(Bloomberg) -- First came soy, then almonds, cashews and coconuts. Now, dairy companies are milking everything from peas and quinoa to flax, oats and hemp amid surging demand for plant-based alternative drinks.
The growth in demand for non-dairy choices is surging as consumers increasingly seek healthier plant-based alternatives for their breakfast cereal and lattes. While sales of fluid milk declined 3 percent a year in the U.S. from 2012 to 2017 and 5 percent in western Europe, global retail sales growth for alternatives has soared 8 percent annually in the past 10 years, Rabobank dairy analyst Tom Bailey said Thursday in a report.
Companies are “milking just about everything,” Bailey said in a report. “While it’s not essential to diversify into dairy alternatives,” the firms that have invested in other products -- either by buying brands or planting almond trees -- have shown better returns over the last five years.
In 2018, U.S. retail sales of traditional milk are projected to drop 1.2 percent, while alternatives like oat and almond are expected to climb 3 percent, according to researcher Euromonitor. The consumer shift has weighed on earnings for companies such as Dean Foods Co., which in 2013 spun off its WhiteWave Foods business that included products like Silk soymilk. Dean is now considering expanding in plant-based production.
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