly used in nutritional supplements and sports-nutritional products. The ingredient exhibits fair solubility, foaming properties, and good heat stability, making it a functional ingredient contender for beverage-based applications. Giants in the game, like Arla Food Ingredients, have been incorporating alpha-lactalbumin into their early-life nutrition formula.
3. Milk Fat Globule Membrane (MFGM) – Milk fat globule membrane (MFGM) is a complex trilayer structure found in mammalian milk that is primarily made up of phospholipids and proteins (>90%). Many studies have shown that MFGM improves a newborn’s immune system, brain development, and cognitive ability. MFGM is currently used mostly as a component and emulsifier in infant formula. As a result, infant formula production enhanced with MFGM has become an emerging and potential area that the key players are exploring. Advances in MFGM separation and purification technologies have broadened their application to other industries, such as food additives and encapsulating materials.
The Technological Advancements
Most activities mapped in technological advancement for functional dairy ingredients include enhancing their stability, solubility, and application through encapsulation, stabilization, etc. Entities active in the functional dairy space are keeping abreast of R&D strategies to strengthen their market share in the industry.
For a detailed, real-world perspective, explore our case study: Techno-Commercial Overview – Functional Dairy Ingredients.
A few of the technological implementations seen in the area are listed below:
- Lactoferrin‘s lower solubility affects processing conditions. To address this, lactoferrin is dehydrated into powder using a cutting-edge spray drying technique specifically intended to limit denaturation while maintaining its functional characteristics and yield. Valfoo (Switzerland) uses this technology to extend the solubility level.
- Proferrin® is a patented and purified lactoferrin produced from premium French milk using cutting-edge technology to preserve its native structure. This ensures a non-denatured product with the highest purity. The lactoferrin produced using the technology is obtained in a non-denatured form that allows the retention of the natural structure.
- Additionally, to tackle the problem of unpleasant odor formation during the processing of whey protein-containing beverages, a gentle oxidation process that selectively targets and oxidizes the free thiol groups of beta-lactoglobulin is being implemented. By the end of the production, the resultant modified whey protein product exhibits remarkable performance, notably by reducing the presence of undesirable odors. Arla Foods is one of those entities that is doing the same to obtain the desired results. Continuous technological advancements hold significance in the sector due to the rising emphasis on innovations, processing impacts, and sustainability aspects demanded by consumers.
Where Does the Growth Prospect Lie?
The functional dairy ingredients market is projected to grow at a decent CAGR of ~7% in the next five years. The increasing health concerns among the mass population will fuel the industry’s growth in the near future, which will create opportunities for players active in the segment and players wanting to enter the segment with unique offerings in the functional dairy ingredient domain.
The functional dairy ingredient trend indicates high potential in areas including novel ingredients that can enhance the overall properties of the dairy product, clean label solutions to gain a sustainability aspect, protein enhancement or enrichment in the products, optimization of dairy solids with whey permeate, and yield optimization with the support of novel technologies, among others.
Figure 2: Exploring the Revenue-generating Prospects in the Functional Dairy Industry
Key entities in the segment include Arla Ingredients, Glanbia Plc, NZMP (Fonterra), Cargill Inc., Danone, and Valio Oy, among many others. The established entities’ key focus areas are sustainability in their product ranges and the production of specialty dairy products such as cheese, yogurt, ice cream, etc., with enhanced functionality through the incorporation of functional dairy ingredients. The player’s portfolio includes value-added products produced using unique processing technologies/ingredients to gain consumers’ attention.
Entities are also bullish on technologies such as Artificial Intelligence and Machine Learning for product innovation in the functional dairy industry. AI and machine learning can speed up one of the industry’s time-consuming processes.
Conclusion and Future Aspect
The machine-learning technology eliminates guesswork and substitutes the tried-and-true method with a more dependable approach. DSM-Firmenich is among the companies that believe AI is crucial to innovation opportunities in the dairy industry.
The key areas that new players must explore to support revenue generation in the functional dairy ingredients industry are:
- Taste and functionality (functional dairy product with improved texture and mouthfeel);
- Clean labelling trend (traceable and sustainable ingredients);
- Enhanced nutrition (use of novel functional ingredients)
- Lactose-free and plant-based alternatives
- Expansion through the foodservice and HoReCa segments