Total fluid milk sales increased in 2024 by 0.5% relative to 2023, according to USDA’s Agricultural Marketing Service (AMS) data, marking the first category increase since 2009. AMS calculated these values based on federal milk marketing order in-area sales per each order’s market administrator. In locations without a federal order, the agency estimates sales based on population density. The devil is in the details of 2024’s growth, requiring a line-by-line analysis. The rise in demand came from organic, whole and “other” fluid milk sales as consumers moved away from low and no-fat options.
Fluid milk sales have been declining since 2009, according to the USDA Economic Research Service’s annual fluid beverage milk sales data, which goes back to 1975. From 1985 to 2010, 54 to 55.5 billion pounds of milk were consumed in the U.S., peaking during the Great Recession in 2009. Since then, the drink has seen 13 consecutive years of decreased usage. Skim milk, which topped out in the late 1990s, is just a fraction of what it was when it reached its high of over 9 billion pounds in 1998; 2024’s sales were less than a quarter of that figure. Similarly, 1% milk is down over 50% from its peak. Reduced-fat milk, the most common type sold from 2005 to 2017, fell by 4.4% annually in 2024.
The increase in 2024 provides hope for growth in the fluid milk market. AMS data showed whole milk purchases in 2024 were over 15 billion pounds, the highest of any variety, up 1.6% versus 2023. In 2020, sales exceeded this level, driven by COVID-19 stay-at-home mandates, and before that, 2007 was the last time this figure exceeded 15 billion pounds. Dairy fat is “en vogue” again, as evidenced by rising butter consumption, and more consumers are opting for the creamy goodness of whole milk.
Another major growth category was “other,” which includes products like eggnog, drinkable yogurt, miscellaneous fat-reduced, lactose-free and other fluid milk products. Indeed, it seems consumers desire innovation and options outside of the usual offerings, as evidenced by the rampant rise in the fairlife brand.
Bloomberg reported that fairlife went from an estimated $90 million in sales in 2015 to $1 billion in 2022, despite the product’s higher price, averaging about $5 per 48-ounce bottle. In Coca-Cola’s Q3 2024 earnings call, CEO Robert B. Quincey noted that fairlife broke the $1 billion mark “a while ago.” A new factory is under construction in New York, estimated to be operational by Q4 2025, adding to the brand’s four other factories.
Other companies have taken note of fairlife’s success and are creating value-added milk products. For example, California Dairies Inc. is opening an extended-shelf-life (ESL) and aseptic/shelf-stable ultra-high-temperature plant, Valley Natural Beverages, in Bakersfield, California, boasting new techniques for processing that allow for ESL and shelf-stable products while avoiding the off-flavor often associated with this type of milk. Dairy Farmers of America has also launched a new offering in the no-fat space. Milk50, which contains just 50 calories per serving, 9 grams of protein, no fat and a quarter of the sugar of a regular glass of skim milk, was launched earlier this month as part of the co-op’s Dairy Pure umbrella. Darigold launched “Fit,” an ultrafiltered, lactose-free, high-protein milk in 2019 and expanded production the following year after doubling sales and distribution during 2H 2019. In 2024, the Pacific Northwest-based co-op added distribution to Meijer stores in the Midwest, another measure of the product’s success.
Organic milk also made great strides in 2024, rising nearly 7% versus 2023 using AMS data, totaling 3 billion pounds. It has gone from 13% of milk sold in the U.S. in 2010 to a 20% market share this past year, up 1.2 billion gallons. While the price point is significantly higher for organic, USDA’s Retail Milk Prices Report showed conventional milk averaged $4.39 per gallon in 2024 compared to $9.62 per gallon for organic as consumer concerns about pesticides, antibiotics and hormones have spurred growth in the sector.
Additionally, organic cows are required to be on pasture for at least 120 days a year, which some consumers may equate with grass-fed milk, which has higher omega-3 levels than regular milk.
Synthesizing the trends across these rising stars, it is clear that people still drink milk but are looking for something different. Health and nutrition remain important, with less emphasis on fat than 20-30 years ago and more concern about sugar and protein content. Clean and natural products are also in demand, and some view milk with additional nutrients or added protein as healthier. Finally, for an innovative, quality product, shoppers have proven they are willing to pay more.
For the dairy industry, there are lessons to be learned. The ongoing need for innovation and keeping up with consumer preferences is real. Food companies have been doing this for years, while many dairy products are commodities. The use of new technologies, alternative feeding systems and product development are all opportunities to continue driving sales in the fluid milk category.
Reprinted with permission from the February 21, 2025, edition of CHEESE MARKET NEWS®; © Copyright 2025 Quarne Publishing LLC; (608) 288-9090; www.cheesemarketnews.com
