Starbucks is under pressure to drop its surcharge for plant-based milks. Here’s what it all means.

Alternative types of vegan milks in glass bottles on a concrete background. Top view
Plant-based milks, which can be made from nuts, grains or legumes, are growing in popularity. (Photo: Getty Images)

For years now, Starbucks customers who prefer their coffee with oat, soy or almond milk over cow's milk — whether because of veganism, lactose-intolerance or other reasons — have also had to swallow surcharges of around 70 cents extra per drink.

While much noise has been made about the practice — including, at various points, by animal-rights group PETA and by vegan Alicia Silverstone, who has called out the coffee giant about the upcharging — there hasn’t been much movement, until now in the U.K.

That's where, on Dec. 28, the coffee chain announced it would make “all dairy alternatives free” at its 1,020 U.K. locations as of Jan. 5. The announcement came less than three weeks after dairy-free advocate organization Switch4Good pressured the company to drop the fees through its Justice Cup campaign, arguing that doing so would “align with Starbucks’ stated commitment to sustainability,” as “oat milk requires 80 percent less land, 90 percent less water and emits less than one-third of the CO2 emissions" than the production of cow's milk.

That campaign now continues stateside, pushing Starbucks to drop the nondairy surcharge at its more than 9,000 U.S. locations, where, a Starbucks spokesperson tells Yahoo Life, “a splash” of any plant-based milk in one’s brewed coffee is free, but if it’s “more than a splash, it would be a charge,” similar “to other beverage customizations such as an additional espresso shot or syrup.”

The pressure from Switch4Good included a recent open letter to Starbucks CEO Kevin Johnson, printed as a half-page ad in the Seattle Times, signed by supporters including Olympic athletes and medical doctors and touting the positive environmental and health benefits of nondairy milk, particularly for the 36 percent of Americans who are lactose intolerant.

“On behalf of all people who are lactose intolerant and made sick by dairy, or who support social and environmental justice across the globe, Switch4Good loudly applauds Starbucks’ recent decision to eliminate the extra charge for nondairy beverages in the U.K.,” the letter reads. “This was a bold yet very smart move. You’re doing the right thing for your customers and the planet, considering the severe and unsustainable impact of dairy farming.”

What is plant-based milk, anyway?

Plant-based milk refers to beverages made by processing water with plant ingredients such as legumes (soybeans, peas), nuts (typically almond, pistachio or coconut), grains (oat or rice) or seeds (such as hemp or sunflower) in order to create nondairy alternatives. While they vary greatly in taste and nutritional content — some naturally contain protein, for example, some contain sugar and other additives, and some but not all are fortified, as is dairy milk, with vitamins A and D — all are significantly more ecologically sustainable than dairy milk, using less water (almond milk production uses a lot of water, but still more than 50 percent less than dairy production) and land, and causing less harmful emissions in their production.

But being mindful of the planet is just one reason some people opt for nondairy alternatives, while others, including many vegans, favor plant-based milks because, unlike dairy, they pose no harm to animals.

Still others choose plant-based milk because they're simply unable to digest lactose, a sugar found in dairy products. In the U.S., according to the National Institutes of Health, about 36 percent of people are lactose-intolerant, a genetic issue that mostly affects people of color — specifically African Americans, Native Americans, Asian Americans and Latinx Americans, as well as Ashkenazi Jews. That's why the campaign targeting Starbucks also calls the coffee giant out for “dietary racism,” through forcing those who can’t ingest dairy to pay more for an alternative. Others eschew dairy milk for a variety of other health reasons, including allergies.

The plant-based milks offered by Starbucks include soy, coconut and almond, which the company makes its own version of, and oat, which Starbucks serves through its partnership with the brand Oatly. (A spokesperson from Oatly declined to comment on any pricing details for Yahoo Life.)

In the U.S., vegan milk accounts for 35 percent of the total plant-based food market and 15 percent of all dollar sales of retail milk, according to the Good Food Institute, which works to accelerate the innovation of alternative proteins. Dollar sales of plant-based milk, it also reports, have grown 20 percent in the past year and 27 percent over the past two years.

Americans have been drinking less cow’s milk, meanwhile, falling at an average rate of almost 2.5 percent a year, according to the USDA — although it remains a staple item in nearly 95 percent of households.

In response to changing demands, many dairy producers now also make nondairy milks and other products — and at least one dairy, Elmhurst, announced in 2018 that it was dropping cow's milk altogether, instead shifting to plant-based almond, cashew, oat, walnut and hazelnut milk. Similarly, coffee chain Blue Bottle is differentiating itself from Starbucks by making oat milk its default for customers at some locations.

Nutritionally speaking, there is much debate over dairy milk vs. alternatives. The National Dairy Council says that milk “provides 13 essential nutrients in each serving including: protein, calcium, phosphorus, vitamins A and D and four B vitamins — B12, riboflavin, pantothenic acid and niacin.” Also, it notes, “Dairy foods provide about 52 percent of the calcium, 51 percent of the vitamin D and 17 percent of the protein consumed by Americans. Research shows that healthy eating styles, which include low-fat and fat-free dairy foods, are linked to a reduced risk of some of the most prevalent chronic diseases in the U.S. — type 2 diabetes and cardiovascular disease in adults — as well as improved bone health.”

But dairy products are also the top source of saturated fat in the American diet, notes the Physicians Committee for Responsible Medicine, a national membership organization of doctors researching and advocating for the health benefits of plant-based diets. As a result, consuming dairy has also been linked to heart disease, type 2 diabetes and Alzheimer’s disease. Studies have also linked dairy to an increased risk of breast, ovarian and prostate cancer.

