Outline___________

I. Introduction
A. Challenges faced by the global dairy industry
B. Decline in dairy milk sales and rise of plant-based milks (PBMs)
C. Factors contributing to the shift towards PBMs

II. Growth and drivers of the PBM market

A. PBMs' market value and projected growth
B. Health and environmental benefits of PBMs
C. Influence of younger generations and societal changes
D. Consumer preferences and brand awareness in the PBM market

III. Factors affecting the production of soy and almond milk

A. Volatility in soybean and almond prices
B. Challenges faced by almond producers in California
C. Major players in the soy and almond milk market

IV. Success and challenges of Oatly

A. Expansion of the Oatly brand and its popularity
B. Lawsuit and impact on Oatly's share prices
C. Competition in the plant-based milk market

V. Impact of plant-based dairy alternatives on the dairy industry

A. Decline in the number of dairy farms
B. Nutritional considerations of cow's milk and alternative options
C. Growth of non-dairy milk alternatives

VI. Impact of COVID-19 and future outlook

A. Influence of the pandemic on consumer preferences
B. Positive outlook for soybeans in 2021
C. Expected trends in milk consumption

VII. Additional information and sources

A. Global land use for agriculture
B. Age-related market segments of PBM consumers
C. Historical prices of soybeans and almonds
D. Market share trends in the soy and almond milk market
Longform Summary___________

I. Introduction

The global dairy industry is facing challenges as consumers shift away from traditional dairy
products. Dairy milk sales have declined, with some analysts predicting a cumulative decline of
21% between 2015 and 2025. Environmental concerns, such as climate change and animal
welfare, have contributed to this trend. Plant-based milks (PBMs) have emerged as alternatives
to dairy milk, and their market value was estimated to be $20.5 billion in 2020, expected to
grow at a compound annual growth rate of 12.5%. PBMs promote their health benefits and
environmentally friendly characteristics. The decline in milk consumption is also associated with
health concerns, such as the link between dairy milk and higher rates of ovarian and prostate
cancers, and the association with increased cardiovascular risks. These factors, combined with
societal changes and the influence of younger generations, have contributed to the rise of the
plant-based milk industry.

II. Growth and drivers of the PBM market

A. PBMs' market value and projected growth:

Plant-based milks (PBMs) have experienced significant growth in the market. In 2020, the
market value of PBMs was estimated to be $20.5 billion. Furthermore, it is projected that PBMs
will continue to grow at a compound annual growth rate of 12.5%. By 2025, PBMs are expected
to account for 24% of the overall milk market.

B. Health and environmental benefits of PBMs:

PBMs are gaining popularity due to their perceived health and environmental benefits.
Consumers are increasingly concerned about their health and the impact of their choices on the
environment. PBMs are seen as a healthier alternative to dairy milk, as they are often lower in
calories, saturated fat, and cholesterol. Additionally, PBMs are considered more
environmentally friendly, as they have a lower carbon footprint and require less water and land
compared to dairy milk production.

C. Influence of younger generations and societal changes:

The rise of PBMs can be attributed to the influence of younger generations and societal changes.
Younger consumers, particularly those in the 25-44 year age group, are driving the demand for
PBMs. This demographic has disposable income and is more conscious of health and climate
impacts. Moreover, societal changes, such as increasing health awareness and declining birth
rates, have contributed to the shift towards PBMs.
D. Consumer preferences and brand awareness in the PBM market:

Consumer preferences play a significant role in the growth of the PBM market. Consumers are
choosing PBMs because they perceive them as healthier and more environmentally friendly
options. Brand awareness is also crucial in the PBM market, with private labels making up 15%
of the market. Additionally, consumers are becoming more knowledgeable about different PBM
brands and their offerings, leading to increased competition for market share.

