Beyond Meat surprised the stock market when the company turned
out to be the best IPO of 2019.
"Beyond Meat", "Beyond Meat", "Beyond Meat".
Alternative meat was having a moment.
Alternative milk, on the other hand, has been quietly
revolutionizing the dairy industry for years.
Milk, the kind from cows, was once a staple of the American
diet, but now consumers have their choice between almond milk,
rice milk, hemp milk, coconut milk, soy milk—you get the idea.
Here's how plant based milk is taking on the $107 billion dairy
industry. Milk gained popularity after World War II.
Dairy farmers had amped up milk production to supply the war
effort, but when the war ended, farmers struggled to sell all
the milk they produced at a favorable price.
So, the government stepped in.
Some methods the government used to drive demand included adding
dairy as its own food group to the USDA's food guidance and
instilling it in school lunches across the nation.
But in 2019, Americans are drinking less and less milk.
In fact, milk consumption has fallen nearly 40 percent since
1975. Analysts say a big reason behind the shift is Americans
growing more aware of milk allergies and intolerances.
People are turning to plant-based milk and people with extra
cash would also rather spend the money on soy and almond than
The dairy industry isn't too happy about the changes.
The dairy industry is challenged really at all levels. Look
at the farm level with milk prices having been low for the past
Profitability for dairy farmers has been very weak.
You're seeing a lot of financial pain at the farmer level,
you know, coming through to the processor level where Dean Foods
is—that's more of a reflection of, you know, these multi-decade
declines in fluid milk consumption that don't really seem to be
In response, the dairy industry attacked the plant-based
alternatives for branding their items as "milk."
Plant-based milk companies use the term because it's easier for
consumers to understand.
The dairy industry thinks it's misleading, which is why you see
"coconut beverage" on some containers instead of coconut milk.
And in 2017, Senator Tammy Baldwin proposed the Dairy Pride Act.
It would "require enforcement against misbranded milk
In 2018, the FDA addressed the dairy industry's concerns.
They called the labeling "misleading" and said that it, "could
compromise the health and wellbeing of consumers."
However, no standard has been put in place.
And despite backlash from the industry, dairy-related companies
are seeing the popularity in nut-based drinks as a business
opportunity. In 2017, Danone acquired WhiteWave, the company
behind Horizon Milk and Silk Pure Almond, for $12.5
billion. Since the purchase, Danone stock has gone up more than
Analysts say the dairy industry has failed to innovate and as a
result, sales of milk have dropped by $4 billion since 2015.
But tech innovations have improved and more plant based products
have appeared on the market, and they look pretty similar to
Meet Michele Simon, the executive director of the Plant Based
Foods Association whose members include Beyond Meat and Blue
She explains that plant-based beverages like soy have been
around for a long time and it was the marketing of soy milk that
opened the door for plant-based drinks.
What really brought soy milk into the mainstream market was when
it shifted away from that type of merchandising to being sold
in the refrigerated section right next to cow's milk.
So they changed the packaging and went from those shelf-stable
packages to the familiar gable-top milk style packages and sold
it right where cow's milk is sold.
And it worked.
Today, almond milk dominates 68 percent of the plant-based
industry with soy milk leading in second at 13.8
percent. Former milk producer Elmhurst Milk 1925 shifted from
cow's milk to nut-based beverages in 2017 after signs of the
The change came when CEO Henry Schwartz met food scientist
Cheryl Mitchell who was perfecting a way to use the whole part
of the nut for nut-based beverages.
Here's Cheryl Mitchell explaining Elmhurst's HydroRelease
When we do the HydroRelease method, it's kind of like power
washing. Instead of grinding to a flour, everything comes off in
layers, right, and it's actually a very gentle, gentle process
here and big particles, right.
Well, that's what you want to do with a fiber is that you want
to make sure that the fiber stay very long makes them easy to
separate from the protein.
And, that's what the hydrorelease process so I was able to
figure out the right equipment to make sure all of this happens.
Oh, and by the way, Cheryl thinks it shouldn't be called
Elmhurst 1925 calls it "milked" because they're literally
lactating the milk.
According to IBISWorld, a market research organization, the
plant-based beverage industry could be worth $2.4 billion
by 2024, but it's facing challenges.
Some companies often have trouble keeping up with demand and to
see where the old school dairy industry is going.
Some analysts say to look at the coffee industry.
A 2016 Wells Fargo report draws parallels between the milk and
From 1946 to 1996, coffee consumption declined by 56 percent,
but since 1997 it's rebounded by 14 percent.
The coffee industry had become complacent with producing instant
coffee and had continued to market to adults instead of a larger
market. Coffee intake was also down due to speculative links
between caffeine and cancer, high cholesterol and other health
diseases. Sound familiar?
The dairy industry has the same problems.
The game changer for coffee was focusing on premium and
So we think what the milk category is really missing is, you
know, what coffee leaned on 30 years ago.
It's marketing, it's investment, it's branding and we've seen
that with Fairlife, you know, from Coke and I think that that is
a little case study that shows that if you do have an emphasis
on quality, emphasis on taste, you know, marketing dollars
behind it you can actually drive growth in the category and even
at higher price points.
While plant-based milk may be the newest threat to cow's milk, it
wasn't the first.
The dairy industry also dealt with the rise of soda and bottled
water. So as plant-based meats take on Wall Street and hit store
shelves, remember it was plant-based milk that flooded the