According to reporting by the Wall Street Journal, the world’s largest retailer—along with other nationwide grocers—has disrupted the American dairy industry by producing their own private label dairy products, which they sell at way more affordable prices than those made by big manufacturers.
The reason? Inexpensive milk draws more customers, according to Tony Sarsam, former CEO for dairy-industry giant Borden. “There are retailers who prefer to have really aggressively low prices on milk because it’s a great way to get people in the stores,” he told Fox Business. Since 90% of all Americans live within 10 miles of a Walmart, that’s a large market of potential milk buyers.
As the price of milk is going up, shoppers are increasingly choosing the most affordable milk option instead of more expensive organic or locally-sourced brands, according to the WSJ.
What’s driving higher milk prices? Kinks in dairy supply chains caused by the coronavirus pandemic have played a part, but so have changes in shopping habits—with more people opting for non-dairy nut and plant-based milk options, which has led to a 2.6% decrease in demand for traditional milk.
In the past few years, Walmart has relied more on their own dairy processing plants over long-term suppliers. The largest milk producer in the country, Dean Foods, recently filed bankruptcy largely because of Walmart’s decision to begin processing its own milk in 2017. A Walmart spokesperson defended their decision to produce their own milk, telling WSJ, “This work is an example of how we are always finding efficiencies within the supply chain to deliver on our commitments to everyday low prices and high-quality groceries.”
Milk still regularly ranks in the top 10 items most commonly purchased at Walmart’s stores, according to WSJ’s report. And now, the world’s largest retailer is likely offering the cheapest gallon of milk in the nation.
For more, check out the one surprising thing you’ll soon be able to get at Walmart.
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