Trend Report: Is Hybrid Dairy the Bridge Plant-Based Milk Needs?

Hybrid dairy is looking to plug the gap between dairy’s climate and health issues and plant-based alternatives’ taste and price challenges – can it be the near-term solutions this industry sorely needs?

Milk remains the most commercially successful segment of the plant-based industry, but sales have been flagging of late, thanks to a resurgence of dairy and continued concerns about the taste and price of alternatives.

It’s no secret that milk production is terrible for the planet, and despite being propped up by the latest dietary guidelines in the US, it is high in saturated fat and cholesterol, both of which raise the risk of heart disease.

Plant-based dairy products have a fraction of the environmental impact of their cow-based counterparts, and can offer similar protein levels with low to no saturated fat, zero cholesterol, and some beneficial dietary fibre.

However, vegan alternatives need to overcome some taste, texture and cost challenges. Enter hybrid dairy: a class of products that blend cow’s milk with plant-based ingredients to offer the best of both worlds.

Over the last year or so, these products have begun carving out their own space in the food tech ecosystem. Can they now go from niche to mainstream?

Milk in numbers

• Global dairy production is responsible for around 4% of greenhouse gas emissions. And among livestock emissions, the milk industry makes up 30% of the footprint.
• The climate change this industry contributes to is causing extreme heatwaves that could lead to a 4% drop in milk production by 2050.
• In the US, sales of dairy milk grew by 2% in 2024, with whole milk intake up by 3%. In contrast, the country saw a 5% decline in plant-based milk consumption.

• Surveys show that 42% of French consumers find blended dairy products appealing, 56% of Irish respondents would try hybrid cheese, and 26% of Thai citizens are interested in hybrid yoghurt.
• People are least receptive to hybrid beverages and milks, and most interested in yoghurt and ice cream formats.
• Coconuts and cashews are the most appealing plant-based ingredients for use in blended dairy. And consumers prioritise nutritional claims like ‘high protein content’, ‘rich in fibre’, and ‘fortified with vitamins and minerals’ over ‘low fat’ or ‘low sugar’.

• In the Netherlands, over a third (35%) of consumers are willing to try a hybrid milk product that contains 30% plant-based ingredients, so long as its price is equivalent to conventional dairy.
• However, 46% of Dutch consumers don’t want to try blended milks, indicating that they’re either satisfied with cow’s milk, don’t believe the taste will be comparable, or find the concept strange.
• Globally, millennials are the most curious demographic when it comes to hybrid proteins, with 75% of respondents expressing interest. Gen Z (72%) and Gen X (66%) consumers aren’t far behind.

The problem: why dairy and plant-based milks are not cutting it

• Non-dairy options fall short on taste: Unsatisfactory taste or texture profiles continue to plague plant-based milk, leaving 57% of consumers resistant to these products. Among the 38% of people who don’t buy non-dairy products, 58% showcase the potential to switch if certain needs are met – better flavour being top of the list.
• Protein and saturated fat in focus: Apart from soy and pea milks, most non-dairy alternatives are low in protein (unless specially fortified), discouraging a large chunk of protein-hungry consumers. They’re also, technically, ultra-processed, which puts people off. Cow’s milk, however, can be high in saturated fat and dietary cholesterol.

• Plant-based milks remain pricey: In the US, milk alternatives are twice as expensive as dairy, carrying a 103% price premium, which makes them a no-go for many cash-strapped consumers hit by inflation. And while private-label non-dairy options are cheaper than milk in all major German supermarkets, they aren’t fortified with some key micronutrients – that makes them much more expensive.
• The climate cost of dairy is too high: The dairy industry’s impact on the climate is hurting its own business, and is in stark contrast with that of plant-based alternatives. A litre of cow’s milk uses 11 times more land than oat milk and nearly 70% more water than almond milk, and produces around thrice as many emissions as rice and soy milk.

Who are the big players in hybrid dairy?

Hybrid milks aren’t new per se. Companies in Thailand, for example, have been selling soy milk with small amounts of dairy for years.

