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Dairy Milk


Plant Based Drinks

Beef Burgers


Plant-Based Burgers

Meat Pizza


Plant-Based Pizza

I’m writing this article in the shadow of the Government’s announcement on the 4th January to move the country into full lockdown. My abiding memory of the first merry lockdown in 2020, wasn’t about the tuition of home schooling – in fact it went relatively smoothly, aided by the incredible organisation and positive spirit of our daughters’ teachers. What struck me was how much food we seemed to get through, the amount of cooking required for the four of us, and dare I say it, how much it cost!

Many households will be in the same situation as us, cooking a lot more at home over these next few months with the added dimension of a dry and vegan January. You may have already exhausted all the permutations of recipes made from the humble chickpea, staved off complaints about the flavour of the (oat) milk in the cereal and are counting the days before you can have crispy bacon again. The cost of your groceries might also be on your mind.


There has already been a fair amount written about the cost of going vegan and I don’t intent to re-hash these arguments again.  Where there has been less research conducted is understanding the true cost of producing plant-based foods vs their non-vegan alternatives. With my interest in cost modelling food products, coupled with Mintec’s fantastic data analytics, we have the direction for this article:

1. What are plant-based proteins and how do they compare to each other?

2. How does the cost structure of similar plant-based and non-plant based products compare?

3. If there is a premium for producing plant-based products, is it justified?

4. How could this premium change over time?

As there is an explosion of plant-based products and the market is developing rapidly, the answers to these questions will, no doubt, change over time and vary by product group.  Nevertheless, in this article and a couple more over the next few weeks, I'll be comparing a sample of three typical products that are produced and consumed:

I've written this article in partnership with Mintec. They're passionate about data with excellent market insights on the food and drinks sectors. Researching this article with them proved to be energising start to 2021!  


To find out more about their business, visit:

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Milk and Plant-Based Drinks

Dairy milk is incredibly cheap for the consumer and farmers are understandably vocal just how tough it is to run a viable business. Farmers with sufficiently large herds and economies of scale can make the numbers add up, but a dry summer, higher feed costs or a dip in the milk price can leave them in a precarious place. According to AHDB, over the last 25 years the total UK herd has dropped 27% and the number of registered farms has dropped 66%. Up to a quarter of farmers are forecast not to break-even.

I’ve heard it mentioned in years past that milk can be one of those staple products like bread, eggs and bananas that get sold as a loss leader by retailers to win the supermarket price wars and encourage shoppers in to store. Through cost modelling, I was keen to test this hypothesis and then understand what impact the low prices of milk has on the plant-based milks, ‘mylks’ or ‘m****’ if we’re playing the grey area or ‘plant-based drinks’ if we’d rather not get a ticking off.

Let’s kick off with the price of dairy milk. The farmgate price has been around the 28-30 pence/litre for the last 3-4 years. Even though milk is a true commodity, retailers and processors (especially those that are farmer owned coops) will be most unhappy to see prices drop back to the levels seen in 2016 or pre 2013.  It’s too damaging for the dairy industry; farmers would be too noisy in their response and it generates bad press. There are pricing mechanisms in place with farmers and retailers that reduce the chance of this happening but dynamics like Covid can put a strain on these mechanisms. For now, let’s assume the dairy milk price will remain fairly stable for the next few years.

210115 comparison of plant based and mil

How do the 2 industries compare?


Are plant-based foods being sold at unjustified premiums?

Plant-Based Proteins

While global plant-based protein production stands at well over 500 million mt, only 2.5 million mt are actually used as a protein ingredient for human food consumption at the moment – the remainder is used to feed animals. Among those 2.5 million mt there are, of course, many different types of Plant-Based proteins which all have different purposes. Let’s look at this in more detail.

In the breakfast sector, the key dairy alternatives are nut, soya, oat or coconut based while in the snacking, lunch and dinner segment the most common plant-based alternatives to meat are based on pea, soya, mycoprotein or mushroom.  Further to this, the way in which the underlying plant-based protein is produced is also quite different. In the dairy alternative segment, the base product, in simplistic terms, is ‘only’ crushed/milled and then mixed with water, stabiliser, emulsifiers, flavours, colours and sometimes sugar to create an alternative for milk. Milk has an average protein content of 3.4 grams per 100ml which can be achieved by the described process with some plant materials.

This is different for the animal protein alternative where the base product (pea or soya) needs to be mixed with twenty or more products to create a sausage or beef like taste and appearance. Beef has an average protein content of around 30g per 100g which means the pea or soya needs to undergo a concentration or isolation process to increase its protein content to get closer to the animal product's protein content. This process is more costly and has higher barriers to entry – keep this in mind for our next session!

We will be breaking these costs and products down into much more detail over the coming sessions benefiting from Mintec’s proprietary Benchmark Prices in the plant-based ingredient and nut sectors.

