San Francisco-based coffee chain Philz Coffee started serving up an oat milk-based creamer last year when a flood of customers started asking for the ubiquitous whole grain option in lieu of dairy. It was such a hit they stopped carrying 2 percent milk altogether.
"We've seen a strong trend towards alternative milk products and away from traditional dairy," Sarah Herringer, director of retail products and innovation at Philz Coffee, told FOX Business.
Philz says a third of their customers order non-dairy with their coffee orders, and it won't charge extra for plant-based options.
"Regular dairy is more popular, but alt dairy has a significant share," Herringer said.
The morning ritual of having coffee that's light and sweet is no longer limited to dairy-based coffee creamers loaded with sugar as consumers opt for dairy-free options with natural ingredients. Sales of plant-based coffee creamers rose 30 percent last year to 8 percent of the creamer market, according to Nielsen data as reported by the Wall Street Journal.
And with milk sales declining, more consumers are looking for alternatives. Indeed, milk sales plummeted to $12 billion in 2019 from $15 billion in 2015, according to Nielsen. Almond milk sales, meanwhile, have grown nearly 6 percent to $1.35 billion while oat milk surged 662 percent to $59.8 million last year, data show.
A number of plant-based dairy brands have hit the market in recent years tapping into the demographic of nearly 68 percent of coffee drinkers who use some form of creamer. Nutpods currently dominates the category with its original variety made with a coconut cream and almond base. It surpasses Nestle's Coffeemate, liquid creamers that are dairy-free and lactose-free, as the No. 1 seller in non-dairy creamers on Amazon.
One serving of Nutpods almond and coconut-based creamer contains 10 calories and no sugar. Califia Farms has a line of no-sugar-added "Better Half," its unsweetened variety contains around 8 calories and zero sugars per serving also made with an almond and coconut base that's vegan and dairy-free. Ripple Foods, a pea-milk brand, has a plant-based creamer made with pea protein, sunflower oil and organic cane sugar that contains around 17 calories and less than 1 gram of sugar per serving.
"Consumers are very excited about having the ability to put non-dairy alternatives in their coffee, smoothies and all kinds of beverages and the creamer is one more extension of that," Brian Kateman, co-founder and president of the Reducetarian Foundation, a nonprofit organization that promotes reducing meat consumption for animal welfare, health the environment, said.
"People who don't necessarily want to consume animal products and have the same taste or experience are now relying on other options. It's a logical extension of plant based milk and I suspect that category will climb."
"People who don't necessarily want to consume animal products and have the same taste or experience are now relying on other options. It's a logical extension of plant-based milk and I suspect that category will climb," Kateman added.
With the rise of plant-based diets that cut out dairy, more eaters are choosing to opt-out of milk in their coffee. Becca Falborn, 29, prefers plant-based creamers from Nutpods or Califia's coconut creamer in her coffee ever since she started her Whole 30 diet.
"I'd rather pay a little more for something I'm consuming knowing it's better for me. You wouldn't even know they're dairy-free," Falborn said.
And businesses have seen substantial growth.
"Non-dairy creamers is a $3 billion segment. You partner that with a product where people enjoy multiple cups a day and it really becomes a way for brands like ours to become part of our every day," Madeline Haydon, founder and chief executive officer of Nutpods said.
Haydon started the brand in 2013 with a successful Kickstarter campaign and debuted on Amazon in 2015. The brand has grown 1,100 percent since it launched Haydon said and recently expanded with flavored oat creamers. And Califia Farms announced in January it raised $225 million in funding to expand its product line in the $1 trillion global dairy and the ready-to-drink coffee industry.
While ingredients vary, coffee creamers are typically made from a combination of sugar, water and vegetable oil and they're typically heavily processed and contain added sugar. The Cinnamon Toast Crunch variety from Nestle-owned Coffeemate contains up to five grams of added sugar in just one serving.
Still, the business for traditional creamers in flavors like Hazelnut and French vanilla are in demand among java drinkers. Sales of liquid coffee creamers surged 9 percent last year, according to market-research firm Nielsen as reported by the Wall Street Journal compared with 2 percent growth across the overall food industry category.
The Business of Food explores the rapidly changing $1.5 trillion food industry every Tuesday on FOX Business.