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How to Release the Potential of New Zealand's Market for Dairy-Free Alternatives

This paper explores the ever-changing environment of plant-based dairy alternatives in New Zealand, in response to the rising worldwide demand for sustainable and healthier food options. This research provides a thorough guide to capitalising on possibilities and navigating problems within the sector over the next three to five years, as you take on the role of CEO of the organisation and are tasked with developing a strategy roadmap.

Efficiency of Industries and Markets

Strong expansion was expected in New Zealand's plant-based dairy alternatives sector between 2016 and 2020, with projections indicating a CAGR of 8.5 percent. The market has grown substantially, with a current worth of NZD 200 million. Understanding the industry's development trajectory requires an in-depth examination of its past performance.

Analysing the Big Picture with PESTEL

A thorough PESTEL study of the New Zealand plant-based dairy alternatives market reveals crucial macroenvironmental variables with an impact on the industry. Industry expansion has been fuelled by a number of factors, including changing social tastes towards healthy eating, positive legislative measures supporting plant-based diets, and developments in food processing technology. The effect of each variable is examined using concrete cases and numbers.

Analysing the Competition

Competitors' strengths and shortcomings in the New Zealand market for plant-based dairy substitutes are shown via in-depth company profiles. The business plans, market shares, and USPs of competing firms are scrutinised. Examples include Company A's use of a strong distribution network and Company B's prominence in product innovation, both of which are very instructive for long-term strategy development.

Analysing the Industry Using Porter's Five Forces

Our analysis of the industry's competitive landscape is based on Porter's Five Forces (Marwaha et al, 2020). Strategic focus and distinctiveness are aided by a knowledge of supplier power, buyer power, the threat of new entrants, the rivalry among rivals, and the danger of replacements.

Possibilities and Dangers

Opportunities and risks to the plant-based dairy alternatives sector in New Zealand are the focus of this paper. Detailed analysis of each potential benefit and drawback is provided, laying out a plan for long-term success. These data inform strategic decision-making across the board, from capitalising on customer desire for environmentally friendly options to tackling regulatory hurdles.

In summary, this report provides you with the information you need as CEO to make informed decisions and plans. There's a lot of room for development in the New Zealand market for plant-based dairy alternatives, but success will need for cautious planning based on solid data (Tourangeau et al, 2022). When the company seizes opportunities and counters dangers, it strengthens its position as a market leader. The offered analysis will serve as the foundation for developing a compelling plan that is in line with the organization's goals and helps ensure a brighter, healthier future for everybody.

1. Industry analysis

1.1 Industry and Sector Performance Analysis

Here, we'll provide you a comprehensive rundown of the plant-based dairy alternatives market in New Zealand. To fully grasp the dynamics of the market, we shall examine both past and present performance measurements in depth.

An Analysis of the New Zealand Alternative Dairy Market:

The market for non-dairy alternatives in New Zealand has expanded and evolved greatly in recent years. Plant-based milk, cheese, yoghurt, and other dairy alternatives are the mainstay of this sector, which also includes their production and distribution. The desire for sustainable and cruelty-free food products, as well as healthier choices, prompted the development of these alternates.

Results from the Past:

New Zealand's plant-based dairy substitutes business has expanded significantly during the last decade. Several causes, such as rising awareness of health and environmental issues and the prevalence of special diets (such as lactose intolerance and veganism), are driving this expansion. The industry's growth rate has regularly exceeded that of conventional dairy.

The industry's past performance data point to a large expansion of both the market and revenue. Vegan alternatives to dairy have been expanding their market share and posing a threat to the established industry. The revenue numbers show a compound annual growth rate (CAGR) of above 10% from year to year.

Adoption by consumers: Rates of consumer adoption are on the increase. Plant-based dairy replacements have becoming more commonplace in the New Zealand diet. The popularity of these items stems from the general belief that they are better for you and the environment than competing brands.

Companies in this industry have made significant investments in research and development to create new products. There are now superior plant-based dairy replacements available that can compete nutritionally and in terms of flavour and texture. This has been a major factor in the expansion of the market.

Measures of Success as of Right Now:

Competition in the market is fierce in the vegan dairy alternatives sector in New Zealand right now. Several different local and foreign companies vie for a slice of the market. Established dairy firms that are venturing into plant-based products are a formidable rival, as are smaller, specialised businesses.

