Plants are Taking Root in the Dairy Case

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If you’re wondering why domestic demand for U.S. fluid milk is down, look no further than your grocer’s dairy case. 

There, you’ll surely find traditional dairy products. But increasingly, the real thing is being crowded on the shelves by plant-based alternatives. What was once a near-sacred haven for real milk, butter, yogurt, ice cream and cheese has become a cornucopia of alternatives, with those same products mimicked by new, plant-based offerings manufactured from soybeans, almonds, coconuts, oats and peas.

“Growing Roots in the Dairy Aisle: The Rise of Plant-based Alternatives,” is a highly comprehensive report released recently by Blimling and Associates, a Madison, Wis.-based dairy brokerage and economic consulting firm. The report compiled data from a wide range of sources, most of which points to the same conclusion: real dairy products face a steep climb to protect market share and grocer shelf space, in the wake of an unprecedented tide of changing consumer preferences that favor plant-based alternatives.

Consider these points:

  • In the last decade, plant-based beverages have nearly doubled their presence in American households, from 16% in 2010, to 34% in 2018. Concurrently, worldwide sales of plant-based beverages more than doubled between 2009 and 2015.
  • According to a Nielsen Homescan survey, 39% of Americans said in 2018 that they are “trying to incorporate plant-based proteins (meat and dairy alternatives) into their diet.”
  • 46% of Americans in a 2018 study by Mintel research said they believe plant-based proteins are “better for you.” In other studies, consumers pointed to taste, animal welfare and sustainability as their primary motivators toward plant-based eating.
  • If the declining trend in U.S. fluid milk consumption continues, within another 5 years fluid milk sales could drop by another 4 billion pounds. That’s a predicted decline of roughly 20% from 2008 to 2023. In comparison, U.S. non-dairy milk sales jumped 61% in just the past 5 years. From April 2018 to April 2019, almond milk led the non-dairy pack with $1.2 billion in sales, followed by soy milk at $215 million and oat milk – the fastest-growing fluid alternative – at $15 million.
  • Plant-based cheeses had $160 million in sales in the same 2018-2019 timeframe, up 19% from the previous year. Similarly, plant-based yogurt logged $230 million in sales, up 39% year-over-year; alternative ice creams sold $304 million in product, for an annual increase of 27%; and plant-based butter clocked in with $189 million in sales, up 5%.

If all those numbers aren’t scary enough, the other news is that plants aren’t the only player in the alt-dairy field. Lab-grown dairy products quickly are gaining momentum and funding. This Forbes magazine article profiles Perfect Day, a California-based start-up working to synthetically replicate casein and whey proteins identical to those in cow’s milk. Theoretically, it then would be possible to follow the same manufacturing processes to create dairy products as today, but without the cows. 

The Blimling report points out that from the standpoint of the consumer’s food dollar and protein intake, real dairy products are a runaway bargain. A serving of real Greek yogurt, for example, contains 15 grams of protein at a cost of 7 cents per gram. A same-size serving of coconut-milk yogurt contains just 1 gram of protein, at a cost of $1.79 per gram. Similarly, an ounce of real cheddar cheese offers 6 grams of protein for 5 cents per ounce, compared to non-dairy, “cheddar-style shreds,” which provide 1 gram of protein per ounce, at a cost of 62 cents per gram.

The dairy industry’s offensive efforts are targeting not only consumers’ pocketbooks, but their hearts as well. The Milk Processor Education Program (MilkPEP) launched the 2019 “Milk: Love What’s Real” campaign, focusing on the many ways and places milk helps people celebrate what really matters to them.

If the widespread belief that the Millennial generation craves “relevance” is true, that softer marketing approach may help create market-share inroads with this group, which is anyone aged 23 to 38. Still, Millennials currently are the main consumers of plant-based foods, and their habits are being channeled even more aggressively by the younger Generation Z, whose oldest members are just embarking on adulthood. According to a 2017 Barclays report, “Gen Z’ers” consume nearly 5 times more non-dairy milk than Millennials. 

“Millennials will remain a key demographic,” stated the Blimling report. “But if you thought they were disruptive to the industry, just wait until Gen Z grows into their buying power.” 

The full report by Blimling and Associates, which also explores data and trends related to alternative meat products, can be accessed here.