Milking it: cleaner climate, non-dairy milk alternatives go mainstream ...

Story of change
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Using cows to produce milk for human consumption is a massive industry. But it’s also a very inefficient, polluting one. Making dairy milk takes far more land and water than non-dairy alternatives, and creates three-times as much pollution fuelling climate breakdown when compared to the likes of oat and soya milk.
One study found that oat milk production reduced direct emissions by up to 41% when compared to the production of cow’s milk, without taking into account the emissions created through transport and refrigeration. But, the good news is that over the past five years, non-dairy milk alternatives have gone rapidly from being a fringe dietary substitute to a mainstream, ethical and sustainable staple. Nearly half of all shoppers in the United States (US) are now buying it.
In the US, the milk alternatives market was valued at over $20bn and is expected to grow at around 12.5% year on year up to 2028, according to Grand View Research. The situation in the UK is similar, with the market expected to reach a value of £500bn by 2025, enjoying yearly growth of 13.8% between now and 2025. While this market growth has predominantly been led by established milk alternatives, such as almond and soya milk, the rapid growth of alternative markets, combined with huge pent up demand from consumers wanting to make healthier and more ethical choices, has driven a plethora of alternatives to market – from hemp and peas, to walnuts, hazelnuts and tiger nuts. If you can think of it, someone’s milking it.
Credit: Photo by Kaffee Meister on Unsplash
Oat milk, especially, is enjoying a meteoric rise and is one of the most sustainable milk alternatives currently available on the market in terms of emissions, water-use and land-use. Oatly, the Swedish manufacturer founded in the 1990s, has seen its sales increase by 106% last year and, as a result of this, has had to ramp up its production. In 2023, Oatly are set to open the world’s biggest alternative milk factory in East Anglia, churning out 450 million litres of oat milk a day and creating hundreds of jobs in the process.
The rapid transition away from dairy towards milk alternatives is being driven by a range of structural changes that are gathering pace, including health concerns, environmental concerns, falling costs and the differing consumer preferences of younger generations.
Yet scaling up the production of milk alternatives is not without its issues – and consumers must be wary of these. For instance, the high demand for almonds is using up huge amounts of water in places like California, accelerating desertification. And in some parts of the world, old-growth forests are being cleared to farm dairy alternatives to keep up with global demand. Scaling up the production of any foodstuff requires finding a balance between the amount of resources required and its impact on surrounding biodiversity and carbon sinks.
Wider relevance
Despite the rapid growth of non-dairy alternatives and the shifting consumer sentiments towards them, they are not a modern phenomenon. In fact, the creation and consumption of almond milk dates back to at least 1226, where it appears in ‘A Baghdad Cookery Book’. By 1390, almond milk was prevalent throughout Europe and became a popular staple during Lent. Soya milk appears later on in recorded history, around 1365, in the ancient Chinese cookbook ‘Yiya Yiyi’. Its first mention in recorded English came in 1704 with Domingo Fernandez Navarrete’s ‘A Collection of Voyages and Travels’, which outlined his adventures as a missionary in China. Perhaps the truly modern phenomenon is the consumption of dairy products, which is a distinctly European phenomenon as the section of humanity that retains the ability to digest milk and other dairy products can trace their ancestry to Europe. Estimates do vary, but over 75% of the global population is believed to be unable to digest milk and dairy.
The scale and scope that the milk alternative markets are currently reaching are being driven by shifting consumer sentiments. And the changes have been rapid. Over one in ten hot drinks ordered from UK cafe chain Pret A Manger has a non-dairy alternative in. In the US, nearly half of all shoppers pop a non-dairy alternative into their baskets. Not only is this causing the production of milk alternatives to rapidly scale up to meet demand, it is also fundamentally challenging the dominant position of the dairy industry in many countries. In the UK, for instance, a combination of falling prices and reduced demand have led to the closure of 1,000 dairy farms from 2013 to 2016, which is roughly one in ten. It’s predicted that by 2025, there will be fewer than 5,000 dairy farms in the UK, down from 13,000 in 2010. These structural economic shifts must be tempered with targeted measures to ensure that livelihoods can be made elsewhere, in more sustainable and resilient parts of the economy.
