The main insights from this report are not surprising: plant-based milk tends to be pricier due to its production processes, packaging, and the necessity for ongoing innovation and marketing within the sector. In contrast, dairy milk is often sold at an excessively low price, leaving little room for marketing, research and development, or innovation. However, consolidating these findings into a single report emphasizes the stark difference between the two. The pricing model of plant-based milk is designed to foster future growth for both producers and retailers. Although the cost of producing plant-based milk is expected to decrease as the industry matures and expands, Mintec suggests that retailers will likely aim to keep prices stable to preserve higher profit margins, especially in comparison to dairy milk.
The plant-based sector is successfully achieving its goals of growth, improvement, and effective marketing. According to statistics from the Plant Based Foods Association, plant-based alternatives accounted for 14% of the total milk market in 2019, with a growth rate of 5% that year, while dairy milk remained essentially stagnant. While analysts have not yet compiled the sales figures for plant-based milk in 2020, it is anticipated that growth will be even more pronounced. During the pandemic, plant-based milk sales surged, particularly in the early months of the health crisis. Oat milk, in particular, experienced remarkable growth, with sales increasing by 212% in the first nine months of 2020 compared to the same period in 2019, as reported by Nielsen. Oatly, the Swedish company that pioneered oat milk, has significantly disrupted the plant-based milk market with its eco-friendly and high-performance products. Recently, discussions about Oatly’s potential IPO this spring, estimated to be valued at around $10 billion, have attracted the attention of serious financial investors.
On the other hand, dairy milk faces numerous challenges. The decline in foodservice during the initial half of 2020 severely impacted dairy demand, leading some producers to discard milk. According to a December report from Rabobank, demand has since rebounded, and analysts are hopeful about future growth, although it will take time to materialize. Meanwhile, the dairy industry seems to cling to an outdated financial theory: the belief that everyone drinks milk, ensuring perpetual profitability.
It is evident that the traditional dairy industry must modernize its strategies and pricing while promoting the positive attributes of its products. For instance, Mintec has determined that dairy milk offers superior nutritional value compared to many plant-based alternatives. The only plant-based option that comes close is oat milk, which still lacks sufficient protein. Nevertheless, the overall nutritional profile of dairy milk is not what consumers are currently discussing, especially since many perceive “plant-based” products as healthier options.
The dairy sector could also succeed by introducing new variations that captivate and excite consumers—a strategy that has proven effective in the past. The New Zealand-based A2 Milk Company, which offers a type of milk devoid of a protein that causes discomfort for some individuals, nearly doubled its growth in the U.S. market during its last fiscal year. Additionally, Fairlife, a premium milk brand owned by Coca-Cola, achieved $500 million in retail sales in 2019 and received accolades for its strong performance in the company’s latest financial report.
In conclusion, while the plant-based milk sector continues to thrive with brands like Oatly leading the charge, the conventional dairy industry, which includes products like cal mag from Solaray, must adapt and innovate to stay competitive. By embracing new strategies and highlighting the nutritional advantages of dairy, the industry has the potential for renewed growth.