How The Great Milk Industry Went Down The Drain

Do you remember in your childhood, when there was always milk in the fridge? You could always add it to a bowl of overly sugared cereal. You could find it with every school lunch, where you’d inevitably get a carton. Pretty much every American over 20 knows exactly what I’m talking about.

And yet milk probably isn’t in your fridge right now. You didn’t forget anything at the store. In fact, this seemingly odd omission from your shopping list comes not from your own forgetfulness. Rather, it’s a sign that the milk industry is dying.

I know that sounds like a very dramatic statement about quite possibly the most banal food product on the face of the earth, but it’s true. In 1970, the average American drank 8 ounces of milk per day, compared to today’s 4.

It’s starting to seem like spilled milk isn’t worth crying over anymore. So what’s happening?

The milk industry (as we know it) is dying and the facts support that statement.

If you’re the skeptical type – and I hope you are in this age of misinformation – you might say, “people drinking half as much milk is not evidence of the milk industry’s collapse.” This would be good reasoning.

But I have evidence by the gallon to support my bold claim here.

First, to contextualize that figure about drinking milk, we need to make a distinction between drinking and consuming milk. Milk is used in a lot of different recipes as an ingredient. So when we say Americans are only drinking an average of four ounces per day, we really do mean drinking. Consumption overall is down too.

At the same time, you have milk alternatives such as oat milk and soy milk which have been on the rise too. Consumption of milk alternatives has increased by 36% between 2013 and 2017.

Between 2010 and 2018, milk sales dropped from 55 billion pounds of milk to just 47.7 billion, which is a 13% drop in less than a decade. This doesn’t even account for the massive disruptions that the COVID-19 pandemic had on the milk industry.

From 1975 to 2018, per capita milk consumption dropped 40% in the United States. This is not a recent trend. Consumer behavior around the consumption of milk has been changing for a really long time.

The government started pitching milk during World War II

Fact: if you drank a glass of milk in 1850, you were taking your own life into your hands. Milk was a dangerously productive environment for bacteria. You would even hear of milkborne outbreaks such as tuberculosis.

In other words, if you consumed milk, you might die of consumption. Milk earned a pretty bad reputation.

But Louis Pasteur figured out a way to kill bacteria and make milk shelf-stable. We call this pasteurization, and it was a game-changer.

Why do I point this out? Because milk’s massive success in the twentieth century was far from guaranteed.

Fast forward to the dark days of World War II. It wasn’t uncommon for young men to be drafted into the military with all kinds of problems related to malnutrition. A lot of people just didn’t get enough to eat during the Great Depression.

Milk is a great source of protein and vitamins, and it’s also really calorie-dense. This made it a great option for the U.S. military who needed a way to beef up soldiers. It doesn’t hurt that during World War II, milk was not rationed the same way that meat was. This, again, made it a cheap and abundant source of protein, vitamins, and calories.

In the 1940s, cities and eventually the federal government under the Truman administration, started putting milk in lunch. To this day, this is why you will see a carton of milk in just about every kid’s school lunch. This further increased the market demand for milk because the government was such a ready buyer.

For decades after this, you had generations of Americans who were used to seeing milk all the time in their kitchens and pantries as well as in their schools. It became a part of life and culture, as ubiquitous and unnoticeable as ants in the grass or traffic lights on city streets. It just felt like it was always there, like some unchanging constant of the universe.

But milk’s popularity in the US was not foredestined. It happened because the government actively pushed it along, starting for very good reasons.

The government massively subsidized milk production in the 1970s

Fast forward again to the 1970s and inflation was jacking up food prices. Under the Carter administration, the dairy industry was heavily subsidized. The milk industry wanted to get paid, so they massively overproduced milk. The government then had to convert much of it into cheese, butter, and dehydrated milk. The problem was so bad that Ronald Reagan sent 30 million pounds of literal “government cheese” overseas just to get rid of it.

You will also recall this is right around when per capita milk consumption started to drop off a bit. People were just starting to drink it less for reasons that were largely unrelated to any government policy or existing business infrastructure.

Now you might think the milk industry would ease off production, start investing into the production of other foodstuffs, and generally move on. But as late as June 2018, our national stockpile of cheese – again, made from a massive surplus of milk that would otherwise go bad – broke the record. Somehow we managed to achieve a national stockpile of 1.39 billion pounds of cheese.

So now, at this point, we have massive excess milk production occurring at the same time that people are deciding not to drink as much milk.

The media started to pitch milk with the wildly successful “got milk” campaign.

Between Reagan’s donation of government cheese in 1983 and the massive surplus of cheese the USA managed to accumulate in 2018, you might wonder, “why didn’t these dairy farms change course? Why didn’t they see it coming?”

