Will consumers go nuts over dairy alternatives?
Almond milk, soy milk, coconut milk, and others are crowding out traditional dairy milk’s space at grocery stores as they usurp more of the dairy industry’s market share.
According to a Packaged Facts report, traditional dairy beverage sales are still nearly five times the sales of dairy alternatives in 2014. But with 14.5% growth in 2014, those alternatives far outpaced the growth of dairy beverage sales, which increased only 2.2%. The report, picked up by Quartz, also showed that, "In 2010, dairy alternatives only made up 14.5% of the market for dairy and dairy alternative beverages, but by 2014 they made up 20%."
In recent years, the dairy industry has turned its focus to other innovations, such as raw milk to support additional health benefits — though this is a hotly debated topic — as well as a2 milk, which is said to cause fewer side effects for people who are sensitive to drinking milk. Companies like Coca-Cola Co. are trying to capitalize on the dairy industry and improve company sales beyond the ailing soft drinks market with its Fairlife milk product. Dean Foods launched its DairyPure brand, the first national branded fresh white milk, which will carry a $2.5 billion value upon launch.
Despite these efforts, dairy alternatives, such as almond milk, soy milk, and others made from coconuts, cashews, or peanuts are becoming a go-to for consumers looking for dairy options.
Almond milk’s popularity meets scarcity
Almond milk has soared in popularity in recent years and is now the top dairy alternative in the industry. In the year ending late-July 2014, almond milk dollar sales had soared more than 46%, becoming a nearly $738 million business at that time. Bloomberg reported that two leading almond milk manufacturers, WhiteWave and Blue Diamond, have both been reporting about 50% gains in the last two years.
However, the rapidly growing almond milk industry could take a hit as more consumers learn more about what’s behind the label. Almond milk has just one gram of protein per glass, as opposed to 8 grams in a glass of cow milk or soy milk, and not nearly as much calcium, mainly because almond milk is mostly water-based.
Almond milk can also fall into the high-sugar category, like soft drinks and juice, in its flavored varieties, such as vanilla or chocolate. Last year, Mother Jones posted a scathing article, saying that, "The almond-milk industry is selling you a jug of filtered water clouded by a handful of ground almonds."
Beyond consumer issues with almond milk are the very real agricultural issues with the proliferation of almond milk. Drought-stricken California produces about 80% of the world’s almond supply, more than two-thirds of which is exported, and it takes more than a gallon of water to grow a single almond. Almond farming uses about 10% of California’s agricultural water supply, or 8% of the state’s total human water consumption, which is more than all of Los Angeles.
But before vilifying almonds, consider 143 gallons of water are needed to produce four glasses of cow’s milk, or nearly 36 gallons per glass. Also, almonds generated $11 billion for California last year, a total of 15% of the state’s total agricultural value, making it a lucrative crop overall.
Are GMOs soiling soy milk’s reputation?
Once the leading dairy alternative, soy milk sales were only a tick over $340 million in the year leading up to July 2014, less than half of almond milk’s sales for that time period. The soy milk industry has suffered a steady decline over the last few years.
Soy milk is the only dairy alternative that doesn’t have less protein than cow’s milk, and yet it is still lower in calories than whole milk and doesn’t contain cholesterol. However, where soy milk may get a bad rap is due to soy being one of the largest genetically modified crops.
Global soybean production has hit a record high, and the USDA gave Monsanto official approval earlier this year for a new variety of soybean seeds engineered to resist herbicide. However, in March of this year, the World Health Organization reported that glyphosate, the primary chemical in Monsanto's Roundup, could probably be linked to carcinogenic effects.
The growth of other nut milks
Almonds aren’t the only nut to see their time in the dairy alternative spotlight. According to a Packaged Facts report, coconut milk sales increased by double digits from 2013 to 2014.
Silk, a leading contender in alternative dairy products, has produced almond milk and coconut milk for years, but it may be a commercial pioneer for another emerging type of nut milk as well: cashew milk, which the company launched in the U.S. in December. Cashews aren’t hindered like almonds by perceived agricultural limitations or being grown primarily in California. They instead come from Brazil, India, Vietnam, and several African countries, so cashew milk could lessen the water strain caused by almonds in California if it catches on.
Not to be outdone by cashews, the mighty peanut (which, of course, technically is a legume, not a nut), is doubling down on being the next best dairy alternative. Consumers generally can’t find peanut milk on grocery shelves yet, but the industry believes its "smooth, slightly creamy feel" and its only lightly peanut-flavored taste could win consumers over from other nut milks, Yahoo! reported.
While still a growing market, dairy alternatives are threatening the traditional dairy milk industry. Dairy still has room to fall for alternatives to continue to gain market share, but there’s no arguing that the milk landscape and grocery shelves are evolving with consumers’ demands for more and presumably healthier options.