A Showdown in the U.S. Milk Aisle Continued at the End of July

FMCG and Retail | 08-03-2018

For increasingly more Americans, the definition of milk has expanded to include dairy alternatives over the last few years. But whether we can truly classify products like almond or soy milk as “milk” has been questioned by the U.S. Food and Drug Administration (FDA). Regardless of what it’s classified as, consumers are shopping the alternative milk space, as sales have seen nearly double digit dollar growth consistently for the last 12 weeks.

Nielsen’s Friday morning data for the week ending July 28, 2018, shows that sales of traditional milk products dropped 4% year-over-year to $227 million. Conversely, sales of milk alternatives are up 8% over the same period, reaching nearly $35 million. Still, not all traditional milks have struggled. During the week, Maola Milk & Ice Cream Co., Grupo Lala S.A. DE C.V. and The A2 Milk Company had the highest rise in dollar sales compared to a year ago.  

Dairy Disruption

Plant-based milks are booming as many U.S. consumers seek to eliminate dairy from their cereal bowls and coffee cups, mostly for health, welfare or environmental reasons. Plant-based milk alternatives still remain a smaller share of the overall market compared to dairy milk. However, dollar and unit sales for the dairy alternative category have grown over the past year, while both dollars and units have declined for the dairy milk category overall.

Diving deeper into the non-dairy milk category, almond milk represents the largest share of the category and has benefited from consumers desire for plant-based milks. Dollar and unit sales of almond milk have each risen 10% year-over-year as of the 52-weeks ending June 30, 2018. However, smaller, newer entrants to the category like oat milk and non-diary milk blends have had the highest growth, with dollar sales up 23% and 51%, respectively, during the same annual period. Meanwhile, dollar and unit sales of soy milk, which was one of the first non-dairy milks to gain broader consumer attention and currently the second largest share of the category, are down over the same period (-9% in both dollars and units).

The Full Fat Comeback

In the shift to more natural, wholesome ingredients, consumers are embracing fuller fat offerings. And within traditional dairy milks, whole milks are winning sales. Cow’s milk represents the largest share of the traditional milk category, and whole milk was the only option to see unit consumption growth year-over-year as of the 52 weeks ending June 30, 2018. While lactose-reduced or -free milk represents a significantly smaller share of sales within traditional milk than cow’s milk, a similar trend emerged over the same period.

Milk’s Price Pressure  

Over the past year, alternative milk prices have seen a slight increase while traditional milk prices continue to fall. Still, the entire dairy department remains influenced by deflationary pressures. With prices dropping, the competition for consumers’ dollars is more important than ever.

Product promotions aren’t the only means to drive sales, and over-reliance on this can often exacerbate price sensitivity. Dairy beverage manufacturers will need to identify innovative and creative ways to capture consumers’ attention and demonstrate the value in their brands. For example, commitments to transparent labeling can have strong impacts on brand equity.  

Data for this article was made possible by Nielsen Friday morning data delivery, the earliest FMCG market read available. Learn more about Friday morning data delivery.

Tagged:  HEALTHY EATING  |  SHOPPER  |  CPG AND RETAIL  |  NIELSEN FIRST LOOK  |  GROCERY

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