Milk consumption

IBISWorld forecasts that per capita milk consumption will fall by 0.8% in 2024-25, to reach 97.5 litres per capita. This drop is largely due to the rising popularity of milk alternatives such as almond and oat milk. Demand for these beverages has risen because of increasing environmental and ethical concerns surrounding general livestock farming, driving people towards vegetarian and vegan lifestyles. At the same time, falling demand from cafes and restaurants is likely to contribute further to this fall. These venues are key channels for milk consumption, and they have lost patronage amid widespread cost-of-living pressures related to high inflation and interest rates.

Milk consumption has fallen consistently over the past decade, after the major supermarket chains discounted their private milk brands by almost one-third to $1.00 per litre, spurring other retailers to follow suit and sparking the 'milk price wars' in 2011-12 and 2012-13. However, consumption began to drop off in 2013-14 and the declines have been relatively consistent ever since. Reduced production and an end to $1.00 per litre milk in the supermarkets have seen domestic milk prices rise over the past decade, contributing to a drop in per capita consumption over the period.

The growing adoption of milk alternatives has influenced per capita milk consumption over the long-term. Vegetarian and vegan diets are becoming more popular and the incidence of lactose intolerance is also growing. These trends are spurring greater consumption of soy, oat and almond milk, which are direct substitutes for drinking milk. As consumers perceive these milk alternatives as highly nutritious, high health consciousness is also propelling increased consumption of these products. The pandemic temporarily upended these long-running trends, especially during lockdown periods when cafes and restaurants were closed to in-person dining. In 2022-23, after pandemic-related restrictions eased, per capita consumption of milk spiked, driven by high levels of private savings during the pandemic and pent-up demand to return to cafes and restaurants.Overall, IBISWorld forecasts that per capita milk consumption will rise at a compound annual rate of 0.1% over the five years through 2024-25.