Dairy Sweetener Market Report

With the increasing number of health-conscious consumers seeking dairy products with low-content sugar without compromising on taste. Manufacturers are partnering to offer different sweetener combinations without compromising flavor leading to increased use of blends of high-intensity sweeteners. For instance, in October 2021, Apura Ingredients announced a partnership with EPC Natural Product Company to offer innovative sugar-reduction solutions to food, beverage, and nutrition manufacturers enabling the formulation of sugar-reduced applications that maintain excellent flavor and mouthfeel.

However, increasing consumers' awareness of the health impact of excessive sugar consumption and rising demand for a low-sugar alternative in everyday food and beverages such as dairy products such as flavored milk, yogurt, and dairy-based beverages often face challenges with solubility when using traditional or natural sweeteners like stevia, due to which market players are introducing innovations in dairy sweeteners with superior solubility.  For instance, in 2023, Tate & Lyle expanded their sweetener portfolio with the launch of highly soluble TASTEVA SOL, a stevia sweetener to provide over 200x solubility of Reb M and D products to address the solubility challenge in beverage, dairy fruit preparation and syrup, offering a premium, healthier and tastier sugar and calorie reduced solutions.

One of the challenges in the growth of the dairy sweetener market is the regulatory challenges, such as strict regulations on ingredient use and sugar taxation policies, which can limit the availability of certain sweeteners and increase manufacturing costs. Additionally, high prices and pressure on dairy producers with narrow profit margins can result from disruptions in the raw material supply chain.  Furthermore, the widespread use of some natural sweeteners in dairy products may be limited by their taste profiles, which may not be to everyone's taste. One such example is stevia. Another issue is consumer perception, since demand may be impacted by false beliefs about the advantages and safety of natural sweeteners over artificial ones.

Moreover, health and safety concerns surrounding sugar alcohol use in sweeteners, such as digestive problems and long-term health issues, could negatively affect consumer adoption. However, competition from alternative ingredients as sugar substitutes and plant-based sweeteners may reduce the demand for traditional dairy sweeteners. Furthermore, environmental concerns about the sustainability of sourcing practices for sweeteners like stevia and the carbon footprint of processing methods could influence consumer perceptions and demand for more sustainable options.

Sugar substitutes are in demand among consumers to reduce calories due to growing health concerns related to obesity, diabetes, and metabolic syndrome. However, diabetic consumers are increasingly adopting sweeteners with a low glycaemic index because blood sugar levels are rising—result, in the introduction of new alternatives by market players. For instance, in November 2022, Bonumose announced the introduction cost-effective process using corn starch to replace lactose in milk, reducing production costs of tagatose by up to 80%. Bonumose converts plant-based materials into rare sugars with increased yield using an enzymatic technology.

However, the increasing preference for natural and clean-label products boosts demand for erythritol, especially when combined with other natural sweeteners like stevia and monk fruit. As health-conscious consumers become mainstream manufacturers are seeking low-calorie alternatives. For instance, in August, Howtian introduced SoPure Dorado, an unrefined golden stevia extract, to the dairy sweetener market. This minimally processed, plant-based, zero-calorie sweetener caters to consumers seeking natural, low-sugar alternatives in dairy products, aligning with the growing demand for healthier choices. Offering a guilt-free sweetening option without contributing to calorie intake, catering to weight-conscious consumers.

As the demand for reducing sugar intake continues among consumers, there is an augmented demand for zero-calorie and low-sugar dairy products. Results in increased pressure on dairy brands to adopt clean-label ingredients, avoiding the use of artificial additives and chemicals. Led market players to introduce transparency and simplicity in product ingredients providing a natural, calorie-free sweetener that mimics sugar’s taste and functionality in dairy applications. For instance, in May 2024, Ingredion announced the launch of its PureCircle brand’s Clean Taste Solubility Solution, a first-of-its-kind drop-in stevia sweetener. Designed to mimic sugar without additives, the product underwent extensive global sensory testing to ensure it matches the taste of artificial sweeteners like sucralose and aspartame, offering a natural alternative.

North America is a dominant player in the dairy sweetener market, due to a significant rise in the preference of consumers for low-calorie and health-conscious alternatives. In addition, growing health impacts awareness due to excessive sugar consumption, resulting in the increasing option for natural sweeteners like stevia, erythritol, and agave syrup, as well as other plant-derived options for healthier options than traditional sugar. Government initiatives, such as FDA's regulations have also enhanced consumer confidence by ensuring product safety. Furthermore, the market is also driven by the surge in lactose-free and sugar-free dairy products, catering to the needs of individuals with dietary restrictions and health concerns like obesity and diabetes.

Additionally, the increasing demand for protein-enriched dairy products, such as protein shakes and functional dairy snacks, has prompted the use of sweeteners to balance flavour while maintaining low sugar content. The trend of clean-label products, and natural additives, further supports the growth of natural dairy sweeteners in the market. The dairy sweetener market in Europe is rapidly growing due to increasing demand for low-calorie sweeteners in dairy products and probiotic-rich fortified foods such as yogurt.  As well as the rising obesity and diabetes rates are resulting in increased adoption of naturally derived labeled products such as stevia, monk fruit, and erythritol. Government policies aiming to reduce sugar consumption have driven the demand for sugar alternatives, encouraging manufacturers to reformulate products with lower sugar content, and fuelling market growth.

However, the high consumption of dairy products in countries such as China, Japan, and Korea have led to significant growth in the Asia-Pacific dairy sweetener market. The growth is further, boosted by urbanization and the influence of Western diets. Additionally, the health and wellness trend continues to grow in the region, including protein-enriched and low-sugar variants driving the demand for alternative sweeteners. As well as fructose, sucrose, and corn syrups are the commonly used dairy sweeteners. However, there is a shift in consumption of naturally derived sweeteners due to rising diabetes and obesity rates.

The dairy sweeteners market of Latin America is diverse and developed, where traditional and locally sourced sweeteners play a prominent role in consumer preferences. Additionally, dairy flavor-infused milk and desserts are becoming popular in nations such as Argentina, Brazil, and Mexico.  However, rising health concerns over sugar-related issues, including obesity and diabetes are shifting consumers towards healthier alternatives. As a result, dairy manufacturers are expanding options such as stevia, erythritol, and agave syrup for healthy and more natural sweeteners. Further, the rise in the demand for functional dairy products, such as probiotic-rich yogurt and lactose-free options, is contributing to the dairy sweetener market. Additionally, sugar-reduction initiatives, driven by both consumer preference and government policies in some countries, are pushing manufacturers to reformulate their products with sugar alternatives.

The Middle East and Africa market of dairy sweeteners is witnessing a gradual growth due to the rising urbanization, middle class, and shifting consumer preferences. Additionally, traditional sweeteners like honey and date syrup are predominant in this region. However, the rising health risks associated with high sugar consumption result in the shift toward natural alternatives such as stevia, and erythritol. Further, functional foods are expanding in international brands and encouraging dairy manufacturers to reformulate products with low-sugar and sugar-free options, contributing to market growth.