America’s largest milk producer filed for bankruptcy. Are plant-based alternatives to blame?

Dean Foods, America’s largest milk producer, has been around for almost a century. Now, after 94 years, it’s filing for bankruptcy.

Image credits: Mehrshad Rajabi.

When a long-lasting company files for bankruptcy, it’s often due to bad management or internal issues. But the case of Dean Foods, a company with yearly revenues of $7.7 billion, might be a bit different.

The company has struggled more and more in recent years because Americans are drinking less cow milk; oftentimes, they are substituting it with plant-based alternatives like soy, almond, or coconut. This year (2019) has been particularly bad as the company’s sales went down by 7%, and profits went down 14%.

Americans’ per capita consumption milk has decreased by 26% since 2000, according to the U.S. Department of Agriculture. Since 1975, milk consumption per capita has tumbled more than 40%.

It’s not just Dean Foods that got hit. The entire milk market suffered. In 2018, milk sales went down by more than $1 billion in 2018, compared to the previous year.

At the same time, plant-based milk has surged. The global plant-based dairy market was estimated at a value of $11.9 billion as of 2017 and is slated to surpass $21 billion by 2024. So, it’s not just the US — throughout the entire developed world, plant milk is swooping in and quickly replacing “regular” milk as people are looking for ways to phase out animal protein from their diet. In the UK, 25% of adults say plant-based milk is their first option.

Money-wise, plant-based milk is more expensive than regular milk — around two times more expensive in general — but given the overall low cost of milk, it’s a price more and more people can afford.

Modern research is also partially to blame for the decline in milk consumption. Several studies have dented the traditional healthy halo once held by milk, and a recent long-term study actually found that milk can increase the risk of bone fractures and mortality. The high saturated fat content of dairy can raise levels of bad cholesterol and while moderate consumption of dairy can still have a positive impact on healthy diets, people are starting to drop it in favor of plant-based alternatives.

The plant milk market has become quite diverse, with soy, almond, oat, rice, coconut, and cashew being just some of the many alternatives you can find on the shelves and at shops. Soy milk stands out as the healthiest options. It packs as much protein as cow’s milk, without any of the saturated fats. Almond, the most popular dairy alternative, has less protein but is still an overall healthy option.

It’s not just health that’s significant — the environmental and humanitarian aspects are also noteworthy. Milk (and dairy in general) produces substantial greenhouse gas emissions. It requires intensive land use and large quantities of water. Plant-based alternatives produce drastically fewer emissions, they require much smaller land areas, and consume less water than dairy milk.

In addition, most milk production cows are kept in questionable conditions (to put it lightly) and to the dairy industry, male calves are considered surplus — they are either shot after birth or sold to the meat industry. The cheapest option in most cases is to simply shoot the calf — which understandably, many people don’t want to support.

For all these reasons, plant-based milk is starting to take away from the dairy industry. Dean Foods’ failure may or may not be a result of that trend. The fact that Walmart, one of their biggest clients, dropped their services to replace them with their own dairy factory certainly didn’t help. Dean has been hemorrhaging executives as well as cash and their approach to the current situation has been criticized by some.

Dean Foods going bankrupt might have nothing to do with plant-based milk, but this is a cautionary tale to the entire industry: plant milk is here, and it’s here to stay. The market needs to adapt.

Leave a Reply

Your email address will not be published.