US: falling liquid milk consumption hits processors

Wednesday, 22 January 2020

by Hannah Clarke

Since November 2019 the US has seen the bankruptcy announcements of two major milk processors, Dean Foods Co and Borden Dairy Co. It is reported that the two Texas-based dairies controlled around 13.5% of the US dairy market.

Both companies cited falling domestic liquid milk consumption as a key reason for their financial difficulties and need to restructure. Declining per capita consumption of fresh milk and volatile farmgate prices have made industry margins harder to manage. In addition, the move by retailers such as Walmart into processing, has made pricing much more competitive. All this has squeezed processor margins.

While total per capita consumption of dairy in the US has actually risen over time – thanks to rising consumption of value-added products like cheese and yoghurt – per capita consumption of liquid milk has fallen by over 40% since 1975.

There are several contributors to this decline. The consumption of milk at breakfast time has suffered, as US consumers are reportedly ditching bowls of cereal and milk in favour of dry cereal bars on-the-go. In addition, some consumers are increasing their demand for plant-based alternatives, driven by perceptions around health, animal welfare and environment.

Despite liquid milk facing challenges, speciality products such as flavoured and lactose-free milk are enjoying growth. US sales of flavoured whole milk grew by nearly 9% in the 10 months to October 2019, with October 2019 sales up 13% on the year. This suggests US consumers are not looking to leave cow’s milk entirely, but are looking for innovative, value-added products.

Image of staff member Hannah Clarke

Hannah Clarke

Analyst - Livestock

See full bio

Sign up for regular updates

You can subscribe to receive Dairy market news straight to your inbox. Simply fill in your contact details on our online form and select the information you wish to receive.

Visit the Keep in touch page

While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.

All intellectual property rights in the information and data on this webpage belong to or are licensed by AHDB. You are authorised to use such information for your internal business purposes only and you must not provide this information to any other third parties, including further publication of the information, or for commercial gain in any way whatsoever without the prior written permission of AHDB for each third party disclosure, publication or commercial arrangement. For more information, please see our Terms of Use and Privacy Notice or contact the Director of Corporate Affairs at  © Agriculture and Horticulture Development Board. All rights reserved.