How the market for milk – almond or ‘real’ – has changed
Almond milk is a hit with consumers across the country — and a sweet success for Sacramento’s Blue Diamond Growers in particular.
Blue Diamond’s Almond Breeze has helped turn a quiet agricultural cooperative into a commercially savvy household brand. The beverage, introduced to consumers in the late ’90s, has opened up new markets for Blue Diamond and the 3,000 Central Valley almond farmers who own it.
One problem, though: The federal government has taken issue with how Almond Breeze and others in its product category are marketed. The Food and Drug Administration said recently it plans to prohibit makers of almond milk — and soy milk and rice milk and other non-dairy alternative drinks — from labeling their products as “milk.”
The final rules won’t be established for another year, but FDA Commissioner Scott Gottlieb indicated he has pretty much made up his mind.
“An almond doesn’t lactate, I will confess,” he said July 17 at a conference sponsored by news website Politico.
Gottlieb’s quote has become something of a catchphrase among dairy industry folks, who are struggling with declining sales and say it’s high time the feds cracked down on the use of the word “milk.”
For years, the FDA has defined milk as the “lacteal secretion” produced by “the complete milking of one or more healthy cows” but hasn’t enforced the definition. Gottlieb’s remarks show that’s about to change.
“It’s something that’s very long overdue,” said Anja Raudabaugh, chief executive of the Western United Dairymen trade association in Modesto. “We’re very much in favor of enforcement of the dairy standard of identity.” She referred to almond milk and other competitors as “veganist alternatives.”
Blue Diamond said shoppers understand exactly what they’re getting when they buy Almond Breeze.
“We stand by how clearly we label our products,” said Blue Diamond spokeswoman Alicia Rockwell. “We don’t see that there’s confusion among consumers.”
Almond milk — which Blue Diamond refers to on its packaging with a single word, “almondmilk” — is made up of ground-up almonds, filtered water and other ingredients.
Created as an effort to find new uses for Blue Diamond nuts, Almond Breeze has blossomed into a major product. Last year the drink debuted in Thailand, South Korea and South Africa, expanding Blue Diamond’s international footprint.
In addition to the “Original” flavor, there’s Almond Breeze “Barista Blend” for coffee lovers and eggnog for Christmas. The drink’s logo is plastered on the floor of Golden 1 Center, next to the team benches, as part of Blue Diamond’s $5 million-a-year sponsorship deal with the Kings.
Experts say Blue Diamond’s entry is the market leader in almond milk sales.
As alternative drinks become more popular, the FDA chief is feeling the heat from dairy producers, said Michele Simon of the Plant Based Foods Association, which lobbies for Blue Diamond and other makers of non-dairy milk drinks. “It appears the pressure has become too much for him to ignore,” she said.
The dispute over labeling pits two groups that happen to be among the heavyweights of California agriculture. The dairy industry was the single largest sector of California’s farm economy in 2016, generating almost $6.1 billion in commodity sales. Almonds ranked No. 3, at nearly $5.2 billion.
Until now, the dairy industry has made little headway fighting back against the alternative drinks. A bill introduced last year by a senator from dairy-friendly Wisconsin to clamp down on the use of the word “milk” gained no traction in Congress. Also last year, a federal judge in Fresno halted a class-action lawsuit claiming WhiteWave Foods, the maker of Silk almond milk, misled consumers with its packaging. The judge said the issue was up to the FDA to decide.
Marketing efforts to woo consumers back to dairy also have come up short. A few years ago the California Milk Processor Board, originator of the famous “Got Milk?” ads, rolled out a campaign promoting the nutritional virtues of “real milk” vs. the imitators. Consumers, though, keep switching to the alternatives.
Because of lactose intolerance and other concerns, per capita consumption of dairy milk fell 22 percent between 2000 and 2016, according to market researcher Packaged Facts.
That’s left an opening for almond, soy and other alternatives. Non-dairy drinks accounted for 27 percent of the total milk market last year, Packaged Facts says, generating $6.8 billion in sales. By 2021, Packaged Facts forecasts the non-dairy sector will control 40 percent of the market and generate more than $11 billion in annual sales.
The trends have been particularly favorable for Blue Diamond. When it launched Almond Breeze in 1998, the non-dairy industry was just a $250 million-a-year business, dominated by soy milk.
Things changed fairly quickly. Simon said almond milk overtook soy milk as the leading non-dairy alternative years ago. And market research places Blue Diamond at the head of the pack: Packaged Facts, in a report on the industry last fall, said Almond Breeze “has surged to the lead in the almond milk segment.”
Blue Diamond reported total revenue of nearly $1.5 billion last year. The Sacramento cooperative won’t release sales data on Almond Breeze, however.