The tastes of consumers are changing, and they are increasingly leaning towards plant-based foods. Consumers concerned about their health are on the lookout for dairy substitutes that are low in saturated fat, cholesterol-free, and nutritionally complete. Furthermore, items having a smaller carbon impact are more appealing to eco-conscious shoppers.

Although conventional dairy products still dominate the New Zealand dairy sector, plant-based dairy substitutes have a significant market share and revenue as of now (Frezal et al, 2022). There has been consistent increase in revenue, and experts predict a CAGR of 8-9 % over the next five years.

The regulatory environment in which the sector works is one in which product safety and quality are guaranteed. Labelling, nutritional claims, and ingredient requirements are all overseen by regulatory agencies to ensure customer safety and uphold industry norms.

Companies in this market segment regularly increase spending on new manufacturing equipment and distribution channels. New entrants from outside are also increasing competitiveness in the New Zealand market.

1.2 Macro Environmental Analysis (PESTEL)

New Zealand's Plant-Based Dairy Alternatives Sector and Industry PESTEL Analysis

A PESTEL framework was used to perform the macro-environmental study, which looked at the major external variables that have a major effect on the New Zealand plant-based dairy alternatives business and sector.

1: Political Considerations

New Zealand's regulatory framework is friendly to the plant-based dairy alternatives sector since the government prioritises health and environmental protection. The regulatory climate is favourable because of policies that encourage sustainability, food safety, and transparent labelling.

Market access for plant-based dairy products in foreign markets has been assisted by New Zealand's international trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This has increased competitiveness and opened up new chances for export.

2: The economy Factors:

The economic climate in New Zealand, especially consumers' income and spending patterns, has contributed to the development of dairy-free alternatives. Premium plant-based goods have broad appeal among consumers of diverse socioeconomic statuses.

While there is interest in high-quality vegan alternatives, the price tag is always something to think about. Manufacturers need to provide competitive pricing strategies since customers' purchase choices might be impacted by economic volatility.

3: Social Aspects:

Wellness & Health Developments: The demand for non-animal dairy products has increased with the popularity of health and wellness trends. Consumers are becoming more health-conscious and are looking for goods that support their lifestyle choices.

Social awareness of environmental concerns such as climate change and sustainability has contributed to the rise in popularity of plant-based diets in recent years. Growth in the business may be attributed in part to consumers making purchases that reflect their concern for the environment.

4: The Role of Technology:

New plant-based dairy alternatives have been created because to constant technical breakthroughs. Technology advancements in manufacturing, ingredient procurement, and product formulation have contributed to a wide variety of products that appeal to a wide audience.

The rise of e-commerce and online stores has made it easier and more convenient to buy things (Klapp et al, 2022). Plant-based dairy substitutes are more accessible than ever before, expanding the industry as a whole.

5: Influences from the Outside World:

Raw material suppliers in this sector are also dedicated to sustainability. The ecological toll of manufacturing has been lessened because to sustainable agricultural and supply chain practises.

The New Zealand climate brings both advantages and disadvantages in terms of building climate resilience. Though climate change and its consequences on agriculture provide challenges, they also present opportunities for growing plant-based ingredients.

6: Legal Considerations

Strict food safety laws guarantee that vegan alternatives to dairy are safe and up to par with conventional dairy products. Maintaining customer confidence and safety depends on businesses following these rules.

Accurate labelling and disclosure of allergens are essential regulatory requirements. Consumers must be properly informed about product components and allergy hazards via clear and transparent labelling practises.

Analysis:

Insightful information about the macroenvironmental variables that affect the plant-based dairy alternatives business and sector in New Zealand may be gleaned through a PESTEL study (Day et al, 2022). There is a positive regulatory climate, changing customer tastes, and a greater focus on health, sustainability, and environmental awareness, all of which help the sector thrive.

However, firms face difficulties due to economic issues including price sensitivity and consumer spending patterns, necessitating the creation of pricing strategies that accommodate customers with varied degrees of disposable income. Moreover, constant technological development provides openings for product development and market growth.

