How Dairy Alternatives Affect Coffee Shop Franchise Owners’ Bottom Lines
By: PJ's CoffeeWith more Americans leaning toward consuming plant-based diets, or at least considering it, coffee shops are strategizing how to accommodate the demand for alternatives to cow’s milk. It’s becoming more common for consumers to request their cappuccino or latte be made with a dairy alternative, or add a splash of it to their black coffee.
If coffee shop owners ignore the demand, they risk taking a hit to their bottom line. But, if they satisfy the demand, they could see a boost. Dairy alternatives should not be ignored, but at PJ’s Coffee it’s important for us to harness trends at the right time in order for our franchisees to profit from them as much as possible.
Non-Dairy Milks Make a Big Splash
The popularity of non-dairy milks is on the rise. Sales of alternatives to cow’s milk increased 61 percent between 2012 and 2017, and nearly half of all grocery shoppers in the United States purchase dairy alternative products. Sales of dairy alternatives in 2015 amounted to $8.22 billion and is expected to hit $26.31 billion in 2024.
The main reason so many Americans are opting for plant-based milks is generational. The largest consumer group living today, millennials, and Generation Z tend to be more health conscious and more concerned about animal welfare, sustainability and the environment than older generations. They’re shunning cow’s milk because they perceive cows to be maltreated and damaging the environment, which fuels plant milks’ cleaner reputation. Another reason plant-based milks are popular is the large population of lactose intolerant consumers. It’s a much bigger number than most people realize – more than two-thirds of the world’s adults are lactose intolerant. Taste is also a contributing factor, with many consumers saying plant milks taste better than cow’s milk.
Alternatives are a Matter of Taste
Currently, almond, coconut and soy milks are the most popular dairy alternatives, including at PJ’s Coffee Shops, where they are available throughout our franchise system. They provide the texture of cow’s milk, but also provide their own unique flavor profile that consumers love.
- Almond milk – Provides a nutty and mildly sweet flavor, along with fewer calories than a serving of skim milk.
- Coconut milk – Delivers that distinct coconut flavor and more calories than almond milk, but fewer than cow’s milk. It also provides more calcium than skim milk.
- Soy – The longtime traditional non-dairy milk can sometimes add a hint of bean, but is creamy and delivers a good amount of protein per serving – about 8 grams.
However, there are many more plant milks vying for top consumers’ choice, including cashew, hemp, pea, rice and oat, which PJ’s Coffee is taking a close look at. Oat milk, which is mildly sweet and has a thickness between cream and water, is taking the lead over the others.
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PJ’s Considers When to Introduce an Alternative
We looked at integrating oat milk into our menu, but it’s just now catching on in the market. When a product or trend is brand new, there’s typically not enough momentum or knowledge among consumers at that time to make its use profitable for franchisees. However, when oat milk becomes more prevalent among consumers, we plan on testing it in some LTO product spotlights. If it’s well-received, then we’ll consider making it a permanent option for our guests.
“More people are eating 100 percent plant-based burgers as a meat alternative, and that’s carrying over into the dairy world,” said Reid Nolte, vice president of brand strategy for PJ’s Coffee. “We are preparing for it. But, if you roll something like oat milk out too early and it doesn’t work, product spoils, franchisees send it back, and by the time the customer is actually ready for it, franchisees may be wary of bringing the product back.”
At PJ’s Coffee, we keep pace with the trends. We know that an increasing number of Americans are scrutinizing what they put in their bodies and want choices, and we have to meet that demand to stay relevant. By diversifying our “milk” selection, we can attract new customers while offering something new to our loyal guests. But we also don’t rush in to invest in products that might not be popular tomorrow. With our franchisees’ bottom line in mind, we carefully analyze each trend’s staying power – including dairy alternatives.