- The plant milk industry is estimated to grow by 15% annually until 2030, while dairy is expected to grow more slowly at 6% a year
- Plant milks have had a strong relationship with specialty coffee
- Dairy still has substantial market share, but aggressive marketing from plant milk brands means it is being overshadowed in the public eye
FOR THE past decade, plant milks have dominated the conversation in coffee shops around the world. And it’s not all smoke and mirrors – there is a genuine thirst for this new category.
The plant milk industry is projected to grow by 15% annually until 2030, when it is projected to be worth more than $120 billion. In contrast, the dairy milk industry is expected to grow at a rate closer to 6% per year during the same period.
But despite this lower projected growth, the dairy industry is older and more established. Valued at nearly $900 billion, with more than 900 billion litres of milk produced every year, dairy is a staple in the coffee sector and further afield around the world.
Throughout the 20th century, dairy milk’s ubiquity was driven by strategic marketing campaigns. Ads from the 1940s to the 1980s emphasised its role in promoting health, highlighting its calcium content for strong bones, teeth, and muscles.
In the 1990s, the narrative for dairy milk began to shift – presenting it as a necessity. The “Got Milk?” campaign by the US dairy lobby used “deprivation marketing” to position it as a crucial part of daily life. It didn’t matter whether or not it was good for you – “what mattered was that all food paled in taste without it”.
This mindset has historically extended to the coffee sector. However, plant milks have recently begun to take centre stage – and dairy seems to have lost its voice.
Dairy has lost its voice
The plant milk sector has undergone a substantial amount of investment in recent years. As such, it is understandable that it is perceived as “overshadowing” dairy.
The coffee sector has certainly played a role here. In the early days, major plant milk brands targeted coffee shops to establish their product as the best alternative to dairy.
These efforts have contributed to dramatic changes in consumer habits. Recent surveys show that 60% of consumers have tried plant milks in coffee shops, and the New York Times reports that in 2022, Generation Z bought 20% less dairy milk than the national average.
Plant milks have essentially generated enough of a buzz that nobody talks about dairy any more. This might raise questions about the current state of the dairy industry – has it conceded the spotlight, or is it exploring new avenues?
The reality is that dairy is still active, and colossal, despite its loss of momentum. It is also striving to reclaim lost market share.
Modern versions of the ‘Got Milk?’ campaign, like ‘Gonna Need Milk’, collaborate with athletes, prominent video games like Fortnite, and causes like women’s empowerment and gender equality to resonate with younger audiences. The focus appears to be shifting from the product itself to addressing subjects that matter to their target demographic.
Plant milks do still dominate the conversation, but it’s worth noting that this doesn’t necessarily translate to increased market share. In 2020, over 90% of all coffee-based beverages in cafes were prepared using dairy products, for example.
“Consumer preferences have shifted over the 10 years we have operated – plant-based milks have increased in popularity massively, but whether this has affected the dairy industry I would question,” says Paul Draper, owner of Bread & Honey Coffee.
Legal disputes
While dairy might have struggled to reclaim its prominence in the public eye, in the legal arena, it is more active than ever.
In 2014, Swedish courts sided with the Swedish Dairy Association in their case against Oatly’s slogan, “It’s like milk, but made for humans”.
Not long afterwards, a landmark European Union (EU) Court of Justice ruling in 2017 stated terms like ‘milk’, ‘cream’ or ‘butter’ can only be used for animal-based products. Ever since, EU plant milk products have had to adopt alternative terms, like “oat drink”.
These rulings do vary from country to country, however. In the US, the FDA has allowed plant milks to use the term “milk”, as American consumers are “not confused by the difference”.
Efforts have recently intensified with the proposal of Amendment 171. This aims to remove all “dairy-like terminology” such as “creamy” from plant-based products; prohibit climate impact comparisons between the two industries; and ban any packaging that appears visually similar to dairy’s.
However, this amendment was rejected by the EU in 2021, which claimed that it contradicted the aim of creating more sustainable food and agricultural production networks. In addition, strong public support saw more than 450,000 people sign a petition opposing the amendment.
So, what now?
Well, as the plant milk matures, and the excitement around newer dairy-free alternatives subsides, consistency and cost will likely become a more crucial consideration for coffee shops and consumers. In the past year, plant milk prices have risen by up to 14% due to increased production costs and unfavourable harvest conditions.
“I think we also need to consider that some dairy alternatives are just awful to work with, taste average and are expensive compared to dairy,” Paul says.
Nonetheless, dairy is likely to retain its mammoth presence in the coffee industry. It will clearly continue to coexist alongside the alternative milk sector – which isn’t going anywhere – but what happens next remains to be seen. The big question is whether or not dairy will be able to innovate at the same level as its new rivals.
