Milk Alternatives Gaining Ground.

• Position: DAIRY INDUSTRY

As consumers increasingly seek beverages made from soy, almonds, coconuts, and rice--even peas and oats--the dairy industry is responding with niche products of its own, but more changes are ahead as the traditional gallon jug milk business struggles to compete with plant-based competition.

A report from CoBank's Knowledge Exchange Division, Denver, Colo., predicts continued double-digit growth in the plant-based milk alternatives market. Sales are up 61% over the past five years, with slower growth of 15% to 25% projected by 2022. Meanwhile, cow's milk consumption continues a decades-long slump.

"The total volume of the alternative milk market is still relatively small and is not a major factor behind declining fluid milk sales:' says Ben Leine, CoBank senior dairy economist. "However, plant-based milks are helping revolutionize how the dairy industry does business. Excitement around plant-based milk alternatives has forced traditional milk to differentiate into a number of premium products in order to compete."

Laine cites organic, grass-fed, ultra-filtered, lactose-free, and A2 milk as niche products that buck the downward milk consumption trend. These command a higher price and compete more directly with plant-based alternatives. "Certain value-added dairy milk products will experience

growth alongside plant-based beverages," he asserts.

Most consumers who buy alternatives are not completely abandoning milk. "Nine in 10 households that purchase plant-based alternatives also buy cow's milk and, among those purchasing both, their cow's milk choice is more likely to be organic or from the premium tier of milk products. That opens up opportunity for...