Such shifts will cause extensive emissions reductions and land-use changes. For instance, the emissions from the 13 largest dairy companies match the yearly emissions of the UK, which is the sixth largest economy in the world. Globally, 14.5% of total cumulative emissions come from the meat and dairy industry which also takes up 77% of all the land dedicated to agriculture. Despite this monumental land and carbon impact, meat and dairy make up just 17% of global caloric supply and 33% of global protein supply. If it continues at its current pace, the transition towards non-dairy dominance could curtail emissions and free-up huge swathes of land in the process for restoration of other low-carbon uses.
Not only will these shifts have a vast impact on emissions and land-use, they will also cause a rethink of government subsidies. In the US, dairy farmers received subsidies to the tune of $3.5 billion in 2020, compared to the $44 million that oat producers were eligible for. In the UK, under the soon-to-be-rescinded EU Common Agriculture Policy (CAP) has provided British dairy farmers with yearly subsidies of around £56 million, making up around 40% of their annual profits. As more and more dairy farms close as a result of these shifts, the forgone subsidies could be redirected to help farmers transition to plant-based production, or diversify their revenue streams into green industries to aid their resilience.
Photo by Taras Kasich on Unsplash
For the businesses that are bringing milk alternatives to the masses, there are a variety of cost benefits that are starting to appear. The first is the falling prices of non-dairy milks as production and market size growth drive down costs further and further. The second is operational, with cafes and restaurants noticing that because milk alternatives like oat milk are ‘shelf stable’ and therefore do not require the same level of refrigeration and stock rotation as their dairy counterparts. When refrigeration makes up 44% of the energy used in cafes and restaurants, the shift towards milk alternatives can deliver significant cost and energy savings, as well as emissions reductions. For this reason, many cafes are choosing to make milk alternatives the default, rather than the exception.
Context and background
The rapid growth and proliferation of milk alternatives can be explained by a variety of systemic shifts. First and foremost, is the growing concern amongst consumers around the environmental impact of their diet. With the meat and dairy industry responsible for the lion’s share of annual agricultural emissions, switching to more vegetarian and vegan diets is a sure-fire way to reduce your impact on not only greenhouse gas emissions, but land use, water use, ocean acidification and eutrophication. And it’s not just the industrial scale of meat and dairy which is the issue – it is the actual product. Recent research has shown that even the most sustainably, environmentally-conscious meat and dairy production still has a higher environmental footprint than the least sustainable vegetable and cereal operations. However, this research doesn’t take into account the carbon sequestration and biodiversity benefits of some forms of livestock management.
Alongside environmental concerns are those pertaining to health. The dominance of cow’s milk as a health product, created through aggressive advertising campaigns from the dairy industry, has crumbled over the last decade given the amount of research emerging showing the contrary. For instance, a long-term study recently showed that high levels of milk consumption actually increases rates of bone fracture and mortality, despite adverts telling us for decades that ‘bones need calcium’. Similar research has found that various components of dairy products may be responsible for higher rates of ovarian and prostate cancer. What’s more, dairy products are high in saturated fats which drive up cholesterol, putting people at greater risk of heart disease. Athletes too are reaping the rewards of milk alternatives as dairy products have been shown to increase mucus production that inhibits breathing and causes inflammation, leading to prolonger recovery periods. Less dairy means athletes recover quicker.
There is also an intergenerational shift that is driving the transition towards milk alternatives. Not only are younger people more concerned about the climate crisis and the ethics of livestock farming, there is a clear change in taste preferences. Younger people today eat foods from a more diverse range of cuisines and cultures, many of which do not use dairy products. In the UK, a third of 16-24 year olds choose a plant-based dairy alternative. For those under 35, 27% choose a non-dairy alternative. And this is growing year on year, with every generation consuming less dairy than the generation before it. This trend was labelled by Dairy UK boss David Dobin as “a demographic time bomb”. With these intergenerational trends set in motion, the dominance of milk may have spoiled.
Enabling factors
Consumer preferences are moving markets
Examples of rapid transition are often driven by a combination of interconnected factors, such as changes in infrastructure and shifts in the policy environment. The rise of non-dairy milks – and the subsequent decline of dairy farming – has been driven primarily by consumer preferences up to this point. And these preferences appear to be accelerating with market growth expected to be over 10% a year for the next decade. There are knock-on effects too, with the growth of non-dairy products spilling over into the production of dairy-free cheeses, snacks and desserts. The sheer quantity and variety of dairy products on supermarket shelves increases year on year, with some of the biggest ice cream and chocolate brands launching dairy-free ranges. Of course, if milk alternatives are to take hold of a dominant market share then a more favourable policy environment would be required. But the progress made so far off the back of consumers’ demands is notable.
