Per capita retail consumption of fluid cow’s milk in the United States has steadily declined since the 1950s. That percentage decline accelerated in the past two decades as the market for plant-based milk substitutes surged. This paper estimates the impacts of the availability of plant-based products on the retail prices and quantities of fluid cow’s milk products in the United States, using a discrete-choice demand model with random coefficients. Results from the demand estimates show that plant-based milk is more substitutable for organic and lactose-free cow’s milk products than for conventional cow milk. Correspondingly, the counterfactual simulation reports that the removal of all plant-based milk products from the choice set would lead to a 20% increase in quantity demanded for organic cow’s milk, a 15% increase for lactose-free cow’s milk, and a 9% increase for conventional cow’s milk. The counterfactual results indicated that annual U.S. fluid cow’s milk consumption would increase by 1.6 gallons per capita, from 16.3 gallons to 17.9 gallons in 2020, in the absence of availability of plant-based milk in the consumer’s choice sets. Out of the 5.1-gallon decrease in annual per capita cow’s milk consumption from 2006 to 2020, the counterfactual experiment reveals that the availability of plant-based milk is responsible for about 32% of this drop. Finally, this paper conducts policy-relevant simulations and finds that USDA-regulated minimum farm prices for milk used for fluid products have reduced the consumption of cow’s milk and increased the consumption of plant-based milk, but the impacts have been small.

This paper estimates the causal effects of the introduction of refrigerated almond milk on the prices and quantities of cow’s milk products and soymilk by exploiting the variation in the availability of refrigerated almond milk in retail stores induced by the staggered rollout across the United States from 2008 through 2010. With conditional parallel trend assumptions that account for the selection mechanism behind introduction timing, the empirical analysis uses recently developed econometric estimators to estimate the price and quantity effects of refrigerated almond milk. Using monthly retail store scanner data, the econometric results show that the introduction of almond milk significantly reduced the short run (through 2010) retail quantities of soymilk (6%) and retail quantities of organic and lactose-free cow’s milk (3%), while having no significant effects on quantities of conventional cow’s milk. Results from dynamic econometric specifications show that the short-run monthly quantity effects became more pronounced over time as the market for plant-based milk expanded to additional locations. Short-run price effects remained minimal for all milk products over the horizon studied.