Land O’Lakes Hopes to Boost Animal-Based Dairy with Startup Accelerator in Face of Alternative Competition

The dairy space has changed quite a bit in the last decade, which Patrick Aaberg, marketing director innovation and business development at Land O’Lakes attributes in part to shoppers’ evolving taste preferences and various trends in health education. “The primary driver within the dairy trade has been consumers looking for healthy, wholesome, clean label products. On a positive note, butter has reemerged as a staple with consumers questioning the health benefits of processed alternatives like margarine. Per to one report , dairy milk sales declined 7% in 2015 and will likely continue to drop another 11% by 2020.

Meanwhile, sales of dairy milk alternatives like nut-based milks and yogurts expanded 9% during 2015, totaling nearly $2 billion. Perhaps more marked is the report’s conclusion that 49% of Americans consume non-dairy products, including 54% of children under the age of 18. The same research disclosed that a primary driver behind the dairy alternative sector’s expansion is the commonly held view that these are better-for-you products.

Roughly 70% of folks polled in the survey believe that non-dairy milk is a healthier choice for children. While many of these alternatives include nut-based products, there are also a small number of young businesses aiming to replicate dairy products without using a cow, shifting the dairy paradigm.

These plant-based or cultured alternatives as particularly popular with venture capital investors as well as food sector stalwarts. In June 2016, plant-based dairy alternative company Kite Hill completed an $18 million round led by 301 INC , General Mills’ new business development and venturing unit, and CAVU Venture Partners .

The startup combines natural ingredients and patented biochemistry with traditional cheese- and dairy-making techniques to create alternative dairy products like cheese. The Legal Challenge to Dairy Alternatives The dairy trade has responded to this new competition through revamped marketing campaigns , and it has as well tapped the legal system.

Right now, the FDA defines milk as “lacteal secretion obtained by the milking of one or more healthy cows.” Although this definition already excludes dairy alternative products, the bill’s backers are wanting the FDA to amp up its enforcement of this term and to give it a makeover. Dairy alternative firms, on the other hand, suggest that the legislation would do more harm than good.

According to VP of marketing at alternative dairy firm Daiya Foods Michael Lynch in recent weeks, scheme would create more confusion for buyers, suggesting that shoppers are already sufficiently familiar with the dairy and non-dairy labeling landscape. He’s in addition hoping the entrepreneurial spirit will rub off on the firm as a whole.

There are a few selection criteria, beginning with the requirement that each business focuses on dairy as its primary ingredient excluding butter. The firm must as well generate at least $200,000 in takings each year. When sifting through the slew of applications its sure to receive, Land O’Lakes will assess marketplace potential, current performance, and each business’s history.