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If Milk is Good For Us, Why Are We Drinking Less?

Jun 21, 2014 • 418 Views

Do you remember those milk mustaches?

An industry ad, "Got Milk" was the response to perfect competition

We first heard “Got Milk?” in 1993. I loved the campaign because, in class, it was the ideal way to illustrate a market that resembled perfect competition. Since firms are small and their products are identical, in perfectly competitive markets one business has a tough time differentiating itself from another. For milk, that meant less incentive to innovate and industry ads.

Increasingly though, milk ads seem not to be working. Looking at milk consumption since the 1970s, the USDA reports that the proportion of preadolescent children not drinking milk daily rose from 13% to 24%. They also point out that the trend has gone on for a long time. Those of us born during the 1960s drink less milk than our grandparents who were born before 1930.

Because of perfect competition, milk producers advertise together but still consumption is down.

From: USDA

So, what has happened? Yes, we are consuming the same volume of beverages–but just not as much milk. The reasons range from changing demographics (for example baby boomers and Hispanics, two high growth groups, are drinking less milk) to lack of innovation, to some price volatility, to more competition.

Here is what we have replaced our milk with:

Perfect competition makes it rough for milk producers to compete

From: CoBank

 

Our bottom line? Primarily because of perfect competition, milk producers have a tough time competing against each other and the new drinks that have entered our diet. (And we haven’t even mentioned the role that government plays with price supports but we will… another day.)

What do you drink instead of milk? Please let us know in a comment.

Sources and more...H/T to the Washington Post Wonkblog for their milk article and their links that took me to a wealth of facts here from CoBank and here from the USDA.

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