Why is Plant-Based Milk Expensive? The Logic Behind Sales

by shruti verma


Picture this: You’re in a vegan grocery store, walking between isles, until you stumble on the best vegan milk that you had been searching for for your vegan whipped cream. Your eyes sparkle but that sparkle soon fades when you check out the price. Sounds realistic?. 


A big time complaint that anti-vegans have about not adapting to veganism is the price that a vegan lifestyle comes for. They’re not wrong, but that isn’t the complete truth about vegan products. Though expensive, vegan products are more cost efficient than their dairy alternatives.  Let’s explore why this is the case.


Answer #1: Higher Cost Of Production Of Nondairy Milk Compared To Dairy Milk.

But that reason is just the tip of the iceberg.


Firstly, the cost of producing plant-based milk is influenced by the raw materials used in its production. The availability and cost of primary ingredients play a significant role, with different plants having varying costs associated with cultivation, harvesting, and processing. Factors such as seasonal variations, weather conditions, global supply and demand, and agricultural practices impact the price of raw materials, affecting the overall production cost. 



Secondly, the processing methods involved in turning raw plant materials into milk also impact production costs. Steps like grinding, soaking, blending, and filtering require specific equipment, energy, and labor. The complexity and efficiency of these processing methods can influence the cost of production. Efficient and optimized processing techniques can help reduce costs, while more complex or resource-intensive methods may increase production expenses.


Lastly, Meeting specific quality standards and certifications can increase the production costs of plant-based milk. Compliance with regulations, food safety practices, and quality control measures may require additional investments in equipment, testing, and personnel. Adhering to these standards ensures product safety and quality but can add to the overall cost of production. The expenses associated with maintaining quality standards contribute to the final cost of plant-based milk.


From a corporate standpoint, the reasons above sound completely normal if corporations want to stay profitable from the vegan milk they’re selling. 


But There Are More Answers To Why Plant Based Milks Are So Expensive. 


Answer #2: Plant Based Dairy Alternatives Require Careful Branding


For corporations preferring eco friendly practices, one significant aspect in branding is the selection of environmentally friendly packaging materials and designs. Opting for sustainable options, such as recycled or renewable materials, incurs additional costs. However, this choice aligns with eco-conscious practices, reducing the product's environmental impact. Moreover, employing smart packaging designs that minimize waste, maximize efficiency, and allow for easy recycling or composting helps control production costs while enhancing the milk's sustainability. Incorporating eco-friendly messaging and certifications may increase branding and marketing expenses but attract environmentally conscious consumers, setting the product apart in the market. 


Answer #3:Scale Of Production 

Larger-scale production of plant-based milk allows manufacturers to benefit from economies of scale, leading to potential cost savings. Through increased volumes, manufacturers can negotiate better deals and secure lower prices for sourcing ingredients from suppliers. Bulk purchasing enables them to take advantage of discounts offered by suppliers for larger quantities. Moreover, efficient equipment utilization in larger production facilities helps reduce the cost per unit of production. Additionally, optimized supply chains and negotiated shipping rates contribute to lower distribution costs for larger-scale producers, potentially allowing them to offer their products at more competitive prices.


In contrast, small-scale or artisanal production of plant-based milk faces inherent cost challenges. Limited production capabilities result in lower production volumes, leading to higher costs per unit produced. Smaller operations may not possess the same bargaining power as larger producers when sourcing ingredients, resulting in higher ingredient costs. Furthermore, artisanal production methods often require more labor-intensive processes, leading to increased labor costs. These factors collectively contribute to higher production costs for small-scale plant-based milk producers.


The differences in scale between larger and smaller producers illustrate why plant-based milk can be relatively expensive. Larger-scale production benefits from economies of scale, enabling cost efficiencies and potentially lower prices, while small-scale production faces inherent cost constraints due to limited capacity and higher ingredient and labor costs.


As plant based milk’s popularity will increase, their production will increase and costs will likely come down. 


Answer #4: Taxes


Tax rates and regulations regarding dairy and plant-based milk products can vary by country and may change over time. In many jurisdictions, dairy milk is often categorized as an agricultural product and may benefit from lower or zero tax rates. On the other hand, plant-based milk products, being classified as processed or manufactured goods, may be subject to standard or higher tax rates.



Answer #5: Budget Allocated To Research And Development.

When companies put a lot of effort into improving the taste, texture, nutritional value, and sustainability of plant-based milk, it often involves investing in research and development (R&D). This means they spend money and resources on things like finding the best ingredients, experimenting with different formulations, and optimizing their production processes.


Research and development expenses can be quite significant. Companies need to source high-quality plant-based ingredients that taste great and have the right nutritional properties. They also work hard to create formulas that make their milk alternatives closely resemble the creamy goodness of dairy milk. Additionally, they explore ways to make their production processes more efficient and eco-friendly, reducing waste and minimizing their environmental impact.


All these efforts to improve plant-based milk come with a cost. Investing in R&D can increase the production expenses for companies. 


Not all plant based milks are produced or priced the same, so you may want to know the types of plant based milk that cost the least to purchase. Here’s your answer for the cheapest types of vegan milk available in India.


Oat Milk:

Oat milk has become widely sought-after as a vegan milk substitute in India, and it is now available at competitive prices. The increasing demand for oat milk has resulted in greater availability and affordability in the market. As more brands introduce oat milk options, the resulting competition has led to lower prices, making it a cost-effective option for consumers who prefer plant-based milk alternatives. The surging popularity of oat milk, along with its relatively uncomplicated production process, contributes to its competitive pricing in the Indian market.

Soy Milk:

Soy milk is a cost-effective vegan milk option in India due to the relatively low cost and wide availability of soybeans, which are its primary ingredient. The simple production process of soaking, grinding, and straining soybeans contributes to its affordability. Additionally, the large-scale production of soy milk enables economies of scale, reducing production costs and making it an economical choice for consumers. 


Coconut Milk:

Coconut milk, which is frequently utilized in Indian cuisine, serves as an affordable vegan milk alternative. Due to its wide usage in various culinary preparations, coconut milk is readily available and accessible at reasonable prices in the market. This popularity and demand for coconut milk contribute to its affordability, making it an attractive choice for individuals seeking a plant-based milk option. The versatility of coconut milk in cooking and its relatively lower production costs compared to some other vegan milk alternatives further enhance its affordability and make it a favorable option in India.


Almond Milk:

Almond milk has gained significant popularity as a plant-based milk alternative in recent years, thanks to its numerous benefits and unique flavor. Its growing demand has led to increased availability and a variety of brands offering almond milk options in the market. Despite being a slightly higher-priced option compared to other plant-based milk alternatives, almond milk still remains cost-effective due to factors such as its versatility, nutritional value, and consumer preference. The widespread popularity of almond milk has led to economies of scale in production, allowing for competitive pricing. Additionally, almond milk's long shelf life and suitability for various culinary uses make it an appealing choice for health-conscious consumers seeking a dairy-free and lactose-free milk substitute.

Conclusion:

The reason for greater cost of plant based milk is mainly due to the higher cost of production, which appears to be a product of lower scale of production. The good news is that vegan milk’s popularity is gaining pace and it’s set to scale up in future. Greater scale and greater demand will likely bring down the cost of production, hence bringing down the cost of sale. Generally, vegan milk from certain milk brands will have greater shelf life than dairy milk, making plant-based milk a very cost effective option for many.