BYOMSPM

Anyone who’s been to a grocery store or a coffee shop in the past 10 years has probably noticed the massive increase in availability of plant-based milks as an alternative to dairy milk. But is the rise of plant-based milk alternatives primarily thanks to its increased nutritional value, reduced moral culpability, or just sheer effective marketing? And will dairy milk survive the boom in plant-based alternatives? Let’s dive into it here by looking at one of the most well-known plant-based milk brands – Oatly.

First, some background stats – U.S. consumers today are drinking around 47% less dairy milk today than in 1975 (Harfmann), while the oat milk market was valued at $3.7B in 2023 with projected growth to $9.8B by 2032 (Harfmann). The massive boom in plant-based milks has seen a bit of a plateau in recent years, though, and today, still just 10% of the U.S. milk market is alternative non-dairy milk (Hildebrand). If you look at dairy and non-dairy milks for their respective land usage, water usage, and methane release, dairy milk comes in all-around last place, using up to 9x as much land as non-dairy alternatives (Science Vs.).

While we’re looking backwards, we need to note that drinking dairy milk hasn’t always been as popular as it has been in the last 50-70 years. It was only after WWII when there was surplus dairy milk production that the USDA added dairy to food recommendations to drive up consumption. While dairy consumption boomed for the next 50 years, so did consumers’ awareness of lactose intolerance, paving the way for alternatives that didn’t cause the same gastrointestinal issues.

On the other half of the world at the turn of the century was developing an alternative to dairy milk — Oatly. It was founded in Sweden in the 1990s as an eco-conscious non-dairy alternative for people with lactose intolerance. On top of that, Oatly boasted great texture, flavor, and other health benefits that rivaled those of dairy milk (Hughes). Oatly saw only moderate success until there was huge growth during COVID, with an increase in sales of around 295% in 2020 (Hughes). By 2021, it was valued at $13B (Hughes).

So… what really catalyzed the boom in Oatly, since at first it really wasn’t very successful (and because getting consumers to try a new product is notoriously very difficult)? In 2012, a new CEO, Tony Peterson (formerly in medical marketing), took over and started leaning into attacks on dairy milk while pushing non-dairy alternatives (The Journal). In 2016, the company changed their market strategy, putting oat milk in artisenal coffee shops to raise brand awareness through firsthand experience as well as to build brand image through association (CNBC). Their marketing team also had a big impact at this stage — Oatly digital marketing became decidedly unique, with specific, quirky messaging that leaned into anti-dairy sentiment as well as pro-sustainability.

Additionally, Oatly and other non-dairy milks positioned themselves strategically in grocery stores – the product containers look like milk cartons, the labels included the word “milk,” and they are sold in the milk section of the store. Overall, I think there was also an increase in the perception of plant-based milks as a healthier, more-environmentally friendly, and “cool” alternative to dairy milk (just from my experience).

With such a rapid and dramatic increase in popularity, the dairy milk industry took notice, and in 2023 the U.S. passed Dairy Pride Act that prohibited non-dairy milk, cheese, and yogurt alternatives from labeling themselves as such (Hildebrand). It’s worth noting here that dairy milk also maintains a big political advantage, as dairy farmers are largely subsidized by the government and protected by big lobbying organizations (Hildebrand). Due (probably at least in part) to these responses from the dairy milk industry, in 2023 the sales of plant-based milks actually went down a small amount, and the consumption of dairy milk increased (Hildebrand).

So will crafty marketing for plant-based milks end up eliminating market demand for traditional dairy milk, or will the pressures from the dairy industry push plant-based milk back into oblivion? Harfmann argues that on the one hand, the nutritional benefits of dairy milk will keep it an attractive option for certain populations. She also explains that certain innovations make dairy milk options that can be better tolerated by those with lactose intolerance, including higher quality pasteurization and lactose-free options. At the same time, it seems that the taste, health benefits (namely – lower calorie content), and environmental upsides of plant-based milk have produced lifelong loyal consumers.

It seems likely that part of the initial boom of plant-based milks was due to very effective marketing; however, I would bet that both plant-based milks alongside their dairy counterparts are all here to stay.

Sources

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CNBC. “How Oatly Build a $100m Empire.” Youtube.

Harfmann, Barbara. “The competition between dairy milks and plant-based milks heats up.” Dairy Foods. 24 June 2024. Web. https://www.dairyfoods.com/articles/97384-the-competition-between-dairy-milks-and-plant-based-milk-heats-up.

Hildebrand, Levi. “The Downfall of Plant-Based Milks.” Youtube.

“How Plant-Based Milks Took Over the Dairy Industry.” Youtube.

Hughes, Dan. “The ‘Back To Basics’ Marketing Success of Oatly.” Digital Marketing Institute. 6 March 2023. Web. https://digitalmarketinginstitute.com/blog/the-back-to-basics-marketing-success-of-oatly.

Johnson, Beth. “Grass-Fed Dairy: Ireland’s Tradition Meets Market Demand in the US.” FOCUS Investment Banking. 31 January 2025. Web. https://focusbankers.com/grass-fed-dairy-irelands-tradition-meets-market-demand-in-the-us/#:~:text=Ireland%20Sets%20the%20Benchmark&text=Milk%20from%20grass%2Dfed%20cows,and%20support%20efficient%20dairy%20production.

The Journal. “Oatly Pioneered Oat Milk. Now It’s Struggling to Keep Up.” The Journal. 14 March 2022. Spotify.

“Soy, Almond, Oat Milks: Are They Udder Bull?” Science Vs. 4 October 2018. Spotify