Dairy is primed to be a key protein ingredient in beverages of the future, according to a beverage expert presenting at the recently held Dairy Management Inc. Dairy Innovation Forum 2005. DMI, which manages the national dairy producer checkoff program, brought together nearly 150 dairy, food and beverage industry leaders to challenge and inspire them to innovate with dairy at its third annual forum.

"The window of opportunity is open for expanded dairy ingredients in beverage offerings," said Julia Kadison, senior vice president of consulting services for Beverage Marketing Corporation (BMC). "The challenge to the dairy industry is to capture its fair share of wellness and functional beverage growth."

The wellness/functional segment of the beverage industry represents a significant opportunity. Kadison projected that by 2008, this segment will account for 85 percent of incremental total beverage sales, replacing carbonated soft drinks as the largest nonalcoholic beverage segment. The fastest-growing areas through 2008 are projected to be ready-to-drink sports nutrition beverages (increasing 86 percent), nutrient-enhanced drinks (84 percent) and energy drinks (69 percent).

"Protein-enhanced beverages will be a strong platform for innovation," Kadison said, providing an ideal situation for protein-rich dairy ingredients such as whey proteins and fractions, ultra-filtered milk and milk protein concentrate. "More than half a billion gallons of beverages could contain dairy," requiring roughly 100 million pounds of dairy ingredients, she said. Some 65 percent of that beverage volume represents currently untapped opportunities for dairy ingredients.

According to BMC, by 2008 dairy ingredients could appear in products such as energy drinks, isotonics, enhanced waters, and fruit drinks. Dairy also is projected to remain strong in more traditional areas such as sports nutrition drinks, yogurt drinks/ smoothies and meal replacement beverages.

Kadison urged dairy ingredient suppliers and processors to be more proactive. "The opportunities are out there waiting for you," she said. Dairy ingredients offer beverage formulators and food product developers the whole package: taste, functionality, nutrition and versatility.

"Innovation is key to the future of the dairy and dairy ingredient industries," said Grant Prentice, executive vice president of marketing and business development for DMI. "This forum demonstrates dairy producers’ commitment to innovation by showcasing trends, research, technologies, nutrition research and more that could serve as a springboard for future dairy opportunities."

>For more information about dairy checkoff-funded programs and research projects visit www.extraordinarydairy.com or www.dairycheckoff.com.

Potential Use of Dairy Ingredients in Beverages of the Future Projected by Beverage Marketing Corporation (BMC)

Beverage Segment – 2008 Projected Volume (million gallons), Potential % Using Dairy Ingredients

Fruit beverages – 4,524, 4-5%
Isotonics – 1,296, 5-10%
Meal replacement – 177, 30-60%
Milk drinks – 95, 100%
Yogurt drinks/smoothies – 40, 80-100%
Ready-to-drink tea – 569, 5%
Enhanced water – 243, 5-10%
Premium carbonated soft drinks – 123, 100%
Sports nutrition  – 13, 100%
Energy drinks – 127, 5-10%
Total – 7,207, 7-10%
Source: BMC, 2004 study commissioned by DMI.

American Dairy Association, National Dairy Council, U.S. Dairy Export Council