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Dairy Product Trends - Fluid Milk

Dairy Product Trends - Fluid Milk
By Sarah Cornelisse
Whole, flavored, lactose-free and organic milk are increasingly desired by consumers as indicated by sales numbers of these milk types. Marketing to millennials with high incomes is one strategy to be considered.
The oft-reported decline in fluid milk consumption finds average Americans drinking 101 pounds less in 2018 than they did in 1975 (Figure 1). While in 1975 consumption stood at 247 pounds per person, in 2018 per capita consumption was down to 146 pounds per person; a decrease of 41 percent.
Figure 1. Per Capita Fluid Milk Consumption
Likewise, Mintel (Figure 2) shows the decline in glasses of milk consumed per day among dairy milk buyers from 2013 to 2018. While households with children consume more milk than households without, average daily consumption has decreased by approximately half a glass in both groups during that five-year period.
Figure 2. Milk Consumption per day, by average number of glasses per household
The reasons given for the fall in fluid milk consumption are numerous, from the decline of cereal consumption to our increasing on-the-go lifestyle. Perceptions regarding nutritive value and digestibility are also affecting milk consumption; only 37% of iGen (those born between 1995 – 2007) milk purchasers indicated that milk is nutritious opposed to 65% of the WWII/Swing generation (those born in 1945 and before) (Mintel, 2018).
Looking only at total fluid milk consumption, however, fails to reveal shifts that are occurring at a milk type level. Indeed, if we look at fluid milk sales by type, as show in Figure 3, we see that whole milk and flavored milk are increasingly being purchased.
In 2000, per capita consumption of whole milk was 66 lbs/person. Falling to a low of 44 lbs/person in 2014, whole milk consumption rebounded to 49 lbs/person in 2018, an increase of five pounds per person.
Reduced-fat, 2% milk consumption stood at 61.92 lbs/person in 2000, rose to 62.08 lbs/person in 2010 and decreased to 48.05 lbs/person in 2018.
Consumption of flavored milk was 13.13 lbs/person in 2000 rising to 14.22 lbs/person in 2018.
Figure 3. Per Capita Fluid Milk Consumption
USDA Agricultural Marketing Service (AMS) reported that from July 2018 to July 2019 there were increased sales of conventional whole and whole flavored milk, 3.6% and 10.4% respectively (USDA AMS). Additionally, AMS estimated that total organic fluid milk sales in July 2019 increased 4.6 percent from 2018. Organic milk categories of that saw increased sales were whole milk (11.4%), reduced-fat 2% milk (10.3%), and flavored fat-reduced milk (17.4%).
Consumer perceptions and value of fluid milk attributes impact their purchase decisions. Real and perceived issues with milk digestibility has led to increasing sales of lactose free milk. Dairy Management Inc. (DMI) data reported in a 2018 Hoard’s Dairyman article stated that lactose-free milk sales rose 10.6% from May 2017 to May 2018. Additionally, sales had risen 79% from 2002.
Interestingly, a study on consumer preferences for fluid milk found that consumers, as a whole, did not prefer whole or lactose-free milk (McCarthy et al., 2017). Additional analysis found that fluid milk consumers found the following characteristics attractive: all natural, organic, reduced fat, vitamin fortified, and added protein.
Milk with specific attribute claims are also increasingly being introduced. 21% of milk launches in 2018 had the “grass-fed” claim, up from 4% of launches in 2014 (Mintel, 2018). The most likely purchaser of “grass-fed” milk were those consumers that categorized themselves as “eco-conscious” (33%).
When milk purchases are looked at by generation/age and income, the following highlights come out. Millennials were the most likely to purchase whole milk (41%) compared to the iGen (33%), Gen x (31%), Baby Boomers (26%) and WWII (19%). Flavored milk is also preferred by the iGen and Millennials, 25% and 23% respectively. Consumers aged 18-34 and with an income greater than $75,000 were also the most likely to purchase lactose-free and organic milk (Mintel, 2018).
The data and trends described above are valuable pieces for small-scale dairy processor strategic business and marketing planning and decision-making. While the overall outlook for fluid milk can seem discouraging, there are bright spots. Sales figures indicate that whole, flavored and organic milk are increasingly sought by consumers. However, this should be tempered by consumer preference research showing that these characteristics are not required. These seemingly contradictory results reveal the complex consumer environment that exists.
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