Supermarkets Bring Milk In-House

Kroger, Walmart and Albertsons are building their own bottling plants for private-label brands.

July 29, 2020

BENTONVILLE, Ark.—After years of decline, Americans are drinking more milk, and supermarkets are rushing to bottle their own private-label milk, the Wall Street Journal reports. Albertsons, Kroger and Walmart are all moving into the milk bottling business, building plants and working with dairy farmers.

The move has threatened some of the largest dairy operators, including Dean Foods and Borden Dairy, both of which were sold this year after filing for bankruptcy. Over the years, milk has fallen out of favor as consumers bought bottled water, juice or dairy alternatives, while breakfast cereal sales have plummeted, too. Around 3,300 dairy-cow herds vanished last year because of low milk prices. Annual per capita U.S. milk consumption has decreased about 40% over the past 40 years.

But the coronavirus pandemic forced sheltering at home, and that led to an increase in milk sales for the first time in 10 years, although overall demand declined because of hotel and restaurant closures. For grocery chains, milk purchases often lead to other sales. At Walmart, milk sales regularly hit the top 10 purchases. As previously reported in NACS Daily, even Coca-Cola has gotten in on the milk industry lately with its “Fairlife” milk brand, which has seen sales soar since consumers began sheltering in place.

Kroger processes about 90% of the milk sold in its stores. Walmart recently opened its own milk bottling plant in Indiana. “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,” said Delia Garcia, a Walmart spokeswoman.