Balancing the cart: Milk, plant-based alternatives and nutrient availability in New Zealand households

Milk is a near-universal source of essential nutrients and contributes significantly to global nutrient availability. Global demand for milk continues to rise, driven by population growth, rising household incomes and favourable consumption patterns. Plant-based alternatives (PBAs) to milk seek to cater to the preferences of a share of consumers regarding sustainability, lifestyle or health-related matters (e.g. allergies and lactose intolerance). Though popular, PBAs do not stand as suitable nutritional substitutes for milk. These considerations emphasise the complex relationships between nutritional content and consumer preferences. This paper estimates a demand system for milk and PBAs in the New Zealand (NZ) market. We explore patterns of complementarity or substitutability between standard milk, reduced-fat milk and organic milk, and an aggregate group of PBAs. We use these results to calculate nutrient elasticities and assess changes in nutrient availability in response to prices and expenditure variations. We estimate a Quadratic Almost Ideal Demand System using purchase records for 2460 NZ households in 2021. We find that demand for standard milk does not show any substitutional relationship with PBAs. On the contrary, increases in the PBAs price lead households to switch towards standard milk, thereby increasing the availability of essential nutrients. That is, in the case of price increases, milk effectively offsets the reduction in essential nutrients as households switch away from PBAs, but PBAs cannot offset any reduction in essential nutrients as households do not find them to be adequate substitutes for milk.