Less land-intensive production makes scaling-up easier
Keeping up with demand can be make or break for new markets and products. One distinct advantage that non-dairy milks have over its cow-based peers is that its production is much less land and resource intensive. This means that scaling up production to cater for ballooning demand is a lot simpler and cheaper than it would be for dairy production as it entails less land, less resource and fewer elements in the supply chain. For business, non-dairy producers are offering attractive returns on investment due to prospective market growth and the reduced need for government subsidy support to bring products to market, as is the case in dairy farming. Venture capital investment into the plant-based dairy sector testifies to the opportunity, soaring to $1.6bn in 2020, with the likes of Oatly alone raising $200m. Today there are at least 124 plant-based dairy companies serving consumers around the world.
The proliferation of milk alternatives has been partly enabled by where it sits within consumer preferences; namely at the intersection between health, ethical and environmental concerns. Market analysts believe that the growth of non-dairy milks is as much due to concerns around saturated fats and cholesterol, as it is to animal welfare and environmental concerns. What’s more, it is relatively easy to swap out dairy from your diet for one of the myriad milk alternatives as technological progress has improved the taste and performance of milk alternatives, as well as the price point.
However, like any industrial-sized production process, there are very real concerns that the growing demand for more sustainable milk alternatives will be met through unsustainable means. One primary concern is around intensive farming of alternative milk inputs, like soya and almonds, which create monocultures that blight biodiversity, require large amounts of water, and may replace old growth forest, releasing additional carbon into the atmosphere. There are additional worries surrounding the amount of food miles that an exponential rise in milk alternatives may entail. Although research suggests that land-use change and farming methods are the most emissions-intensive parts of food production rather than transport, highlighting the fact that it’s what you eat, not where it comes from, that is the most important environmental factor. There are also concerns around packaging and heightened waste through the proliferation of alternatives and the drive to differentiate products, despite many businesses offering in-store refills. Efforts must be made to ensure that the growth of the milk alternatives market is a climate help, not a hindrance.
A product, and market, that caters to consumers that hold these concerns is set to create the broad-base coalition required for rapid transition. There are other areas that hold this crossover potential, such as the issue of air pollution, where solving the problem would unlock significant environmental and health benefits.
Scope and evidence
In the US, the milk alternatives market was valued at over $20bn and is expected to grow at around 12.5% year on year up to 2028.
The UK market is expected to reach a value of £500bn by 2025, enjoying yearly growth of 13.8% between now and 2025.
In the US, the sales of milk alternatives have grown by 61% since 2012, and topped $2 billion in sales last year.
One study found that oat milk production reduced direct emissions by up to 41% when compared to the production of cow’s milk without taking into account the emissions created through transport and refrigeration.
Oatly has seen its sales increase by 170% last year and has had to ramp up its production by 50% to keep up with demand.
The sale of non-soya plant milks has risen almost nine-fold in western markets, which include western Europe, North America and Australasia.
Venture capital investment into the milk alternatives market rose to $1.6bn last year from $64m in 2015.
According to research from Mintel, UK plant milk sales have grown by 30% since 2015, driven by a surge in vegan and vegetarian diets.
Lessons for rapid transition
Connecting concerns can help accelerate transition: The growth of the milk alternatives market is due to the products speaking to a range of concerns surrounding animal welfare, human health and the climate crisis. By connecting to all of these concerns, milk alternatives have created a broad based coalition of consumers that are making new markets and challenging old ones.
In some cases, consumer preferences alone can lay the foundations for transition: While rapid transition requires a mix of factors, this story of change shows that in certain areas consumer preferences can provide the basis for large and systematic shifts, without additional government support (although this can speed things along and make sure that the right incentives are in place and not the wrong ones, like subsidies to bad practices).
The change in tastes and preferences between generations can be used as a springboard for change: The milk alternatives market shows how intergenerational differences in diets, social concerns and personal preferences can trigger big, market-making shifts – some to the benefit of transition when effectively used, but it is important to be alert to others that might work to its detriment.