210115 Mintec Milk Graph.jpg

~28-30 pence/litre

Source - Mintec Analytics

Pricing of Milk vs Plant-Based Drinks

Now let’s see how the price of dairy milk compares with its plant-based alternatives:

210118 Prices of plant based milks vs wh

Data collated on 6/1/21 from a major UK supermarket. All data is based on conventional, non- organic products, for all listed products at, or close to, 1 litre pack formats. Whole milk is for 2 pints.

One can see clearly that the prices of the plant-based drinks are around twice that of conventional milk.  Is this price premium justified? The answer lies in comparing the characteristics of the dairy and plant-based drinks industries which are totally different.

Currently, the characteristics of the plant-based sector result in a more expensive cost model compared to dairy. As time goes on, economies of scale, less requirement to invest in R&D, marketing and capital expenditure and increased competition are likely to mean the cost structure for plant-based drinks becomes more competitive.

Plant based recipes

Recipes fall into 3 categories: nut based (almond, hazelnut), cereal/legume based (oat, rice, soya, pea) or coconut. Recipes are 85-95% water with only 2-6% coming from their named ingredient. Other materials added include stabiliser, emulsifiers, flavours, colours and sometimes sugar.

Most plant-based brands try to mimic their dairy competitors with the equivalent of skimmed, semi-skimmed and whole fat as well as speciality products like ‘barrista’ style targeted at coffee chains. Naturally, the dairy industry doesn’t like being mimicked and plant-based products in Europe can’t be compared to dairy products in the future after an EU ruling in 2020. The reality is that plant- based drinks have quite different nutritional profiles from dairy milk. Only pea and soya drinks have a similar level of protein as whole milk with pea having a similar (but lower) nutritional balance to milk. Products like almond drink are quite different to dairy milk:

210118 Nutritionals of plant based milks

Cost Model Comparison

Dairy is a tight cost model.  Once the cost of the milk has been accounted for at 28-30 pence/litre (~ £280-300/mt), this only allows  £200-300/mt for all the costs associated with getting the product on the shelf at the retailer, depending on the pack size. This results in simple packaging and streamlined bottling and logistics. Allocation for R&D and overheads is very slim.

The materials for the plant-based milks are marginally cheaper - typically around GBP £250/mt (oat-based drinks closer to £100/mt and pea based up to  £300/mt). Given that the retail prices for plant-based products are double that of dairy, more can be spent on the overheads and marketing of building the business. Tetrapac packaging and the profits both for the brands and the retailers are higher. Even for the more expensive almond milk, raw material prices have been particularly attractive this year with the Mintec Benchmark Prices (MBP) for shelled almonds, delivered to Europe, falling to 9 year lows of £3598/mt during August of 2020.

210118 Prices of plant based milks vs wh

Nutritional values based on typical products and will vary from brand-to-brand. Snap-shot taken from leading brands nutritional descriptions on 6/1/21

All costs are directional estimates not based on any one company. There will be considerable differences from company to company due to factors like, specific recipe design, pack format, location of factory production, country product is being sold, size of the business and how they decide to invest in R&D, overheads and marketing. Some companies may choose to invest all their profit back into driving further growth. Costs will change over time.

Review of cost elements

Reviewing each element of the cost model comparison graph shows where the differences lie between milk and plant based drinks

210118 Table of milk vs plant based.png


Milk is incredibly good value for the consumer, cheaper in fact than some bottled water. On a per litre basis, it generates a low profit for the farmer, the dairy and the retailer. From this point of view dairies must be looking across to the plant-based drinks with a degree of envy – some are already launching their own dairy free drinks. Retailers need to strike a balance between supporting the dairy industry and providing milk for the 96% of the sector that is still dairy with the inevitable switching from dairy into plant-based.

Being a younger ‘challenger’, non-commodity industry with only 4% of the total milk market it’s not surprising that the plant-based drinks are more expensive and generate more profits throughout the end-to-end supply chain. Plant-based drinks are ripe for innovation and with their environmental benefits are highly attractive to investors as can be seen by the big investments being made in R&D and capex and eye watering valuations of some brands. Except for almonds (global crop of 2M mt isn't that big), the base materials for plant-based ingredients are plentiful and availability of materials shouldn’t be a limiting factor in plant-based expansion.


How does the cost structure of similar plant-based and non-plant based products compare?


Overall plant-based products are more expensive to produce than dairy (a bit cheaper on materials but more expensive on packaging and blending/bottling).

If there is a premium for producing plant-based products, is it justified?


Broadly speaking the premium for plant-based is justified as milk is (too) cheap in comparison and the nascent plant-based industry doesn’t have the economies of scale that dairy has but has higher costs for overhead R&D, marketing, logistics and global expansion.

How could this premium change over time?

As plant-based drinks steel more share from dairy the plant-based drinks premium should reduce.  In practice brands and retailers will try to hang onto this premium to generate more profits for the sector and drive further growth.

Food for thought….

What will happen to the prices of dairy milk and plant-based drinks as the plant-based drinks continue to steel share from milk?

If you think prices will start to change at what point will this be? When plant-based drinks have share of 10%, 20%, 30% of the total milk market?


How will the dairy industry respond to the plant-based drinks hunger for market share?

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