Alternatives to cow’s milk challenge dairy industry
Gerri Tucker knew exactly what she wanted when she entered the milk aisle at her local grocery: Silk’s Almond and Cashew blend, which in bold lettering boasts of 10 grams of protein per serving.
“It’s rich, it’s thick, it has a wonderful taste,” said Tucker, 74, who was turned on to the milk substitute by neighbors who swear by it. “It has everything I need.”
Tucker, a retired massage therapist, gave up dairy 45 years ago because of lactose intolerance, but she discovered her ideal replacement only recently. Soy milk, for a long time the sole alternative, upset her stomach, and almond milk, which has dominated the scene for 15 years, was a little thin for her taste.
Now the dairy aisle is crowded with milk alternatives made with cashews, hazelnuts, macadamia nuts, oats, rice, hemp, peas and bananas, many of them with sweetened or vanilla-flavored variations and fortified with extra nutrients.
Sales of plant- and nutbased milks, which sell for more than twice the price of dairy milk, jumped 44% between 2013 and 2018, to nearly $2.4 billion last year, according to market research firm Euromonitor. Driving the increase were tastier options emerging and consumers cutting back on animal-based food for reasons such as digestion, overall health, ethics or the environment.
The plant-based explosion has caused headaches for the dairy industry, which for years has been grappling with falling milk consumption and sales. Although dairy milk is still in 95% of U.S. households, per capita consumption has fallen 25% since 2000, according to the U.S. Department of Agriculture. Retail sales of dairy milk declined 18.8% from 2014 to 2018, to $15.6 billion, and are projected to drop to $13.7 billion by 2023, according to Chicago-based market research firm Mintel.
The dairy industry is fighting to compete by introducing new products, making farms more efficient and pushing the government to prohibit nondairy products from being labeled as “milk.”
The Food and Drug Administration, concerned that the term “milk” leads consumers to believe that plant-based beverages have the same nutritional attributes as cow’s milk, is reviewing 13,000 comments submitted on the matter before deciding whether to issue a new rule.
The dairy industry already contends with a long list of challenges: low commodity milk prices, limited export markets because of the trade war, fierce competition from other beverages such as bottled water, and smaller households that have dampened demand for a gallon. More than 2,700 licensed dairy farms across the country closed last year, according to the USDA.
Not helping dairy’s cause are recent undercover videos recorded at farms, the latest of which showed calves being hit, kicked and dragged by workers at Fair Oaks Farms, a large dairy in northwestern Indiana known for promoting the good care of its cows.
Fair Oaks and Fairlife, which makes a popular brand of ultrafiltered milk and counted Fair Oaks among its supplying farms, swiftly promised reforms and increased audits of animal welfare. Mintel senior beverage analyst Caleb Bryant doubts that the dairy industry will be harmed much, saying the primary reason that people consume alternatives to dairy is digestive health.
But the images of suffering cows could be the final straw that pushes some people toward dairy alternatives now that there are so many to choose from.
“It solidified my decision to go away from dairy,” Gary Hebding, 30, said of the videos as he put a carton of Simple Truth’s unsweetened vanilla almond milk in his basket at a Chicago grocery. “You can’t really abuse almonds too much.”
Investments pour in
The recent boom in alternative milks was spurred by the success of almond milk, because companies that wanted in on the action sought ways to stand out from the pack by tapping other plant sources and touting specific health benefits, Bryant said.
Investors last year sank $200 million into startups making plant-based dairy alternatives, more than any other food and beverage category, according to a recent report in industry publication Food and Tech Connect. California-based Ripple Foods got $65 million for its pea milk, which it claims contains as much protein and calcium as dairy but less sugar, and uses far less water than growing almonds.
Oat milk is the fastest growing dairy alternative, popularized by coffee shops that find its creaminess good for making lattes. When coffee house firm Intelligentsia introduced Oatly, a Swedish brand, to its milk lineup in 2016, it saw orders for almond and soy milk drop dramatically within just a couple of weeks as consumers made the switch. More than 10% of drinks sold at Intelligentia’s coffee bars now include oat milk, while 4.1% use almond milk and 2% use 2% milk. The coffee company also distributes Oatly in the U.S.
Quaker Oats, owned by Pepsi, muscled in this year with the launch of its Oat Beverage, bringing oat milk into more retail locations than any other brand is in. It avoided the term “milk” in the brand’s name in case the FDA forbids it.
Quaker uses a fine milling process to isolate the oat bran, which is rich in heart-healthy beta-glucan. That allows it to make a heart-health claim on the packaging that it hopes serves as a differentiator, said Koen Burghouts, the company’s vice president of innovation. It also added chicory root to increase the fiber content of the product to 4 grams per serving.
Despite the healthfocused marketing, nutritionists warn consumers to read the labels on dairy alternatives carefully. Many brands have added sugars or sweeteners, and some types of plant-based milks, such as rice milk, have little protein, said Ginger Hultin, a registered dietitian and spokesperson for the Academy of Nutrition and Dietetics.
The Center for Science in the Public Interest, in its comment to the FDA regarding use of the term “milk”, suggested that rather than ban dairy terminology for nondairy products, it should require plant-based milks to disclose on packaging when certain key nutrients are present in lower amounts than in dairy products; examples might be Vitamin D, calcium and protein. That’s especially important for young children, who get a lot of their nutrients from milk, the organization said.
Dairy industry responds
The dairy industry is arming itself against the competition with innovations of its own, after years of disinvestment.
Dairy Management Inc., which is funded by a mandatory fee on farmers, has shifted its focus from traditional advertising to working with milk manufacturers to launch products that address the consumer interest in health. The group helped launch Fairlife, which uses a special filtration process to produce a lactose-free milk that is higher in protein and lower in sugar than regular milk.
The group also worked with Dean Foods to launch Trumoo After Dark, a line of adult-focused milks with flavors such as “vanilla and chai spice” and “dark chocolate salted caramel.” Those products are indulgences but also can be used to highlight milk’s melatonin content as a way to promote sleep, said Paul Ziemnisky, vice president of innovation at the organization.
Despite its challenges, dairy milk is seeing growth in some segments. Sales of whole milk are rising as wellness trends reject the anti-fat ethos that drove dieting culture 20 years ago, Ziemnisky said. Also rising are sales of flavored and lactose-free milks, he said.
The a2 Milk Company, an Australian company with U.S. headquarters in Boulder, Colo., works with farmers on cow genetics to produce milk it claims doesn’t cause digestive issues. The company says that many people who have trouble digesting dairy products aren’t intolerant of lactose but of the a1 protein naturally found in about a third of cows, so it creates a supply chain of milk sourced only from cows that produce the a2 protein. The brand is 11% of the milk market in Australia and hopes to find converts in the U.S.
“We feel this is part of the savior of the U.S. dairy system,” said CEO Blake Waltrip.