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Dairy Product Trends - Fluid Milk

Bottled fluid milk is an attractive product for new and on-farm processors. Understanding fluid milk sales trends and consumer perspectives can help determine product offerings and drive marketing strategy.

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Updated:

May 18, 2023

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The oft-reported decline in fluid milk consumption finds average Americans drinking 113 pounds less, per person, in 2021 than they did in 1975 (Figure 1). While in 1975 consumption stood at 247 pounds per person, in 2021 per capita consumption was down to 134 pounds per person; a decrease of approximately 46 percent.

Figure 1. Per Capita Fluid Milk Consumption
Data: USDA ERS

The reasons given for the fall in fluid milk consumption are numerous, from the decline of cereal consumption to our increasingly on-the-go lifestyle. Perceptions regarding nutritive value and digestibility are also affecting milk consumption; only 37% of iGen (those born between 1995 – 2007) milk purchasers indicated that milk is nutritious, opposed to 65% of the WWII/Swing generation (those born in 1945 and before) (Mintel, 2018).

Looking only at total fluid milk consumption, however, fails to reveal shifts that are occurring at a milk type level. Indeed, if we look at fluid milk sales by type, as shown in Figure 2, we see that whole milk is increasingly being purchased.

Graph showing Fluid Milk Sales by Type — **Figure 2. Fluid Milk Sales, by Type**
Source: USDA ERS

While in 2000, sales of whole milk stood at 18,696 million pounds, sales fell to a low of 13,784 million pounds in 2013, before rebounding to 15,812 million pounds in 2021, an approximate 15% increase since 2013. Reduced-fat, 2% milk sales were 17,420 million pounds in 2000, rose to 19,117 million pounds in 2010 and decreased to 14,609 million pounds in 2021. Sales of flavored milk were 3,661 million pounds in 2000, peaking at 4633 million pounds in 2017, and stood at 4,171 million pounds in 2021.

Sales of whole, reduced-fat (2%), and flavored milk each experienced shocks to their sales trends in 2020, with whole and reduced-fat (2%) both seeing increased sales while flavored milk saw a dip.

A 2018 consumer survey revealed that when milk purchases were explored by generation/age and income, Millennials were the most likely to purchase whole milk (41%) compared to the iGen (33%), Gen X (31%), Baby Boomers (26%), and WWII (19%). Flavored milk was also preferred by the iGen and Millennials, 25% and 23% respectively. And finally, consumers aged 18-34 and with an income greater than $75,000 were the most likely to purchase lactose-free and organic milk (Mintel, 2018).

More recently, USDA Agricultural Marketing Service (AMS) reported that from February 2022 to February 2023, sales of both conventional and organic milk products decreased. Of conventionally produced milk, only sales of whole milk increased, and the change was minimal at 0.1%. Among organic products, whole and flavored reduced-fat milk were the only ones to see an increase in sales from the previous February.

Perceptions regarding fluid milk attributes and the value placed on those attributes impact consumer purchase decisions. Real and perceived issues with milk digestibility have led to increasing sales of lactose-free milk, for instance, even though a study on consumer preferences for fluid milk found that consumers, as a whole, did not prefer lactose-free milk (McCarthy et al., 2017).

Additional analysis by McCarthy et al. found that fluid milk consumers found the following characteristics attractive: all natural, organic, reduced fat, vitamin fortified, and added protein. This aligns with ideal dairy milk attributes reported by consumers surveyed by Mintel, as shown in Figure 3.

Chart of Ideal dairy milk attributes — **Figure 3. Ideal Dairy Milk Attributes**
Source: Mintel, Dairy and Non-Dairy Milk, US 2022

The consumer audience can be segmented through numerous demographic characteristics; one of relative interest for fluid milk is parental status. Three attributes that stood out as being of greater importance to consumers who were a parent to children under the age of 18 were high protein, organic, and functional benefits.

The data and trends described above are valuable pieces of information for small-scale dairy processor strategic business and marketing planning and decision-making. While the overall outlook for fluid milk can seem discouraging, there are bright spots. Sales figures indicate that whole, flavored, and organic milk are increasingly sought by consumers. However, this should be tempered by consumer preference research showing that these characteristics are not required. These seemingly contradictory results reveal the complex consumer environment that exists.