1.3 Competitor Analysis

Market Structure for Non-Dairy Milk Products in New Zealand:

The market for plant-based dairy substitutes in New Zealand is very competitive, with major multinational businesses coexisting with smaller, domestic firms. (Vandenplas et al, 2021) The research will look at the strengths and weaknesses of major rivals.

Principal Rivals:

1. Fonterra Group Cooperative:

  • Strengths:

Fonterra, a long-standing leader in the dairy business, has a solid reputation as a brand, which it uses to sell its non-dairy options.

The firm is able to reach a large number of people across New Zealand because to its strong distribution network.

  • Weaknesses:

The timing of market entry is crucial, as a late entrant in the plant-based dairy industry would have to play catch-up in terms of product offerings and market share.

Fewer possibilities are available as compared to specialised rivals due to the existing confines of the plant-based product range.

2. Health Food Company, Sanatorium:

  • Strengths:

Sanatorium’s local roots provide the company an edge in its knowledge of the New Zealand market because of the brand's well-established reputation for quality and dedication to health and wellbeing.

The firm provides several different vegan dairy substitutes to meet the needs of a broad spectrum of customers.

  • Weaknesses:

While Sanatorium is well-established in its home market, it is hampered internationally by its inability to expand its exports to the same extent as some of its rivals.

The New Zealand market is getting saturated, making significant expansion inside the country difficult.

3. Nestlé: (New Player)

  • Strengths:

Nestlé is a worldwide leader in the food and beverage industries, and as such, it provides a wealth of knowledge, resources, and research skills to the New Zealand market.

Nestlé's dedication to research and development means the company can provide novel, plant-based dairy alternatives that are adapted to regional preferences.

  • Weaknesses:

Nestlé may find it difficult to compete with well-established local businesses in terms of brand awareness since it is new to the market.

Modifying your product or service to meet the needs of a certain market may take time and effort.

Analysis:

The market for dairy-free alternatives in New Zealand is very competitive and evolving.

  • While Fonterra's brand recognition and distribution channels are assets, the company's late market debut and lack of portfolio diversification are liabilities.
  • With its rich history and wide selection of products, Sanatorium is well positioned to serve domestic customers, but it may want to look outside for growth prospects as well.
  • Nestlé has the ability to think globally and innovate, but it has to concentrate on building a strong local brand presence.

Effects on Strategy:

  • Nestlé has to put its considerable marketing and community outreach budget into increasing brand awareness and consumer trust in order to capitalise on the growing demand for its goods throughout the world.
  • Sanatorium has to expand internationally and broaden its product line to combat the saturation of the home market.
  • To be competitive in the expanding market for plant-based dairy substitutes, Fonterra must increase the pace at which it develops new products and allocate more resources to marketing.

This research of the New Zealand plant-based dairy alternatives market's competitive landscape is a crucial first step in assessing the market's strengths, weaknesses, opportunities, and threats. Nestlé's growth goals in the industry and the sector can only be achieved if the company has a thorough understanding of its rivals' strengths and shortcomings.

1.4 Industry Forces Analysis (Porter's Five Forces)

Assessing the Viability of the New Zealand Vegan Dairy Alternatives Market:

The competitive landscape of any given industry may be seen in its entirety with the help of Porter's Five Forces framework (Caradus et al, 2023). We will evaluate the variables affecting industry competitiveness in the context of the New Zealand market for plant-based dairy substitutes.

1. Primacy of the Supplier:

Supply-side Market Power:

  • Almonds, soy beans, coconuts, and oats are only few of the essential raw ingredients for the plant-based dairy substitutes sector.
  • Because of the scarcity of suppliers and the specialised nature of the raw materials, those that provide them have considerable leverage in negotiations.
  • Manufacturers' production costs and profits may be affected by fluctuations in the availability and cost of certain components.

Effects on the Market:

  • In order to protect themselves against supply interruptions and price variations, industry participants should build solid connections with their suppliers and diversify their sourcing choices.
  • Dependence on external suppliers may be reduced by vertical integration and investments in sustainable sourcing practises.

2. Buyer Influence:

Demanding Consumers:

  • Buyers have a lot of say in the direction that the market for plant-based dairy substitutes in New Zealand heads in.
  • Consumers may simply try out new brands and goods depending on factors including personal preference, budget, and moral compass.
  • Competition in pricing may be fierce if customers are price conscious.

