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Why does the US continue to drink less milk?

4 commentsBy John Geuss , 26-Nov-2013
Last updated on 26-Nov-2013 at 12:42 GMT

Why does the US continue to drink less milk?

US milk consumption has been steadily declining since the mid 1970s. But why? DairyReporter.com's US dairy commodities expert and MilkPrice blogger, John Geuss, examines the factors driving the decrease and the industry efforts to reverse the trend. 

Over the last four decades, consumption of milk in the US has changed. 

Consumer trends show a continually shrinking per capita consumption, down 25% since 1975. This decreasing consumption will no doubt continue.

Competition for alternate beverages continually intensifies with the introduction of new products. The trends indicate a reduction of 28 oz (830 ml) of milk per person every year.

The composition of this milk is also changing. In 1975, whole fat milk made up the majority of milk consumed (68%). Today, whole fat milk makes up only 26% of milk sales with 2% fat milk now the market leader with 33% of total milk sales.

There is no reason to expect changes in the shrinking share of market for whole milk. The only unknown is which of the three forms of reduced fat milk will grow fastest. Recent data suggests a change from 2% fat milk to 1% fat milk.

The retail price of milk is not responsible for this loss of per capita consumption. The consumer price of milk has decreased as compared to the overall Consumer Price Index for 'prepared at home' food. 

Since 1975 the relative price of milk has decreased 20% as compared to expenditures for all food items. Increasing milk prices could be responsible for decreasing demand, but the data shows that the price of milk is not increasing.  

Therefore the decrease in milk consumption is clearly a change in consumer buying and consumption habits.

There are also significant changes in processing of drinking milk. There are fewer and fewer processing plants but the size of these facilities has increased dramatically.

Since 1975, the number of processing plants has decreased by 87% and the output of these facilities has increased by 500%. Fewer but larger plants are an indication of the industry’s efforts to reduce cost and increase processing efficiency.

Over time, there have been efforts to change the trend of decreasing milk consumption. Flavored milk like chocolate and strawberry have been available during the entire time span of this analysis. More modern packaging has been developed to improve the image and attractiveness of milk.

Expenditures for advertising have increased and have made the 'milk mustache' an easily recognized symbol of milk drinkers.

However, none of these actions has changed the consumption trends and there is no reason to think that the decreasing trends will not continue.  

The focus of the dairy producer needs to change from one of milk volume to one of milk components.

The growing US export market for dairy products does not include drinking milk because it is too expensive to ship water. US growth in domestic dairy consumption is coming from processed dairy products like cheese and yogurt, not drinking milk.

US dairy commodities blogger, John Geuss.

The US dairy industry must focus on component production, not milk volume. While this seems obvious, producer discussions almost always focus on the volume of milk, not the component output or the individual component levels. 

John Geuss is the editor of US dairy commodities blog, MilkPrice.

For in-depth month-by-month examinations of American dairy commodity movements, visit MilkPrice.

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4 comments (Comments are now closed)

Contributing Factors

At one point I heard the statistic that 25% of milk was consumed with breakfast cereal. I am curious if trends in cereal consumption have also played a role in milk consumption?

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Posted by Jason Nuttle
05 December 2013 | 00h11

Tasteless, nutrition-less, white water

To slightly rephrase Tom Van Nortwick's comment below. When producers (They are no longer called dairies i'm told) stopped selling milk and started selling white water in milk jugs they lost me and many others as customers. They lost us and are losing others as their deceptions are being uncovered. The contents of the milk jugs in the store are white. Skim milk is not white it is light blue. Whole milk is not white it is cream colored because of the cream content. People do not like the flavor of the current so called milk product even when sweetened with high fructose corn syrup. It tastes flat. It has the wrong mouth feel and the nutrition is no better than a carbonated beverage. I for one welcome the coming demise of the giant milk factory. Let them concentrate on selling cheese and the like overseas. Bring back my local dairy where I can purchase a gallon of real milk from a farmer I know who keeps real cows, not black and white water machines. His cows live on real pasture and he both drinks his own product and it sells directly to his neighbors. I love milk, but I stopped purchasing it at the store many years ago when Dean Foods with the help of the Federal Government Price Support System drove the last small dairy in my part of the state out of business.

Editor's Comment: Thanks for your comment Jerry. Your passion shows through and it's clear there's a growing passion among consumers for local, sustainable production on a smaller scale perhaps, and a perception that this equates to natural and healthy end products. Has the dairy industry at large really keyed into this trend yet, which can also help it unlock added value? I'm not so sure (Ben Bouckley)

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Posted by Jerry Segers
29 November 2013 | 04h39

Price Matters; Class I and PMO cpsts

I believe that the law of supply and demand is still alive and well and that the retail price of milk does matter. Classified pricing adds significant costs for fluid milk products. Many are now advocating the elimination of classified pricing saying it no longer needed for the law's stated purpose of assuring that fresh fluid milk always will be available to consumers. It now exists only because of a lingering belief that it enhances the dairy farmers' milk checks. Some dairy economists say that is not a valid presumption anyway. Supply is determined by the amount farmers receive for their milk whether it comes from Class I or Class II, II and IV. The cost of shipping water is not the only reason fluid milk exports (think shelf stable UHT) are a challenge. The high Class I price also applies to UHT milks and is a significant factor when competing in the international market. The application of the Grade A PMO to UHT plants also can add a significant burden. There is no more reason to subject commercially sterile UHT milk to the PMO than it is for evaporated milk which is not subject to the PMO. The National Conference on Interstate Milk Shipments (NCIMS) writes the PMO . It consists of state regulators and they included UHT milk primarily for job security reasons. FDA's low acid food in hermetically sealed containers regulation is more than adequate to protect the public health.

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Posted by Jerome Schindler
27 November 2013 | 19h04

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