Retailer-owned bottling plants keep store brand milk prices low

Retailers like Kroger, Walmart and Albertsons increasingly are venturing into the milk bottling business. A Wall Street Journal report recently epxplored how the retailers have built their own milk-bottling plants to support the production of their store brand milks at a lower cost than competitor brands. 

The article said that the grocers’ stepping into bottling is a threat to a $40 billion U.S. milk industry and the larger national brands, including Dean Foods and Borden Dairy, both of which recently filed for bankruptcy.

The article asserts that retailers rely on aggressively low milk prices to drive traffic and use their private brands for those value offerings. The category had been in decline until pandemic shopping boosted the category's sales, but the pandemic also has been difficult on farmers who had a surplus of supply. Publix, for example, helped dairy farmers by purchasing 350,000 gallons of milk from nearby dairy farmers and donating it to Feeding America.

The WSJ article said Walmart has been running its own milk-processing plant since 2016 to supply store brand milk to Walmart and Sam’s Club stores in the Midwest.

Read the full article on the retailers’ milk strategies and the impact on the dairy industry.