Nestlé entering animal-free dairy with milk products

Dive Brief:

• Nestlé is exploring the development of products using animal-free dairy proteins as the world’s largest food company looks for another way to meet consumers’ growing demand for more environmentally friendly diets while keeping the taste and nutrition they desire.
• Later this year, Nestlé will bring chocolate and plain milk-like products containing animal-free protein from Perfect Day made through precision fermentation to the U.S. market as part of a “test and learn” in a handful of stores.
• Fermentation is an ancient technology used to make beer, kimchi and yogurt. But it has rapidly gained momentum in the marketplace because products made through the method are said to have a very low carbon footprint, can be produced quickly and are relatively inexpensive. 

Dive Insight:

The move into products using animal-free dairy proteins follows similar investments Nestlé has made in recent years in plant-based meat and dairy alternatives.

In 2017, it purchased Sweet Earth, a company that makes plant-based deli meat, chicken, jerky, sausage and beef, among other offerings. It also has debuted plant-based extensions of some of its top brands, including Coffee-mate creamers, Nescafe Lattes, Starbucks creamers and DiGiorno frozen pizza.

Perfect Day makes its dairy proteins through precision fermentation, a process through which yeast is modified to produce whey protein when fermented. The protein is identical to the whey protein found in cow’s milk, offers good nutritional and functionality benefits that is suitable for vegans and is lactose-free, according to Perfect Day.

Perfect Day made its debut on the marketplace in 2019 with ice cream. It has since worked with several other CPGs that have incorporated its animal-free milk protein into everything from candy bars and cake mixes to cream cheese and protein powder.

Nestlé is among the biggest CPG firms to incorporate Perfect Day’s ingredient. Starbucks announced last year it was testing milk made by Perfect Day for a limited time, and Mars said in June it was collaborating with the startup to make a milk chocolate bar featuring animal-free dairy proteins.

“Innovating alongside leaders like Nestlé is a key part of how we’re scaling Perfect Day’s impact,” said Ryan Pandya, Perfect Day co-founder and CEO. “We can’t wait for consumers to taste how a brand with centuries of world-class experience can partner with Perfect Day to deliver for consumers and our planet.” 

While there’s no guarantee that Nestlé’s milk-like products will become a permanent fixture in its lineup anytime soon, the fact that the Switzerland-based food maker is exploring the food technology immediately adds credibility and promise to the future of animal-free dairy ingredients. For Nestlé, it gives the firm another tool, along with plant based, that it could use to develop products to address changing consumer needs.  

A limited release will allow Nestlé to monitor how consumers respond to the new milk — studying attributes like the color, texture and sweetness levels. It also will enable Nestlé to figure out the most promising technologies, partners and products, while learning more about the marketplace and consumer acceptance.

The products will be overseen by the company’s newly established U.S. R+D Accelerator, a division charged with identifying opportunities and bringing highly differentiated product concepts to the market in only six months.

“While this category is still very young, we know consumers are looking for products that have a reduced environmental footprint,” Joanna Yarbrough, head of Nestlé’s R+D Accelerator, said in a statement. “We are evaluating this avenue as a future growth opportunity for our business.”

Regardless of whether the product launch with Perfect Day is a success, Stefan Palzer, an executive vice president and chief technology officer at Nestlé, said the company remains committed to milk from animals. He noted dairy provides essential nutrients, especially for young children, while milk production contributes to the economic livelihoods of farmers globally.

“Nestlé is not exiting milk,” he told reporters last week. “It’s not either or. We want to give consumers choices.”

A study released earlier this year found consumers are very enthusiastic and curious about animal-free dairy, with animal welfare being the top reason they want to consume it. Focus groups conducted by precision fermentation startup Formo, Fordham University and Mercy For Animals found many people saw the technology as a viable option for dairy products. They also felt that this kind of product would not be a threat to dairy farmers’ livelihoods.