After a period of decline Australia’s Dairy and Soy Food market is forecast to be worth US$13 billion over the five year period of 2016 to 2021, with a compound annual growth rate (CAGR) of 4.0%, according to GlobalData, a leading data and analytics company.

The company’s latest report, , reveals that market value declined at a CAGR of -2.8% during 2011- 2016 driven by the depreciation of the A$ and slow wage growth.

This has increased price sensitivity, and damaged consumer spending confidence, leading to an increased emphasis on value for money in Australians’ purchasing behaviour.

Despite a value decline over 2011-2016, the market saw volume growth over the same period of 2.1%, highlighting a change in consumer buying habits as they searched for better deals via lower price-points and bulk buys, such as multipacks and promotional offers.

Veronika Zhupanova, analyst at GlobalData, says: ‘‘The contraction of the market was a stern test for Dairy brands on their ability to be flexible and adapt their products towards current consumer needs. During a market downturn it is especially important to accurately read consumers’ requirements. Over the past 5 years, better value has been a priority, however, this is changing with a return to growth and manufacturers must once again stay current as consumers become more willing to pay a premium.”

An improving economy and more favourable exchange rates are driving increased premiumisation in the country’s Dairy & Soy market, and consumers desire to pay more for products closely aligned with their taste, dietary and lifestyle demands. This will include the desire for decadent and indulgent taste sensations, higher protein content, and additional packaging convenience.

Consumers will trade-up across all the categories; however, this will be especially notable in Drinkable Yogurt, where volume is expected to decline, whilst value will see a substantial growth at a CAGR of 3.5%.

Zhupanova notes: “Brands should capitalise on Australian consumer’s readiness to trade-up in the Drinkable Yogurt Category and introduce novel formulations in order to stand out and catch consumer attention. These innovations can be unique flavour combinations, such as savoury flavours, unusual for the category ingredients such as spices or super grains, and functional benefits, such as being rich in nutrients that keep consumers full for longer.”

Meanwhile, Yogurt and Butter & Spreadable fats will be the categories which show the fastest growth by both volume and value over 2016-2021, highlighting them as “safe bet” categories, which both existing and new market players should consider tapping into.

Demand in this category is being driven by consumer needs for healthy convenient snacking and on the go or at work lunch options, such as sandwiches or yogurt pots.

Zhupanova added: “As consumers’ real or perceived feelings of time-scarcity is only going to grow, the demand for products which position themselves as both time-saving and also offering nutritious and healthy energy boosts will grow. In addition to this, functional benefits, such as benefits to digestive health and prolonged satiety will be among those most sought after by busy Australian consumers.”