What drink is the real threat as a competitor of milk in stores? Columnist Cindy Sorensen explains that it is not plant-based alternative drinks, but innovation that has been aggressively driven in the water category.
I recently read an article cautioning consumers, manufacturers, and retailers not to be fooled by the sales increases the plant-based beverage manufacturers have promoted as part of their introduction of new items into the milk case.
This article dispelled how the percent sales increases are misleading as they are built on a small base of business from the previous years’ sales.
I have been involved with the dairy industry for over ten years. During that time, the slice of the category which plant sales represent has never been more than 6-8%. That piece of the category switches from one plant-based beverage to another.
For example, when the almond beverage was introduced, the sales captured by almond beverages, came at the expense of soy beverage. Now we see the introduction of hemp, oat, and cashew beverages and many of those sales are coming directly from almond and soy beverage sales.
When a new plant-based product is introduced, double-digit sales increases naturally occur as the base from year one to year two is very small, and new distribution gains naturally drive double-digit growth. This double-digit increase should not be confused with the size of the segment or the pace of growth. It will flatten in subsequent years.
Cow’s milk has steadily represented approximately 94% of all category sales. It’s difficult to post double-digit increases year over year when looking at such large category sales. The article was successful in helping the reader understand how to analyze these statistics to understand the true size of the plant-based segment in comparison to the large cow’s milk segment.
The goal of the article was also to point out that the biggest competitor to cow’s milk, is not plant-based beverages.
This article accurately depicts the water category as the largest competitor of cow’s milk.
But I believe looking at water alone as the greatest competitive threat to milk is not “seeing the forest for the trees.” The true threat to cow’s milk is… innovation.
Why is water such a threat to milk? One only needs to walk the aisles of any food retailer to see the plethora of new product introductions in the water category. Water innovation has included new flavors, new packaging, new benefits, new marketing, and new brand entries into what is quickly becoming a crowded market.
This water category innovation is a true “commodity to value-added” category success story. Consumers have demonstrated they are willing to pay a premium price for these new products. And water is only one example.
We see innovation in many other beverage categories (i.e.plant-based), and we also see the creation of beverage categories that didn’t exist 5-10 years ago (cold-brewed coffee, energy drinks, smoothies, etc.). While the market has been flooded with product innovations throughout all categories, cow’s milk has seen little innovation in flavor, packaging, and marketing.
Milk processors continue to produce milk in a gallon jug, which consumers have indicated through their purchase behavior and consumer research, they no longer wish to purchase. Despite the rich nutritional benefits of cow’s milk, the category is out-innovated and out-marketed by many other beverage categories.
It’s time to focus on the true competition to cow’s milk: innovation. Let’s give the consumer what they want, how they want it, and when and where they want it.