Major dairy processors invest in dairy-free products such as oat milk, leaving small farmers increasingly in the lurch

One reason the American dairy industry has been struggling in recent years: People just don't drink as much milk anymore. Instead, more consumers increasingly favor substitutes made from nuts, flax, hemp, and more. Major dairy processors have tried to fight the trend by lobbying to ban non-dairy products from using dairy-associated words like milk, yogurt or cheese. But many have also been investing or launching their own plant-based dairy alternative product lines. "The fight, which is now playing out in Washington, pits smaller dairy farmers against some of the country’s largest milk producers, which have been increasingly looking to work both ends of the dairy aisle," Janelle Nanos reports for The Boston Globe. 

Major dairy processors like HP Hood, Dean Foods and Danone North America have launched or invested in plant-based brands in recent years. Hood, especially, has embraced the trend. The company has been producing Almond Breeze nut milk in its facilities for the past decade, and in January became the first major dairy to market its own oat milk, Nanos reports.

Oat milk, made by straining oats and water, is the current darling of the alt-milk world. It first became popular in 2016 when Oatly, a 25-year-old Swedish oat milk brand, hit American coffeehouses in 2016. The product quickly became popular because it was rich, creamy, free of common allergens, and foams up like real cow's milk, Nanos reports. Hood executives say their effort to get an oat milk product to market has paid off, and that its Planet Oat is so popular that Amazon regularly runs out. 

"That one of the nation’s major dairy producers considered it a coup to introduce an oat milk to America was yet another sign that the traditional milk market is at a crossroads," Nanos reports. "Americans bought $16.16 billion of cow’s milk in the year ending in late March 2015, the market research firm Nielsen found, but that number dropped to $12.13 billion at the same time this past year. Meanwhile, sales of alternative milks were up 8 percent year-over-year, as of January of this year, hitting $1.7 billion, according to Nielsen data."