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Dairy checkoff: Milk can win beverage wars

Only 3% of households buy plant-based milk alternatives.

Fran O'Leary, Wisconsin Agriculturist Senior Editor

December 13, 2019

6 Min Read
smiling woman drinking glass of milk
MOST PREFER MILK: Ninety-four percent of all U.S. households still buy milk. CentralITAlliance/Getty Images

Despite declining fluid milk consumption in the U.S., Dairy Management Inc., the organization that manages the national dairy checkoff, believes there are reasons to be optimistic about the future of milk consumption.

“Fluid milk is still a powerhouse category. Ninety-four percent of U.S. households still purchase milk,” says Paul Ziemnisky, executive vice president of DMI. “That means 117 million households are buying milk.”

Of those 117 million households, 65 million are exclusive to milk, meaning they do not purchase plant-based milk alternatives; those households buy 33 gallons of milk per year. Fifty-two million households buy both milk and plant-based milk alternatives. On average, these households buy 29 gallons of milk, compared to 5 gallons of plant-based milk alternatives. Ziemnisky calls this group “explorers.”

“They are trying new things and new flavors,” he says.

The remaining 7 million households do not purchase milk. This represents 6% of U.S. households. Ziemnisky points out that 3% of households are exclusive to plant-based milk alternatives, and the remaining 3% buy neither.

Ziemnisky says societal change is a major contributor to the decline in fluid milk consumption and is driven by four major dynamics:

  1. About 70% of households today don’t have kids.

  2. Of the nearly 30% of households with kids, milk may not be as historically relevant to their culture.

  3. An increasing number of consumers are not sitting down to eat breakfast. As much as 25% of the decline in fluid milk consumption is tied to the decline in the number of people who eat cereal.

  4. In the past five years, more than 600 beverage items have been introduced at retail.

“We’re primarily losing consumers to two beverages: bottled water and coffee,” Ziemnisky says — not plant-based alternative milk products. Fifty-three percent of white milk competitive switching losses are from bottled water, and 11% is from switching to coffee, he says. Flavored and sparkling water are helping to fuel bottled water sales.

The one milk product that is declining in sales is low-fat milk (2%, 1%, skim/fat-free).

“People want whole milk,” Ziemnisky says. “Whole milk sales are growing and now exceed sales of 2% milk [$3.9 billion vs. $3.6 billion per year]. Milk sales rates are crushing plants in terms of overall volume.” 

table showing milk subsegments versus alternatives

Plant-based milk sales are $2 billion per year, while total sales of all white milk are $11.8 billion per year.

“Even flavored milk sales [primarily chocolate milk] are $1.6 billion per year,” Ziemnisky says.

So, what is the dairy checkoff doing to counteract sales of bottled flavored water and coffee? Following are a few examples of DMI’s efforts during the past five years:

  • The checkoff contributed to 1.4 billion pounds of incremental sales from investments in nutrition science (full-fat milk, lactose-free milk, digestive health and chocolate milk as a recovery drink).

  • The checkoff contributed to 1.3 billion cumulative new product pounds, $1 billion in infrastructure investment and $250 million in incremental consumer marketing spent from fluid milk revitalization partners.

  • DMI-led product innovation received national recognition and awards — Shamrock’s Rockin’ Protein beverages were recognized by Convenience Store and Petroleum Magazine as the 2019 Best New Product.

  • Kroger’s Private Selection Primo Pastures flavored milks were recognized by Store Brands as the 2019 Best New Product.

Kroger’s Private Selection Primo Pastures flavored milks

INDULGENT MILK BEVERAGE: Kroger’s Private Selection Primo Pastures flavored milks were recognized by Store Brands as the 2019 Best New Product.

Ziemnisky says DMI is also testing innovation with packaging. “Not many kids 5 to 10 years old can lift a gallon of milk and pour it without spilling,” he notes. “More kids would drink milk if they could access it. We’re working on more kid-friendly milk packaging.”

DMI is also looking into waste reduction, Zieminsky says. “We’re rethinking plastic to help solve the world’s plastics problem — bring back the milkman.”

He says DMI is also working on a number of milk-based beverages that offer new and interesting flavors in portable single servings to give customers the personal, customized, indulgent products they are craving.

Ziemnisky says the decline in milk consumption is less than most people realize.

“We’re losing, on average, 3 ounces of milk at retail per household per week,” he explains. “An increase of just one more serving per household per week could drive significant increase in milk consumption.”

McDonald’s to offer new chocolate milk

Support from dairy checkoff food scientists has helped McDonald’s USA produce a reduced-sugar, low-fat chocolate milk that will be unveiled nationwide in January. The new formulation has 25% less sugar than McDonald’s previous chocolate milk and is no longer a fat-free product.

DMI has had a partnership with McDonald’s since 2009. DMI provided on-site support from food scientists and other resources, and worked closely with the McDonald’s team to create the final product.

new formulation of McDonald’s chocolate milk

MORE NUTRITIOUS: The new formulation of McDonald’s chocolate milk has 25% less sugar than its previous chocolate milk and is no longer a fat-free product.

“Chocolate milk has been a longtime customer favorite at McDonald’s, and U.S. dairy farmers are glad to see the chain roll out a great-tasting chocolate milk that has even more nutritional benefits than previously,” says Pennsylvania dairy farmer Marilyn Hershey, who serves as chairwoman of DMI. “This is a great example of a food-service leader listening and responding to customer demand. It also benefits dairy farmers because McDonald’s will offer an improved milk product to millions of customers, which could lead to similar changes at other restaurants.”

Fast facts about U.S. dairy consumption

  • According to DMI, since the dairy checkoff began in 1983, annual per-person dairy consumption has grown by 73 pounds.

  • The average person in the U.S. consumes about 650 pounds of dairy (milk equivalent, milkfat basis) per year — the same amount that was consumed in 1960.

  • In 1960, people drank more fluid milk than they do today. Consumers today consume far more cheese.

  • Cheese consumption is at the highest level ever, with American-style, Italian-style and specialty cheese segments (e.g., Hispanic cheeses) growing. Cheese consumption has nearly doubled in the past 35 years, from 20.6 pounds per person in 1983 to 38 pounds per person in 2018. Ninety percent of the milk produced in Wisconsin is made into cheese.

  • Cheese is the largest contributor to dairy consumption, as it takes 10 pounds of milk to make 1 pound of cheese. And don’t forget about yogurt, ice cream, cottage cheese, cream cheese and sour cream.

  • Butter consumption is at the highest point it has been in the U.S. in 50 years. The average person eats 5.8 pounds of butter per year, the same as what was consumed in 1969.

About the Author(s)

Fran O'Leary

Wisconsin Agriculturist Senior Editor, Farm Progress

Fran O’Leary lives in Brandon, Wis., and has been editor of Wisconsin Agriculturist since 2003. Even though O’Leary was born and raised on a farm in Illinois, she has spent most of her life in Wisconsin. She moved to the state when she was 18 years old and later graduated from the University of Wisconsin-Whitewater with a bachelor's degree in journalism.

Before becoming editor of Wisconsin Agriculturist, O’Leary worked at Johnson Hill Press in Fort Atkinson as a writer and editor of farm business publications and at the Janesville Gazette in Janesville as farm editor and a feature writer. Later, she signed on as a public relations associate at Bader Rutter in Brookfield, and served as managing editor and farm editor at The Reporter, a daily newspaper in Fond du Lac.

She has been a member of American Agricultural Editors’ Association (now Agricultural Communicators Network) since 2003.

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