Milk alternatives are increasing in popularity, causing the US Dairy market, milk in particular, to experience losses in their overall profit, and will continue to do so, due to consumer trends and preferences. For many years, milk alternatives have been growing in popularity whether it be for lactose allergies, health concerns, or veganism as a lifestyle. The government was one of the US Dairy markets’ best customers, and dairy in the US has been known to be inelastic because the because many dairy has been considered staple foods in the American diet. But times have begun to change and consumers are have been finding that there are many health benefits of switching to alternatives to these dairy products.
Nowadays, the demand for milk has been decreasing due to the alternatives and substitutes that are becoming available and increasing in popularity. Milks made out of nuts like almond milk, cashew milk, and even macadamia nut milk have entered the market, as well as coconut milk and soy milk. Many consumers have found there have been many health concerns related to consuming dairy products, and according to the USDA, since the 1970’s the amount of kids that have chosen to stop drinking milk daily has been rising. And because of perfect competition, it is hard for firms within the industry to compete against one another and other drinks that have been entering the market.
Unlike cheese, which consumers’ willingness to pay continually remains pretty high, people have become very price sensitive to buying milk because of all the changing in trends. Raising the prices milk would cause the demand and consumption to decrease.
Merlo, Catherine. “Why Dairy Demand Has Become More Elastic.” AgWeb - The Home Page of Agriculture, 5 Mar. 2015, www.agweb.com/article/why-dairy-demand-has-become-more-elastic-naa-catherine-merlo/.
Schwartz, Elaine. “Perfect Competition Can Explain Less Milk Consumption.” Econlife, 26 Oct. 2017, econlife.com/2014/06/milk-perfect-competition-limits-firms/.