"I Don't Want to Drink Milk"...People Seeking Imported and Alternative Milk Due to Rising Prices

Published 20 Nov.2022 17:00(KST)

Consumer Response 'Cold' to Milk Price Increase
Turning to Imported and Alternative Milk
Dairy Companies Also Compete to Dominate Alternative Milk Market

Maeil Dairies Amazing Oat 2 Types. / Photo by Maeil Dairies

[Asia Economy Reporter Song Seung-yoon] Amid growing concerns over 'milkflation,' where food prices are rising consecutively due to the increase in milk prices, more consumers are opting for relatively cheaper imported milk instead of domestic milk or switching to alternative milk options.

According to the industry on the 20th, following the rise in raw milk prices this year, major dairy companies such as Seoul Milk Cooperative, Maeil Dairies, Namyang Dairy Products, and Dongwon F&B implemented price increases for dairy products including fresh milk as of the 17th. Prices were raised by about 5-9%, bringing the price of fresh milk to the high 2,800 won range. Although this falls short of the initially expected 3,000 won range, consumer reactions have been cold. The main sentiment is that milk is too expensive compared to the past and, given the many alternative products available in the market, there is no reason for milk to be this costly. Oh Joo-hee (37), a resident of Anyang, Gyeonggi Province, said, "In the past, there was a strong perception that you had to drink milk no matter what, but these days that's not necessarily the case. I occasionally buy it to eat with cereal, but if prices keep rising, I think I will buy it less and less."

For this reason, the movement to seek relatively cheaper imported sterilized milk has also become active. Online, there are numerous reviews stating that there is little difference in taste and nutrition between domestic and imported milk. The fact that sterilized milk can be stored for up to six months to a year due to the sterilization process is another reason for its popularity. Polish milk brands such as Mlekovita and Got Milk are sold at around 1,200 to 1,300 won per liter, which is about half the price of domestic milk. Even when considering shipping costs for multiple purchases, it is still cheaper. In fact, the import volume of sterilized milk in the first half of this year was about 14,000 tons, a 57% increase compared to about 9,000 tons in the same period last year.

Alternative milk is also gaining attention as another option. Alternative milk is a beverage made by extracting protein and fat components from plant-based ingredients such as soy or almond milk to resemble milk. According to market research firm Euromonitor, the domestic alternative milk market size grew 35.9% over five years, from 510.9 billion won in 2016 to 694.2 billion won last year. It is expected to reach 1 trillion won by 2026. In contrast, the domestic milk market size has only grown at an average annual rate of 1.7% over the past five years.

Companies are also quickly entering the related market. As milk consumption gradually decreases, they see diversification of business as the only way to find a breakthrough. Maeil Dairies has been focusing on the plant-based alternative milk business since 2015. It was the first to enter the alternative milk market domestically by importing the American Blue Diamond's 'Almond Breeze,' and in August last year, it launched the plant-based beverage brand 'Amazing Oat,' directly manufacturing and selling it. Recently, it opened a pop-up store called 'Amazing Oat Cafe' in Seongsu-dong, Seoul, and is conducting various marketing activities.

Namyang Dairy Products also launched the plant-based beverage 'Almond Day' last September. This is its second attempt after discontinuing the plant-based ingredient brand 'Nature is the Answer,' introduced in 2019. It was released in two versions: 'Original' and sugar-free 'Unsweet,' and recently intensified market efforts by releasing a CM song featuring the Almond Day character 'Mondy.' Seoul Milk is also pursuing differentiation strategies by launching functional products such as lactose-free milk. In addition, they are focusing on product diversification by introducing home meal replacements and desserts using raw milk, such as pizza.

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An industry insider explained, "Due to factors such as the preference for imported milk, decreased consumption caused by low birth rates, and diversification of alternative products, the milk market is expected to continue its current trend. Therefore, companies have no choice but to survive by diversifying their portfolios with alternative milk and functional beverages."