Danish dairy giant Arla used to sell a dairy-oat milk hybrid at one point, and France’s Triballat Noyal retailed a Pâquerette & Compagnie line with 50% cow’s milk and 50% oats, almonds and hazelnuts. Live Real Milk introduced 50-50 blends with oats or almonds too, and more recently, Kerry, launched its Smug Dairy line of milks, cheeses and butters “cut” with oat milk (more on that later).

All of these have since been discontinued, thanks to a lack of sales, botched marketing, and wrong product choices.

Those who’ve had success have hit the right mix of price, labelling, and ingredient mix. Danone’s Dairy & Plants Blend was described as an industry-first baby formula and is one of the longer-standing examples of hybrid dairy. It contains 60% plant protein.

Denmark’s PlanetDairy is the latest emerging player, positioning hybrid dairy as the near-term solution while precision fermentation reaches industrial scale. It introduced a three-strong line of milks in collaboration with Dutch producer Farm Dairy, combining cow’s milk with sunflower oil, faba bean protein, sugar, and salt. The plant-based ingredients made up 30-40% of the product.

PlanetDairy entered the category through its Audu brand of blended cheese, which combines dairy with coconut oil, potato starch, and pea protein. In addition, it sells pizza and Tex-Mex cheeses as white-label offerings, and recently bought the equipment and tech of Swedish plant-based cheese startup Stockeld Dreamery.

Its headline partnership is with Dutch retailer Albert Heijn, which has rolled out a whole milk, a semi-skimmed milk, and a yoghurt with 30-40% plant-based ingredients over the last few months.

The challenges and opportunities for hybrid dairy

As alluded to above, many previous attempts at hybrid dairy have fallen by the wayside. Kerry’s Smug Dairy is the most interesting case study.

Most of its products offered very minor sustainability gains: the whole milk achieved a mere 18% emissions reduction, far too low to move the needle for most consumers. Its most successful product was the spreadable butter, which had 54% lower emissions than 100% dairy butter.

The latter is Smug Dairy’s most expensive product. At £9.38 per kg, it was dearer than the £7 cost of the Kerrymaid dairy spread, and more than twice as costly as the dairy-free spreadable butter sold by Kerry’s Pure brand (for £4.30 per kg).

Kerry Dairy Ireland’s strategy and marketing head, Victoria Southern, has suggested that though the range had delivered on taste and function, “categories like milk and butter are difficult to disrupt”. Smug Dairy’s pivot away from hybrids reflects the difficulties and importance of getting the ingredient ratio right.

Its hybrid milk and block butters only contained about 25% plant-based ingredients, falling short on the climate benefits. And the one product that had equal amounts of plants and dairy – the spreadable butter – priced out most consumers.

Danone (with the 60-40 ratio in favour of plants) and Albert Heijn seemed to have cracked the code here. The latter’s hybrid milks and yoghurts are actually 10 cents cheaper than their conventional counterparts, and decrease emissions by 20-30%, demonstrating that hybrid dairy can simultaneously deliver on the price and sustainability fronts.

It will be interesting to see how the dairy and alternative protein sectors respond to hybrid dairy. Despite Danone’s success, its plant-based brand, Alpro, told Green Queen it will stay away from the category – for now.

“All the serious dairy producers are looking at that. From the dairy angle, I think it makes a lot of sense to start blending with a more sustainable protein base. And now consumer acceptance is starting to rise,” Guillaume Millet, the European VP of plant-based food for Danone, told Green Queen last year, before adding that there’s no proven success and labelling is still a challenge.

Others, however, are welcoming the shift. Sweden’s The Green Dairy uses oats and fava beans to make plant-based and hybrid dairy products, and recently bagged an $8.6M investment from Ikea’s VC arm. Dutch startup Time-Travelling Milkman has created a sunflower-seed-based novel fat that can be used in blended dairy products too.

Fellow Dutch firm Those Vegan Cowboys, for its part, is targeting hybrid cheeses as one of the applications for its animal-free casein protein. And Israel’s Accellta has created a hybrid butter with 20% cell-cultured milk fat.

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