III. Factors affecting the production of soy and almond milk

A. Volatility in soybean and almond prices: - Historical prices of soybeans and almonds in the
U.S. from 2008 to 2021 show significant fluctuations.
- Soybean prices range from $1.45 to $14 per bushel, while almond prices range from $1.56 to
$16 per pound unshelled.
- These price fluctuations can impact the profitability and stability of soy and almond milk
production.

B. Challenges faced by almond producers in California: - California is the major producer of

almonds, accounting for 68% of world production.
- However, almond producers in California face challenges such as wildfires and droughts.
- Farmers have implemented water-saving technologies, but these have not been widely
adopted in other producing countries.
- The price of California almonds has significantly declined from 2016 to 2020 due to various
factors, including competition and tariff increases.

C. Major players in the soy and almond milk market: - Danone's Silk dominates the soy milk
business in the U.S.
- Blue Diamond is the largest producer of almond milk, with a significant market share.
- Other major players in the industry include Oatly, which offers oat milk and other plant-based
milks, and various private labels.
- Brand competition and consumer preferences play a significant role in shaping the soy and
almond milk market.

IV. Success and challenges of Oatly

A. Expansion of the Oatly brand and its popularity:

Oatly, a brand that offers oat milk as an environmentally friendly alternative to dairy milk, has
experienced significant success and expansion. The founder, Toni Petersson, focused on
burnishing the Oatly brand and expanding it globally. He targeted the U.S. market and used an
unconventional strategy by partnering with a coffee shop chain, Intelligentsia, to introduce oat
milk to baristas. Oatly proved to be a viable substitute for dairy milk, especially when it came to
decorating lattes, and its popularity grew rapidly. By 2020, Oatly was sold in numerous retail
establishments and coffee shops. Oatly's success can be attributed to its alignment with
consumer desires for environmentally friendly alternatives and its commitment to addressing
climate change.

B. Lawsuit and impact on Oatly's share prices:

Despite Oatly's successful IPO in the U.S., 2021 has been challenging for the company. Oatly
initially seemed to weather the COVID crisis well by offsetting lost sales from restaurant closures
with increased sales through grocery stores and direct consumer channels. However, Spruce
Point Capital Management, an activist private equity investment company, filed a class action
lawsuit against Oatly, accusing the company of lack of transparency in capital expenditure costs,
water usage at its New Jersey plant, and suspicious accounting practices that inflated revenues
and profitability. One of the main points of contention was that Oatly's competitors, Califa
Farms and Chobani, were taking away market share, leading to a decrease in shelf space and
online price discounting for Oatly. This lawsuit had a noticeable impact on Oatly's share prices,
causing them to drop below the IPO price.

C. Competition in the plant-based milk market:

The plant-based milk market is highly competitive, with various brands vying for market share.
Oatly, as a popular oat milk brand, faces competition from other plant-based milk options such
as soy and almond milk. Other brands, including Elmhurst and Pacific Foods, have emerged in
the plant-based milk market and are able to command premium prices. The proliferation of
plant-based milk brands has resulted in competition for shelf space in grocery stores.
Differentiation in the market is achieved through factors such as flavor profiles, health
attributes, and input materials. As the plant-based milk market continues to grow, new entrants
will challenge the dominance of dairy milk and existing plant-based milk brands, creating a
dynamic and competitive landscape.

V. Impact of plant-based dairy alternatives on the dairy industry

A. Decline in the number of dairy farms:

The global dairy industry is experiencing a decline in the number of dairy farms. According to a
report by Mintel, the number of dairy farms in the US has decreased by half since 2003. While
the impact of plant-based dairy alternatives on this decline is relatively small, it is a contributing
factor to the challenges faced by the dairy industry.
B. Nutritional considerations of cow's milk and alternative options:

The nutritional considerations of cow's milk and alternative options play a role in the shift
towards plant-based dairy alternatives. Research from Harvard University highlights the health
concerns associated with dairy milk consumption, such as the link between dairy milk and higher
rates of ovarian and prostate cancers, as well as increased cardiovascular risks. This has led
some consumers to seek alternative options that are perceived as healthier.

