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05/24/2022

Plant-Based Dairy Reinvigorates Milk Category

Alternative segment has become the growth engine for department
Bridget Goldschmidt
Managing Editor
Bridget Goldschmidt profile picture
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Plant-Based Dairy Reinvigorates Milk Category
Now accounting for 16% of all retail milk dollar sales, plant-based milk is the growth engine of the milk category.

It’s well known that plant-based milk often serves as a gateway for consumers to a plant-based diet, but new data from the Plant Based Foods Association, The Good Food Institute (GFI) and market research firm SPINS shows just how important these products are.

While the data reveals that U.S. retail sales of plant-based foods reached an all-time high of $7.4 billion in 2021, and that overall, plant-based food retail sales grew three times faster than total food retail sales, with most plant-based categories surpassing their conventional counterparts, plant-based milk was a particular standout. 

Dollar sales for plant-based milk increased 4% and 33% in the past three years to hit $2.6 billion, while animal-based milk sales fell 2% in 2021. Now accounting for 16% of all retail milk dollar sales, plant-based milk is the growth engine of the milk category, contributing $105 million in growth, while animal-based milk’s decline equated to a loss of $264 million. In the natural enhanced channel, plant-based milk makes up 40% of all milk sold, up from 34% in 2018. Forty-two percent of households buy plant-based milk, and 76% of plant-based milk buyers bought it several times in 2021.

As the biggest category in the plant-based market, plant-based milk continues to benefit from product innovation, and greater merchandising space and assortment. Almond milk is the category leader, accounting for 59% of the total category, with oat milk the second-largest segment, having grown more than 44 times in the past three years to now make up 17% of category sales, up from just 0.5% in 2018. Plant-based milk is now the innovation leader in the milk category, backed by key advancements in ingredient diversification and product development to enhance taste, functionality and nutrition. 

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Plant-Based Dairy Reinvigorates Milk Category
Forty-two percent of households buy plant-based milk, and 76% of plant-based milk buyers bought it several times in 2021.

Effect on Adjacent Alt-Dairy Categories

The success of plant-based milk has laid the groundwork for significant growth in other plant-based dairy products, which attained $2.1 billion in total sales in 2021. Categories such as ready-to-drink beverages, and plant-based creamers — which now has a 9% share of all creamers sold — saw rapid growth as plant-based milk consumers increasingly moved into these adjacent categories.

Across the store, plant-based dairy dollar sales are growing more quickly than those of many conventional animal products. In 2021, plant-based yogurt dollar sales rose 9%, three times the rate of conventional yogurt, to a 4.5% dollar share. Plant-based cheese grew 7%, while conventional cheese decreased 2%, and plant-based ice cream and frozen desserts increased 31% over the past two years to reach $458 million. In the natural enhanced channel, where retail trends start, dollar share of plant-based creamers rose to 33% of all creamers sold, while plant-based yogurt increased to a 21% share of all yogurt.

Still Going Strong

This year, milk alternative sales are continuing their upward rise, logging a 3.8% increase in dollars and a 1.5% increase in units, according to IRI data for the 52 weeks ending April 17. Meanwhile, for the same time period, dairy refrigerated milk experienced a 1.7% uptick in dollar sales and a 4.2% decline in units.

Why do plant-based alternatives have a much higher household penetration in milk than in meat — 42% versus 19% in 2021, per GFI data? One key reason is likely lactose intolerance, a condition where the body develops a reduced ability to digest lactose, the sugar present in dairy milk, notes Anne-Marie Roerink, president of San Antonio-based 210 Analytics. In the United States, about 36% of people have lactose malabsorption, according to the National Institute of Diabetes and Digestive and Kidney Diseases, with African Americans, Native Americans, Asian Americans and Hispanics more likely to have the condition, which causes such issues as bloating, diarrhea and gas following the consumption of milk products. Therefore, as Roerink observes, while there may be a medical need to purchase milk alternatives, there’s no such need with meat. 

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