I’d argue that a big part of that was the incredibly famous series of advertising campaigns that we know as the “got milk” campaigns.

The “got milk” campaigns started in 1993, directed by – I kid you not – Michael Bay. The campaigns became massively popular, pleasing the milk and dairy industry that were pushing them. Here’s a compilation of them if you’ve been living under a dairy-free rock for the last 30 years.

They’re fantastic commercials, no doubt about it. That’s why they’ve been name-checked and parodied in everything from Friends to Rick and Morty. A full 90% of Americans could recognize the ad campaign at one point.

Shame there’s no evidence that it actually increased milk sales.

This is a bit speculative, but indulge me here for a moment. The government pushed milk in World War II because it was cheap, useful, effective way to address the health crisis of malnutrition and the national security problem that was having a nation full of underweight men. Then they mandated that it be provided in American schools, making it ubiquitous. In the 1970s, the industry was subsidized, making milk products even more ubiquituous.

And yet at the same time, in the 1970s, people started drinking less milk, a trend that just kept going. As this trend was becoming noticeable, you have this freakishly successful ad campaign that, again, made milk seem like something as constant and fixed in our culture as air.

If you asked an average American if milk was a good business to be in, they’d probably say yes. Who – other than bloggers with too much time on their hands – looks up actual milk consumption behaviors? Nobody! They just assumed it was important because milk was in schools, prominent in every store, and had some of the most recognizable advertisements ever created.

You could not create better conditions for concealing an industry collapse if you tried.

The milk industry has been seeing a decline in demand for a really long time.

You can’t sell people something they don’t want. That’s the first rule of marketing: product-market fit.

People have just not been thirsty for milk lately, and demand has been dropping for a long, long time.

Turns out, milk has a lot of problems. A lot of the qualities that made it great for solving malnutrition just don’t work in an age where the majority of people are overweight. Objectively speaking, milk – whole milk, in particular – just isn’t that great for you. Not bad for you, per se, just not great.

Oh, and that’s assuming you can drink milk. As many as 30-50 million Americans can’t, including 80% of African-Americans and Native Americans, and a whopping 90% of Asian-Americans. Being able to digest lactose in the first place, in fact, is kind of a happy accident for those of European descent.

This isn’t even getting into animal rights issues. That’s so bleak that I don’t even want to cover it except to say that people have pretty strong moral incentives not to consume animal products too. And I say this as one who would never have the discipline to go vegan.

In short, many Americans can’t drink milk. Some want to, but don’t consider it healthy. Others want to, but find its consumption immoral. And all of this is happening while the artificial demand for milk created by the government and the media for decades are tapering off.

As if that weren’t bad enough for the milk industry, milk alternatives are looking good too. Oat milk, almond milk, soymilk, and others are becoming common sights in grocery stores and restaurants. Sales have been going up, especially over the last few years.

There are a few bright spots for the dairy industry, though.

Spare a moment to think about the people who run dairy farms that have continued for generations. The downfall of milk has been happening for a really long time, so as outside observers, especially ones with hindsight, we could all see the industry’s disaster coming. But even as we chalk up the industry’s collapse to changing consumer demand, that does not diminish the tragedy of inheriting an old farm and not being able to keep it going.

I hate leaving stories in a hopeless place, though. So for the affected farmers trying to salvage their farms, I’ll say this: cheese and yogurt have been growing for a while. You need milk to make cheese and yogurt, so it wouldn’t be too terribly burdensome to shift from producing milk to cheese and yogurt.

At the same time, more and more people are beginning to think about the moral implications of their food. Some are concerned about the welfare of animals, and others are concerned about buying locally to prevent unnecessary climate-damaging carbon emissions. Smaller farms are better positioned to serve these growing niches than big companies.

Every product has a lifecycle. Every. Single. One.

If you’re reading this as a small business owner and you’re looking for something to learn from this article, let me posit this: if the modern milk industry can die, so can your product.

Look, it’s not all bad! Every product waxes and wanes in popularity. It’s not in the nature of business for anything to stay popular forever. The best long-term success strategy is to make multiple products so that when one’s lifecycle is ending, another’s is beginning.

It’s impossible to make people want something they don’t want in the long run. The government pushed milk as a way to fight back against malnutrition. Then it subsidized the massive industry that built up as a result to keep farms in business and to keep ubiquitous products cheap. But this didn’t address the underlying problem. People got milk, but they didn’t want milk.

Some people would phrase this as “adapt or die.” I say put a more positive spin on it. Embrace the new and always look for more ways to please your customers. Being proactive about serving others’ needs can help you ride about just about anything you can imagine happening.