Beyond The Gallon Jug: How Can Innovation Change The Path Of Fluid Milk?

While yogurt, cheese and export sales have been a boon for the U.S. dairy industry, allowing milk production to expand nearly 18 percent in just the last decade alone, fluid milk sales have continued along a troubled trail. In the 35 year period from 1975-2010 annual per capita fluid milk consumption dropped from 28.6 to 20.9 gallons.1 And the trend hasn’t let up as overall per capita fluid sales declined another 1.6 and 1.8 percent in 2011 and 2012, respectively, and experienced their fourth consecutive month of year-on-year declines in February, 2013.2 Indeed, despite a 43 percent increase in U.S. population between 1975 and 2010, total milk consumption increased just 4 percent.3 In 2012, a mere 26.5 percent of milk production was marketed through fluid products versus 46 percent in 1975.4

It’s been a painful time for the fluid milk industry. Will the future bring more of the same and continue to drive processors towards the manufacture of other dairy products, or can fluid milk regain momentum with today’s American consumer and provide greater opportunity for the fluid processor?

What’s Behind the Downtrend?

There are several pieces to the story of how fluid milk got to where it is today. One major factor behind the erosion is that the beverage industry has become increasingly complex, a trend that has only accelerated in recent years. While an individual still consumes on average 221-224 gallons of beverages a year (30-33 percent of which is tap water), the choices one now faces have broadened significantly. 5,6 We essentially went from milk, carbonated soft drinks (CSDs), coffee and juice in the 1970s to a myriad of alternatives available today. A trip along the coolers or beverage aisles in the grocery, club or convenience store can be a dizzying experience if one steps back to look at the plethora of options. 

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