Is the Milk Industry Circling the Drain?

The dairy industry hopes a $500 million cash infusion can reignite sales. Instead, the worst is yet to come.
milk

Sales of milk have been horrible lately, but nothing tells the story like the long-term picture.  In 1982, the United States population stood at 232 million. Today it’s 317 million people. So if America’s milk consumption per person were flat, we’d still expect a 36 percent increase in US milk sales from 1982 just to keep pace with population growth.  Instead, America’s total milk consumption for 2014 is dead-even with 1982 figures. In other words, Americans are drinking about a third less milk per person than they were a generation ago. And the market for whole milk has fallen off a cliff—dropping from 290 pounds per capita in 1950 to just 45 pounds today.

True, the dairy industry was massive in 1982, and remains massive today. But what frightens milk producers is the possibility that Americans could be losing their taste for milk altogether. As cow’s milk loses shelf space to soys milk and almond milk, and studies emerge questioning whether milk is healthful in the first place, we may be on the brink of witnessing the dairy industry progress from decline to collapse. Nobody seems more worried about this than Tom Gallagher, who runs the dairy industry’s top promotional organization, Dairy Management Inc.

Gallagher says, “The numbers are devastating. At some point, milk could become an irrelevant beverage for the average consumer.”

In any case, Gallagher and the US Dairy Industry have no intention of vanishing without a fight. They’ve just announced plans to spend half a billion dollars on ads and packaging improvements.

But the trouble with milk isn’t with the packaging or the branding or the advertising. The problem is with the milk itself. More and more people are deciding vegan milks are a superior product for a host of reasons ranging from animal cruelty to environmental sustainability. Sure, Coca-Cola has just unveiled a processed milk product that it expects will eventually “rain money.” But given that the stuff is expected to sell for double the price of conventional milk, and addresses few of milk’s underlying problems, good luck with that.

One problem facing the dairy industry is that factory farming is near the end of the road, in terms of measurably boosting efficiency. Cows have been selectively bred for more than fifty years. In the early days, boosting milk yields was easy. But now that the average cow produces at least triple the milk of a cow from the 1950s, there are diminishing returns in terms of gaining further efficiency improvements. And cows already have widespread and chronic problems associated with their high milk yields. The fact that the milk industry has to always be looking over its shoulder for the next undercover investigation can’t be helping matters either. There’s only so many times the industry can claim that the latest abuses are “not the norm” before it loses all credibility.

Meanwhile, the vegan milk industry is just now ramping up, with a stream of exciting new products. Thanks to the fact that vegan milks are going mainstream, these products are becoming increasingly price-competitive with conventional milk. Given that it’ll always be cheaper to grow a row of soybeans or tend an almond tree than it is to feed and care for a cow, the outlook for America’s milk industry is sure looking bleak.