Sales of milk as a beverage have fallen to the lowest level in nearly 30 years with more than half of U.S. adults no longer consuming the dairy industry’s most iconic product.
In 2011, total U.S. beverage milk sales were 53 billion pounds – about 6 billion gallons – the lowest level since 1984, according to U.S. Department of Agriculture figures released in August.
Whole milk beverage sales in 2011 were less than half their level from the early 1980s, according to the Agriculture Department.
«We have known there’s been a continuous decline in per-capita milk consumption for many years, going back even further than 1984,» said Vivien Godfrey, CEO of the Milk Processor Education Program known for the «Got Milk?» and milk mustache advertising campaigns.
Shifting consumer habits and a flood of new beverages in the marketplace, including sports drinks and bottled teas, have taken a toll on beverage milk sales, Godfrey said.
While Americans consume about the same number of gallons of beverages as they did in the past, they’re drinking a lot less milk. «Milk has lost out to other beverages, primarily bottled water,» Godfrey said.
Not giving up, the dairy industry has chosen «breakfast-at-home» as one of its battlegrounds for increasing milk sales. Americans still drink more milk at the breakfast table than during any other time.
«It’s our territory that we have to defend,» Godfrey said. «Breakfast at home accounts for the highest portion of milk consumption, by far, of any meal occasion. So we are going to ‘fish where the fishes are.»
Consumption of chocolate milk as a sports recovery drink is another area the industry is promoting, based on evidence that milk’s protein, carbohydrates and sodium are optimal for refueling tired muscles.
It could bring many adults back into the dairy industry’s fold, especially if they question the nutritional value of other beverages.
«We believe many athletes would rather consume milk, that’s all natural, instead of something concocted in a laboratory,» Godfrey said.
Schools are another battleground for the dairy industry because it doesn’t want to lose more market share to other beverages, including soda, bottled water and energy drinks.
«If we have 55 million kids going to school each and every day, and we don’t present them with a product they like and comes in a handy container, then we have lost them for a lifetime,» said Tom Gallagher, CEO of Dairy Management Inc.
Most of Wisconsin’s farm milk is used to make cheese. But, nationwide, the sales decline of milk as a beverage is a critical issue, Gallagher said.
«If we don’t see fundamental changes in the milk business, and I don’t mean incremental changes, then milk is going to become an irrelevant beverage at some point,» he said.
Meanwhile, the industry has been saddled with clunky labeling requirements such as «1% milk» when it would rather call that product «99% fat free.» Labels such as «skim milk» also don’t mean much to consumers not familiar with industry standards.
The labeling issues ought to be addressed so that milk becomes a more consumer-friendly item, according to Gallagher. There’s also a pressing need for product innovation.
«We can’t keep thinking that we can grow the business by producing more gallons of milk. People want on-the-go packaging, and they want a shelf-stable product they can refrigerate when they want or maybe not refrigerate it at all.»
Some Dairy Foods Soaring
Sales of yogurt and other dairy products have offset much of the decline in sales of milk as a beverage. Yogurt consumption is up 400% from 30 years ago, according to the Wisconsin Milk Marketing Board.
Cheese consumption has risen, too, and Wisconsin has a 48% share of U.S. specialty cheese sales, said Patrick Geoghegan, a WMMB senior vice president.
The profit margin on milk as a beverage is slim, and it’s not uncommon for milk producers to lose money on the product.
In March, dairy farmers pocketed about 4 cents on every gallon of milk sold in stores. In July they lost 32 cents per gallon, according to Gallagher, because of the drought that resulted in a steep rise in dairy-cow feed costs.