Milk Consumption Dips
Even the milk-thirsty Great Lakes region, which leads the nation in flavored milk consumption, has not curbed the downward trend that has gripped the dairy industry for decades.
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 are 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.
If one is not lactose intolerant, chocolate milk is a pretty good sports recovery drink, said Lori Koss, assistant professor in the department of kinesiology at University of Wisconsin-Milwaukee. It is high in water content and protein, and the sugar helps in recovery, she said.
Schools are another battleground for the dairy industry because it does not 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., a national organization that promotes dairy products and is funded by dairy farmers.
Most of Wisconsin's farm milk is used to make cheese. However, 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.
The word devastating does not apply yet, but it is "pretty darn close," Gallagher added.
It irks the dairy industry that some products it competes with use the name milk but aren't the real thing. The industry says plant-based products such as soy milk and almond milk should be relabeled because they do not come from a cow.
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 do not 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 is 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."
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.
It may be too much for the industry to halt the trend of fallen sales of milk as a beverage, especially whole milk that is no longer in favor with people trying to reduce the calories they consume and the fat in their diet.
Fearful of antibiotics and synthetic hormones used in the dairy industry, many people have simply stopped drinking milk, said Melissa Abbott, senior director of culinary insights at the Harmon Group, a market research firm in Bellevue, Wash.
Dairy producers say there is no evidence that any of the practices are harmful, but dairy-free diets are a long-term trend rather than a fad, according to Abbott.
"Average consumers have all kinds of unhealthy junk in their homes, but they will not buy milk that has hormones in it," she said.
The gallon milk jug was invented to feed a nation that, decades ago, was largely eating most meals at home as a family.
However, times have changed, and the dairy industry has not always kept up with marketing trends aimed at more diverse, less predictable lifestyles. The industry has not done what successful brands should do to grow, according to Gallagher.
"The first thing we have to look at is ourselves rather than blame our competition," he said. "People are still eating yogurts, cream cheeses and other products . . . but if you walk through the grocery store there's shelf after shelf of our competition. And we should be there, too."