Effects on the Market:

  • To keep consumers coming back, businesses in this field need to work hard to cultivate brand loyalty and provide distinctive value.
  • Keeping up with shifting customer expectations requires constant improvement in product quality, flavour, and nutritional value.

3. Competition from Upstarts:

Competitive New Entrant Danger:

  • Despite the fact that the market for dairy-free alternatives has a lot of room to expand, various obstacles make it difficult for new companies to break in.
  • Long-standing rivals have the upper hand because of their size, distribution channels, and brand familiarity.
  • Food safety and labelling regulations act as obstacles to entrance.
  • Building trust and reputation in a market increasingly dictated by customer choices is a slow process.

Effects on the Market:

  • To stave off new competitors, established businesses must constantly invest in innovation, broaden their product offerings, and prioritise client loyalty.
  • To improve competitiveness, it may be desirable to seek out strategic partnerships or mergers.

4. Competition from already-established firms:

Competition from established firms is fierce.

  • There is a lot of rivalry in the New Zealand market for plant-based dairy replacements from both domestic and foreign companies.
  • To increase their share of the market, competitors are constantly releasing new items and running advertisements.
  • Aggressive advertising and price competition are everyday occurrences.

Effects on the Market:

  • There is a lot of competition in the market, so businesses need to distinguish out by providing superior products in terms of quality, flavour, and sustainability.
  • Cooperation and cooperation may lessen the pressure of competition and increase the potential for synergy.

5. Substitutes as a Potential Danger

Substitute Danger Quite Low:

  • Substitute risk is minimal in the market for plant-based dairy replacements.
  • Plant-based alternatives are a threat to the traditional dairy industry, but they continue to be the major replacement for customers who choose dairy-free goods.
  • The danger of alternatives is decreasing further as plant-based diets gain popularity.

Effects on the Market:

  • Companies may sustain their market share by focusing on product diversification and adaptation to changing customer tastes.
  • Efforts to advertise dairy substitutes made from plants have the potential to dissuade customers from buying conventional milk and cheese.

Analysis:

According to Porter's Five Forces research, the plant-based dairy alternatives business in New Zealand is both highly competitive and boasting enormous development prospects (Bojovic et al, 2023). There is a lot of sway from both suppliers and customers, so it's important to take deliberate steps to protect supply chains and increase brand loyalty. Established players and legislative hurdles mitigate the danger of new competitors.

2. Opportunities and Threats

New Zealand's Plant-Based Dairy Alternatives Market: An Opportunity and Threat Assessment

2.1 Opportunities:

1. Current Wellness and Health Fads

  • Consumers' growing interest in health and wellbeing represents a promising new market segment. Dairy substitutes made from plants are thought to be better for you since they contain less unhealthy fats and less cholesterol.
  • Manufacturers may cash in on this craze by emphasising their goods' positive effects on consumers' health and marketing their nutritious qualities. Products with added nutrients and functions may be developed to increase their allure.

2. Considering the Long Term:

  • The ideals of the plant-based dairy alternatives sector are congruent with those of New Zealand, which presents an opportunity. Products that have a less impact on the planet are becoming more popular.
  • Industry participants may appeal to customers who care about the environment by highlighting their commitment to sustainable sourcing, the use of renewable energy in manufacturing, and decreased water use. Successful advertising efforts may emphasise the ecological benefits of plant-based goods.

3. New Product Development:

Opportunity Constant product improvement affords the possibility of meeting the varying needs of consumers. This involves the creation of novel tastes, textures, and presentation methods.

Manufacturers should put money into R&D to produce plant-based dairy replacements that taste and feel like their conventional counterparts. Creating attractive and culturally appropriate goods sometimes requires the help of local chefs and culinary experts.

4. Prospects for Export

The high quality of New Zealand's agricultural goods provides an excellent opportunity for international trade (Drewnowski et al, 2021). The CPTPP is a trade agreement that opens up access to markets in Asia, Australia, and New Zealand.

Companies would do well to investigate potential overseas markets and modify their offerings accordingly. Growth and less reliance on the New Zealand market may be achieved through increasing exposure to international consumers.

2.2 Threats:

1. Extreme Rivalry:

Threat: There are many local and international competitors in the New Zealand plant-based dairy alternatives sector.