Other research has shown no link between drinking cow's milk and a reduced risk of bone fractures, as well as evidence that the high amount of phosphorous in cow’s milk actually works against the body’s ability to absorb calcium. Cows, Switch4Good points out, are simply the “middlemen” for calcium, accruing it in their milk the same way humans can find it in a variety of food sources — including kale, tofu, white beans, bok choy, sesame seeds and fortified nondairy milks.

Why does plant-based milk cost more than dairy milk?

The answer here is complicated and again depends on who you ask.

According to Matt Herrick, spokesperson for the International Dairy Foods Association, which represents the nation’s dairy manufacturing and marketing industry, including some companies that make both dairy and nondairy milks (such as Hood, which makes Almond Breeze), “It is purely about economies of scale and supply and demand.”

Explaining further, Herrick says, the U.S. produced about 26 billion gallons of cow’s milk in 2020 — compared with about 375 million gallons of nondairy milks in 2021, the highest amount on record, which is just 1.4 percent of all the cow’s milk produced in the U.S.

“It’s important to note that cow’s milk goes toward making many, many products that [alternative] beverages do not — cheeses, cream cheeses, yogurts, kefirs, ice cream and related frozen confections, and many milk-derived ingredients that go into nutritional supplements (whey powders, etc.) and fitness and recovery foods and drinks,” Herrick says. “These other products really drive the dairy category as a whole and are why dairy consumption has continued to grow each year even as fluid milk consumption (cow’s milk) has declined in the U.S.”

Added to that, he notes, is that the economy is experiencing serious supply chain disruptions that have an impact on the sourcing of ingredients — and that plant-based beverages “are a mixture of many ingredients, whereas cow’s milk is just cow’s milk and perhaps Vitamin D," and “is sourced 150 to 300 miles from the point of sale — even at a coffee shop.”

Almond milk, for example, can have many other ingredients, including calcium carbonate, vitamin E acetate, vitamin A palmitate, sea salt, gellan gum and sunflower lecithin, which “could be difficult to source and more costly due to supply chain issues,” Herrick says.

But even the main ingredients can cause big fluctuations, says Emma Ignaszewski, corporate engagement project manager for the Good Food Institute. “There remains a large range in the price of plant-based milks based on ingredients,” Ignaszewski says. “Because of the gap in prices between raw materials like almonds, oats, rice, soy, and coconut, and the relative newness of some of these ingredient sources as the base for plant-based milk, there are efficiencies that we expect still to come as production scales. Additionally, plant-based milk companies today may have higher R&D [research and development], marketing and packaging expenses that will come down in the future.”

Further, she notes, as the plant-based milk market is still a small fraction of the overall milk market, “coffee shops may also not be able to purchase plant-based milks in volumes that are large enough to offer the greatest cost benefits. As more and more consumers request plant-based drinks, it’s likely the per-drink costs of having these products on hand will go down for operators.”

However, Switch4Good executive director and Olympic cycling silver medalist Dotsie Bausch — who was part of a 2018 public service announcement (view it above) from top athletes that aired during the Olympics about giving up cow’s milk for health reasons — say it’s the government’s dairy subsidies that create the biggest price disparities.

“The dairy industry is subsidized by the government at almost $40 billion a year,” she tells Yahoo Life, referring to a 2018 Canadian trade consultant analysis of American agriculture subsidies. (Yahoo Life reached out to the USDA for comment but did not receive a response.) Those subsidies, she points out, include the government-run marketing and research arms of the industry, allowing dairy farmers to operate without worrying about devoting resources to marketing, research or development.

“So, it is very much a false price,” Bausch says. “When you just have to manufacture it and bottle it and not do research or development and zero marketing? The ‘Milk does a body good,’ ‘Got milk’ slogans are delivered with the benefit of an annual budget from the government, which has its own milk marketing department known at MilkPEP. It funds the Olympics; it’s enormous.”

Herrick takes issue with that, however, pointing out that dairy makers are “food companies,” many of which produce alternative milks as well, and that they “certainly research, develop new products, invest in new facilities … advertise widely and more.” Further, he says, MilkPEP, the National Dairy Council and other entities overseen by the USDA are partially funded by a Dairy Checkoff program and milk processors, through which “dairy farmers themselves contribute a small portion of each dollar in sales toward industry research and promotion.”

Still, Bausch insists, “Dairy farmers pay a small fraction of their cow's milk production into a government system. They don’t have to do their own marketing. MilkPEP does it for them. So, they don’t have to be innovative or create or use one ounce of energy on marketing like is normally the case when one is pedaling a product.”

There's also a question of how much demand there is for cow's milk. A piece in the Northeastern University Political Review calls dairy a “dying industry,” noting, “Heavy subsidy masks the industry’s lowered demand.” It adds, “The dairy lobby is one of the most influential in Washington, wielding an inordinate ability to garner government support for their industry … The subsidies are bailing out a dying industry. As with all other goods, dairy production should be tied to consumer demand in the free market.”

The Starbucks spokesperson declined to provide specific milk prices or pricing differences as paid by Starbucks, as well as detailed surcharge prices, which vary by region.

Bausch says her organization’s estimates — based on milk prices at Costco, which is where some smaller mom-and-pop coffee places often get supplies, and where the price of a gallon of conventional dairy milk is about half that of plant-based milk — show a scant difference between dairy and plant-based when factoring in likely discounts based on Starbucks making its own alternative milks and other factors (bulk Oatly purchases).

“In the deepest dive we can do, it looks like for the three milks they make, the cost might be 9 to 10 cents more for a tall latte than one with dairy milk. And that could be low — it could be 20 cents — but they are still charging 70, 80, 90 cents, depending on the region, and the upcharge is the same whether it’s for a tall or a venti,” Bausch says. “When you look at the price they’re passing on to customers in the U.S., they are passing it on simply because they can, period. I don’t think you should just because you can.”

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