C. Growth of non-dairy milk alternatives:

The growth of non-dairy milk alternatives is significant. According to an article in Forbes, the
non-dairy milk alternatives market is experiencing a significant moment. A report by Grand View
Research also projects growth in the non-dairy milk market in the coming years. Plant-based
milks, such as almond milk, soy milk, and oat milk, are gaining popularity among consumers who
are looking for alternatives to traditional dairy milk. This growth in non-dairy milk alternatives is
contributing to the shift away from traditional dairy products and impacting the dairy industry.

VI. Impact of COVID-19 and future outlook

A. Influence of the pandemic on consumer preferences:

The COVID-19 pandemic has had a significant impact on consumer preferences, including in the
dairy industry. As people faced lockdowns and restrictions, there was a shift in purchasing
behavior towards plant-based milks. Consumers became more health-conscious and
environmentally aware, leading to an increased interest in plant-based alternatives. The
pandemic accelerated the trend of consumers seeking out products that align with their values,
such as those that are perceived as healthier and more sustainable. This shift in consumer
preferences has contributed to the growth of the plant-based milk market.

B. Positive outlook for soybeans in 2021:

Despite the challenges brought about by the pandemic, there is a positive outlook for soybeans
in 2021. Soybeans are expected to experience increased demand as the year progresses. This
positive outlook is driven by factors such as the recovery of the global economy, the reopening
of foodservice establishments, and the growing popularity of plant-based diets. As more people
adopt plant-based eating habits and seek out alternative protein sources, the demand for
soybeans is likely to rise.

C. Expected trends in milk consumption:

Looking ahead, the trends in milk consumption are expected to continue shifting. Dairy milk
consumption is projected to gradually decline, while the consumption of plant-based milks is
expected to increase. This trend is driven by various factors, including health concerns
associated with dairy milk, environmental considerations, and changing consumer preferences.
As more consumers become aware of the benefits of plant-based milks and the negative
impacts of dairy milk production, the demand for alternatives is likely to grow. The COVID-19
pandemic has further accelerated these trends, as consumers prioritize health and sustainability
in their purchasing decisions.

Overall, the impact of COVID-19 on the dairy industry has been significant, with consumer
preferences shifting towards plant-based milks. This trend is expected to continue in the future,
leading to changes in milk consumption patterns and presenting opportunities for the growth of
the plant-based milk market. Additionally, the positive outlook for soybeans indicates potential
growth and increased demand for alternative protein sources.

VII. Additional information and sources

A. Global land use for agriculture

The global land area dedicated to agriculture is substantial, highlighting the importance of
agriculture in sustaining the world's population. According to data from Our World in Data, half
of the world's habitable land is used for agriculture. This includes 77% of the global calorie
supply and 37% of the global protein supply coming from meat and dairy.:

B. Age-related market segments of PBM consumers

The age-related market segments of plant-based milk (PBM) consumers are categorized by
sales. According to data from Mintel, the largest consumer segment of PBMs is individuals aged
25-44 years. This age group has disposable income and is conscious of health and climate
impacts, making them more likely to choose plant-based milk alternatives.:

C. Historical prices of soybeans and almonds

Historical prices of soybeans and almonds in the U.S. have varied over time. From 2008 to 2021,
soybean prices ranged from $1.45 to $14 per bushel, while almond prices ranged from $1.56 to
$16 per pound unshelled. These prices are affected by market conditions and factors such as
supply and demand.:

D. Market share trends in the soy and almond milk market

The market share trends in the combined soy and almond milk market in the U.S. have
fluctuated among different companies. From 2015 to 2020, the market share percentages for
major players ranged from 10% to 60%. This indicates competition and changing consumer
preferences within the plant-based milk market.:
Sources:
- Our World in Data
- Mintel
- Historical price data from relevant sources
- Market share data from industry reports and analysis