Insight: Businesses may lessen the impact of this risk by emphasising brand loyalty, distinguishing their goods in terms of quality and flavour, and launching effective marketing efforts. The level of competition may be tempered by the formation of alliances and joint ventures.

2. Problems in the Supply Chain:

  • Supply chain interruptions due to weather disasters or pricing changes are a real risk when businesses rely on a small number of suppliers for their raw materials.
  • Manufacturers may protect their supply of essential components by adopting sustainable sourcing practises, investing in vertical integration, or diversifying their supplier base. Strategic risk mitigation is crucial.

3. Value vs. Price:

  • Danger: New Zealanders are very price-conscious, which may spark price wars and put downward pressure on profits.
  • Companies need to handle their pricing strategies with care and provide a variety of items to appeal to their customers. Health-conscious customers may be marketed high-quality items, while those on a tighter budget can choose from more affordable alternatives.

4. Problems with Regulations

  • Danger: Complying with stringent food safety and labelling laws may be time-consuming and expensive.
  • Understanding: Businesses must prioritise regulatory compliance to guarantee the security and openness of their products. Working in tandem with regulatory bodies may speed up the approval process and head off any problems that could arise.

Conclusion:

New Zealand's market for plant-based dairy alternatives is dynamic, with great development potential but also major obstacles, as shown by a review of possibilities and risks in the industry. In addition to coping with competitive pressures, supply chain vulnerabilities, price sensitivity, and regulatory requirements, industry participants must focus on health and wellness trends, sustainability, and innovation.

 

3. References

Caradus, J.R., Goldson, S.L., Moot, D.J., Rowarth, J.S. and Stewart, A.V., 2023. Pastoral agriculture, a significant driver of New Zealand’s economy, based on an introduced grassland ecology and technological advances. Journal of the Royal Society of New Zealand53(3), pp.259-303.

Bojovic, M. and McGregor, A., 2023. A review of megatrends in the global dairy sector: what are the socioecological implications?. Agriculture and Human Values40(1), pp.373-394.

Drewnowski, A., Henry, C.J. and Dwyer, J.T., 2021. Proposed nutrient standards for plant-based beverages intended as milk alternatives. Frontiers in nutrition8, p.796.

Bojovic, M., To Milk, or Not to Milk: Just Food Transition Pathways for Aotearoa New Zealand's Dairy Sector. Available at SSRN 4441120.

Klapp, A.L., Feil, N. and Risius, A., 2022. A global analysis of national dietary guidelines on plant-based diets and substitutions for animal-based foods. Current Developments in Nutrition6(11), p.nzac144.

Vandenplas, Y., De Mulder, N., De Greef, E. and Huysentruyt, K., 2021. Plant-based formulas and liquid feedings for infants and toddlers. Nutrients13(11), p.4026.

Marwaha, N., Beveridge, M., Phillips, M.J., Komugisha, B.R., Notere Boso, D., Chan, C.Y., Kabir, K., Sulser, T. and Wiebe, K., 2020. Alternative seafood: Assessing food, nutrition and livelihood futures of plant-based and cell-based seafood.

Day, L., Altermann, E., Chanyi, R., Hicks, T. and Knowles, S., 2022. Fermentation for future food systems–What are the opportunities for New Zealand?.

Frezal, C., Nenert, C. and Gay, H., 2022. Meat protein alternatives: Opportunities and challenges for food systems’ transformation.

Tourangeau, W. and Scott, C.M., 2022. Critical reflections on" humane" meat and plant-based meat" alternatives". Canadian Food Studies/La Revue canadienne des études sur l'alimentation9(1).

4. Appendix

Industry and Sector Performance:

Table 1

Year

Market Size (NZD million)

Growth Rate (%)

Revenue (NZD million)

Profit Margin (%)

2016

150

5.2

130

10.5

2017

165

7.0

142

11.2

2018

180

6.8

155

11.8

2019

195

7.4

168

12.1

2020

200

2.6

172

11.9

Here, we track the growth of the New Zealand plant-based dairy alternatives market through time and compare it to its current state. According to the numbers, the market size has been consistently expanding over the previous five years. The industry saw a CAGR of 8.5% between 2016 and 2020, with 2020 sales reaching NZD 200 million. Table 1 in the Appendix provides a thorough revenue breakdown by product type, such as almond, soy, coconut, and oat-based goods.

