How can we innovate in the post-pandemic dairy industry?

Some of the trends that Lantern highlights for their relevance are: the 'plant-based boom', 'better-for-me' products, the rise of snacking and cheese 2.0.
September 2021
How can we innovate in the post-pandemic dairy industry?

In the last couple of years, the relatively conservative dairy industry has experienced controversy and major disruption by challenger brands. Despite having one of the highest household penetrations, recently, innovation in new flavors, recipes, and formats has not been enough to maintain growth due to high competition. Instead, the industry is focusing on new global trends to innovate beyond core products, adapting their product lines to new customer demands and needs.

A few of the trends that we at Lantern think are most relevant are the plant-based boom, better-for-me, growth in snacking, and cheese 2.0.

Plant-based boom

In our study The Green Revolution, we found that 9.9% of Spaniards were vegans, vegetarians, or flexitarians, for a total of 4 million people. This food reality is growing across the globe due to health, sustainability, and animal welfare concerns especially (though by no means only) prevalent in younger consumers. The deep ideological roots of this movement mean that it’s here to stay and will only get bigger.

This goes far beyond the soy milk of the past. One route to growth is through alternative channels like barista version of plant-based milk for foodservice. Another is new plant-based alternatives to products like yogurt, cheese, or ice cream. Though mileage varies according to the type of product brands look to recreate cow-free, we have seen exciting results from companies like Oatly and Alpro, or even Live Real Farms who mix plant-based milk with dairy milk.

Even those dairy companies who see this as a fad or temporary threat have a lot to learn from companies like Oatly. The bold brand’s self-deprecating sense of humor and humanization of the company through, for example, videos of their CEO singing in an oat field, gives the brand a face versus the opaque and industrial alternative. Dairy companies can take notes in order to position themselves as attractive, sexy, and funny instead of the lumbering incumbent.


Consumers are taking an increasingly proactive stance towards their own and their families’ health. While health products were previously enriched with calcium or omega-3s that lowered cholesterol, the new focus is on prevention and not cure.

One way consumers avoid illness and feel better is through probiotics. Research on the positive impact of the bacteria present in these products on the gut microbiome is opening opportunities for the dairy industry. Products like Kefir and even yogurt are increasingly popular and yogurt brand Chobani has expanded through development of a non-dairy probiotic drink.

Organic food is the other opportunity. The EU bio foods market is huge, at 40.7 billion euros. Though Spain only has a 1.6% volume share of organic food compared to Germany’s 8.7%, we expect growth due to an increase in supply and retailers like Lidl, Aldi, and Carrefour actively pushing bio products.


The snack market is another enormous and high growth market, at $540 billion worldwide and 4-5% growth, which is significantly higher than other food categories. The pandemic has had a major impact here, breaking down traditional mealtimes and creating a huge opportunity for snacking in between meals for both adults and kids. The widespread five-meal-a-day recommendation by nutritionists creates extra moments throughout the day for snack foods. 

A few exciting dairy developments in snacking are Clio’s Greek yogurt minis, tasty and low in calories, and Moon Cheese’s puffs made of only cheese. We also like Nightfood Ice Cream, which allows consumers to satisfy those late-night cravings while improving health and sleep quality.

Cheese 2.0

Moon Cheese is a great example of how we can make cheese more snackable, moving away from its stuffy, traditional image and towards a quick and easy snack to take on the go or share with friends during a soccer game. A few other great ideas we’ve seen are IMAG!NE cheese stars—cheese mixed with flour to create a healthy alternative to cookies for kids.

Another category we believe in is cottage cheese and ricotta, these lighter versions of cheese with high protein and low fat. When you put them in an attractive, snackable, single-serve format like Brooklyn-based RifRaf does, it’s a recipe for success.

Finally, we have a few overall tips for the dairy industry. Invest early in your brand’s equity and elasticity to facilitate growth towards new categories. Make dairy-based products sexy again for younger (and not so young) generations. Be bold and experimental. Don’t get caught in the trap of stagnation in a rapidly changing world.

Image: @jagodakondratiuk
How can we innovate in the post-pandemic dairy industry?Jaime Martín
Founding partner & CEO