- Non-dairy milk sales in the U.S. have increased 61% during the past five years. They are estimated to reach $2.11 billion in 2017. At the same time, dairy milk sales have fallen 15% since 2012, reaching an estimated $16.12 billion last year, according to Mintel’s latest report.
- Even as almond, soy and coconut dominate the non-dairy category, analysts predict greater innovation with other varieties.
- Sales of flavored milk, the fastest-growing category in the segment, are estimated to reach $1.74 billion in 2017, an 18% increase from five years earlier. Whole milk sales have increased 8% since 2012 and are estimated to hit $5.36 billion in 2017.
Twenty-five years ago milk processors in California banded together to create a marketing plan to counter declining sales of the beverage as Americans switched to sodas and sports drinks. This group became the non-profit California Milk Processor Board, and its efforts led to the creation of the iconic Got Milk? slogan.
Last year, the board announced that it was ending its relationship with the ad agency that created the campaign in order to look for new ideas for marketing its product as consumers switch to almond, rice and soy milk. Experimentation with new varieties of plant-based milks doesn’t seem to be stopping there. Pecan, quinoa, hazelnut and flax milks also are gaining traction, according to Mintel’s research.
“Innovation will be a catalyst to drive the category forward in 2018 as both mainstream bases like almond and alternative plant bases offer added functional benefits and unique flavors,” Megan Hambleton, a beverage analyst at Mintel, said in the report. “We predict that new plant bases such as cashew and rice will allow new entrants into the non-dairy milk category to eventually surpass the soy milk segment, one of the first non-dairy milk segments to really take off with consumers.”
With more insight into the impact of hormones and enzymes — such as the effect lactose has on individual consumers — people have been seeking alternatives to traditional milk. Beginning a few decades ago with Silk and now Vita Coco, innovators and upstarts have come to their rescue. There seems to be no stopping the flood of plant-based milks to see what consumers will like.
The decline in traditional milk consumption seems to follow the direction of other foods that were once on the American consumer's weekly grocery lists. Several of the Got Milk? television and print ads paired milk with a bowl of cereal and even a popular brand of sandwich cookie. As the consumer's breakfast and snacking habits change, cereal makers, in particular, have struggled.
The Mintel report suggests one avenue of growth for traditional milk producers is flavored varieties, which are forecast to grow by 21% by 2022.
“Appealing to kids and adults, flavored milk is one of the only milk types that lends itself to multiple occasions such as being consumed on its own as a thirst quencher, accompanying a meal or as a post-workout recovery drink,” Hambleton says. “With the increase in flavor options, as well as innovations that promise better nutrition, flavored milk will be a segment that helps fill the gap left by skim and low-fat milk options.”
Another avenue for traditional milk producers could be its role as an essential ingredient in producing baked goods as well as cheese, yogurt and butter. In a switch from margarine, sales of butter increased about 8% last year. That amounted to 940,000 metric tons, the most in 40 years.
“Whole-fat options thrive in the dairy milk category as consumer preferences shift in favor of full-fat, whole milk products that appeal due to taste, nutritional content and are viewed as beneficial for both children and adults,” Hambleton said.
To spur sales, milk producers could promote organic items from pasture-raised, grass-fed cows. Premium dairy products, such as ice cream, are another solution manufacturers could pursue more to turn around lagging sales. And cottage cheese is another option that offers more health benefits while still being versatile enough for flavor innovations like strawberry chia sun-dried tomato and kalamata olive. Even as milk battles the influx of new plant varieties, producers of the beverage and other dairy products are not going away anytime soon.