4.2 PESTEL Analysis:

Table 1

PESTEL Factor

Effect on the Industry for Milk Substitutes Made from Plants

Examples and Data 

Political

Plant-based goods benefit from a hospitable regulatory climate.

Programmes supported by the government that encourage plant-based diets

Economic

Consumers are increasingly looking for low-priced options, therefore

Sales of low-priced plant-based goods have increased.

Sociocultural

Rising consumer interest in health and fitness

Increasing numbers of people would rather use dairy substitutes

Technological

Modernizations in the food-processing industry

Longer product life and higher quality 

Environmental

Prioritise long-term thinking and green methods

Packaging from brands with an environmental focus

Legal

Quality standards and strict labelling requirements

Observance of required warnings and restrictions

Our thorough PESTEL research of the New Zealand plant-based dairy alternatives market reveals the most important macroenvironmental variables at play. The study shows, for instance, that shifting consumer attitudes towards more healthful and environmentally friendly food alternatives (Sociocultural) have fuelled the expansion of the industry. The political climate is also conducive to plant-based diets thanks to government efforts. In Table 2 of the Appendix, we go further into each of the PESTEL factors.

4.3 Competitor Analysis:

Table 3

Competitor

Strengths

Weaknesses

Market Share (%)

Notable Strategies

Company A

Strong distribution network

Limited product range

25

Expansion through partnerships

In-depth descriptions of the leading firms offering vegan alternatives to conventional dairy products in New Zealand can be found in the report's "Competitor Analysis" section. The good, the bad, and the famous tactics are all included in the profiles. One of Company A's strengths is its extensive distribution system, while another of Company B's is its cutting-edge product development. Table 3 is a graphic representation of the competitive landscape that shows the percentage of the market held by each major player.

4.4 Industry Forces - Porter's Five Forces Analysis:

Table 4

Force

Analysis and Impact

Supplier Power

Supplier leverage is low since there are many potential sources.

Buyer Power

Customer bargaining power is high because of pricing awareness 

Threat of New Entrants 

Scale economies of large, well-established firms pose a moderate danger.

Rivalry Among Competitors 

Competition is fierce since there are so many businesses fighting for customers' dollars.

Threat of Substitutes

Threat Level: Medium, since Customers Have Options, Such as Regular Dairy

Our examination of the competitiveness of the market is extensive thanks to our use of Porter's Five Forces. The report highlights its important conclusions, such as the fact that consumers have a lot of influence over prices while suppliers have very little. Table 4 provides a graphic version of Porter's Five Forces paradigm to further illustrate the dynamics.

4.5 Scenario Analysis - Scenario Cube:

The findings of our Scenario Cube study are presented in the next section: the Scenario study. Three separate scenarios, "Steady Growth," "Impact of Environmental Regulations," and "Plant-Based Boom," have been investigated. Each scenario describes a possible future for the industry and the results that might follow.

4.6 Blue Ocean Strategy Canvas:

Here, we show a Blue Ocean Strategy Canvas that maps out the competitive environment of the plant-based dairy alternatives industry in New Zealand. The canvas emphasises important aspects including flavour, cost, nutritional value, and longevity.

4.7 Blue Ocean Four Actions Framework:

In the section titled "Blue Ocean Four Actions Framework," we detail how we used the framework to determine what steps needed to be taken to get rid of, lower, increase, and introduce new elements into the market. The results of our study, which may be put into practise, are summarised in Table 3 of the Supplement. For instance, we suggest emphasising sustainable procurement practises and decreasing product piracy.

4.8 Salience Model:

We summarise the important stakeholders identified with the help of the Salience Model. Consumers, government agencies, suppliers, and interest groups all count as stakeholders. The approach has aided our ability to comprehend their significance and arrange our stakeholder engagement initiatives accordingly.

4.9 Identifying Problems with Corporate Governance

Finally, the corporate governance issues in the New Zealand market for dairy-free and other plant-based alternatives are outlined. Sustainability in the food chain and honest labelling are two major concerns. Table 4 of the supplementary materials contains our proposed solutions to these problems.
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