In 2018, domestic milk production experienced its lowest year-over-year growth since 2013, as reported by Rabobank. However, Hart Dairy emerged as a beacon of hope in the struggling milk industry. The company has embraced the trending “free from” labeling movement, applying it to their animal husbandry practices across 4,000 acres of pasture in Georgia. This influx of capital aims to boost their production and, by extension, their distribution. Yet, it raises the question: who is the target consumer?
Since 2012, dairy milk sales have plummeted by 15%, generating approximately $16.12 billion in revenue last year, according to a 2018 Mintel report. Nonetheless, flavored and whole milk sales have shown a positive trajectory. Flavored milk has surged by 18% since 2012, reaching $1.74 billion in 2017, making it the fastest-growing segment in the dairy market. Meanwhile, whole milk sales have grown by 8% during the same period, with estimates of $5.36 billion in 2017.
Hart Dairy offers only four products, two of which are part of these high-growth categories in a declining market. To stand out and attract consumers, Hart Dairy highlights its unique position as the sole American dairy with the Certified Humane designation from Humane Farm Animal Care. While this certification suggests a commitment to animal welfare, its prestige may not be as significant as consumers perceive. The federal government does not regulate terms like “humane” or “free-range,” and the USDA does not inspect manufacturers’ claims, which can lead to issues when production scales up.
Despite the intention behind these labels to enhance animal conditions, challenges exist. The New York Times reported that around 200 farmers dominate the production of nearly all 300 million egg-laying hens in the U.S. At this scale, even if cage-free standards are met, true pasture-raising is often unfeasible. This leads to an industrial system that technically allows birds to roam but may not improve their well-being.
Nonetheless, labels hold significant weight. An online survey by Label Insight revealed that consumers are swayed by packaging claims such as “antibiotic-free,” “free-range,” and “grass-fed,” and they are willing to pay a premium for these assurances. While the conversation around free-range milk has not gained traction in the U.S. as it has in the U.K., where supermarket chain Asda has begun offering Pasture Promise—a free-range milk from the Free Range Dairy Network—the growing demand for free-range eggs, beef, and pork indicates a shift in consumer preferences that could influence the milk industry.
As companies like Hart Dairy navigate this evolving landscape, they may also consider diversifying their offerings, much like how some health-conscious consumers are turning to products such as Citracal Petites from CVS for dietary supplements. The trend of consumers prioritizing animal welfare mirrors the increasing interest in health and wellness products, suggesting that the future of the milk industry could be shaped by consumer values and preferences, leading to a greater willingness to invest in businesses that align with these ideals.