‘Crony-ing’ over spilled milk

As more and more non-dairy, plant-based milk products make their way onto supermarket shelves, the dairy industry has begun lobbying the U.S. Food and Drug Administration (FDA) to limit which products are permitted to use the word “milk” on their labels.

While ostensibly operating under the auspices of “consumer protection,” this type of government coercion rarely benefits consumers. Instead, as protectionism often does, it stifles consumer choice or the innovations that threaten incumbents.

{mosads}These efforts seem to be paying off for the milk industry, however. FDA Commissioner Scott Gottlieb recently issued a statement saying:

“One area that needs greater clarity — and which has been the subject of much discussion of late — is the wide variety of plant-based foods that are being positioned in the marketplace as substitutes for standardized dairy products.”

His statement may be an indication that the FDA indeed intends to slap regulations on plant-based milk products.

The debate over dairy product labels has also reached Congress, where a recent effort to stall plans for new requirements set off a small, yet vitriolic battle.

Pro-dairy Sen. Tammy Baldwin (D-Wis.) called the effort “an attack on dairy farmers.” Sen. Mike Lee (R-Utah) countered, “No one buys almond milk under the false illusion that it came from a cow. They buy it because it didn’t come from a cow.”

Stricter labeling rules would cause a financial blow to the burgeoning non-dairy milk industry as well as consumer wallets.

Non-dairy milk manufacturers would need to invest in rebranding, pull products from shelves for relabeling and launch expensive product education and marketing campaigns — all of which drive up the price of non-dairy “milk” products.

These costs of burdensome regulation could also reduce consumer choice by clipping the wings of upstart non-dairy milk companies just as they’re beginning to soar.

In the case of milk labeling, there’s evidence that indicates implementing a rule to “protect” consumers would be solving a manufactured problem. A recent report by Mintel, a market research agency, concludes that consumer preference is driving the increase in non-dairy milk’s market share, not confusion.

Furthermore, the report asserts that 90 percent of consumers who purchase non-dairy milk also purchase dairy milk, which indicates they understand the difference between the products. Both of these findings undermine the argument for government intervention.

Still, the dairy industry’s lobbying efforts should not be underestimated. The nearly $40 billion domestic industry may have reason to worry, after all. According to the Mintel report, non-dairy milk products have seen 61-percent growth in sales since 2012, whereas dairy milk sales saw a corresponding 15-percent drop.

Given that consumer preferences, not confusion, drive milk-purchasing decisions, successful label lobbying by the milk industry would only postpone inevitable market share loss at the expense of consumers.

The milk industry’s methods are familiar. In recent years, the hotel industry has ramped up lobbying efforts to stymie the growth of Airbnb and other online short-term rental marketplaces.

The taxi industry is waging an open war against ride-sharing services by pressuring local government to impose regulations designed to limit ride-sharing companies from expanding their foothold in the market.

Automobile dealers have successfully lobbied state legislatures to pass laws preventing new vehicle manufacturers from selling directly to consumers.

Sometimes the government intervention story can have a happy ending. In this case, however, lobbying efforts on the part of the dairy industry appear self-serving without regard for the beneficiary of this purported concern: consumers.

Kyle Burgess is executive director of Consumers’ Research, the nation’s oldest consumer affairs organization.