You’ve read all the articles, seen all the videos, and decided to make the switch to a vegan diet!
You log onto your favourite e-commerce store and are searching for vegan milk options when you realize something. (If you want to get a better understanding of what exactly Vegan Milk is and why you should drink it, check out our blog - Vegan Milk: Types, Benefits, and Brands – Vegan Dukan) All the vegan milk options that you see are pricier than their dairy counterparts! You still buy some products to try them out but are left thinking, how is it that all the vegan options are more expensive than their dairy counterparts? In this blog, we’ll explore the 4 broad reasons why the cost of vegan milk options is higher than that of dairy milk options!
Subsidies - The Dairy industry is backed by governmental subsidies which all it to sell its products at very cheap prices. On the other hand, the vegan industry is not yet backed by subsidies, which is one of the reasons why the vegan industry is not able to price its milk alternates as aggressively as the dairy industry. However, this is just one of the reasons behind the cost difference! A rough estimate of the various subsidies that the government gives for various processes in the dairy industry comes to a conservative average of approximately 25 lakhs!
Availability - Since the demand for dairy products, especially milk, has been around in India for literally centuries, the dairy industry has had ample amount of time to develop, adapt and spread outlets of various sizes across the country, depending on the demand. This close proximity allows the dairy industry to spend as less as possible on transportation and hence get their products to consumers at cheap prices. However, especially compared to the dairy industry in India, the vegan industry is still in its infancy. Because of this, they have not yet had the time to spread across the country. As a result, they have to bear the transportation costs, which ultimately add to the cost of vegan milk!
Taxes - Taxation also plays a crucial role in deciding the price of any product. While some dairy products are tax-exempt, most of the dairy products that we consume every day come under the 5% GST slab while butter, cheese and ghee come under the 12% slab. On the other hand, vegan products, which are targeted at being replacements for dairy or meat-based products, are generally processed and as a result, come under the highest tax slab i.e 28%. This huge difference in taxes
Manufacturing Costs - As discussed before, the dairy industry has been around for centuries, this has allowed the industry as a whole to improve its efficiency by leaps and bounds, moving from completely manual, and slow processing to completely automated and highly efficient processing. This has allowed the manufacturing costs of dairy milk to drop substantially. On the other hand, the vegan industry is still in its infancy and as a result, has not yet benefited from years of refinement and efficiency increments in its manufacturing processes. Hence, higher manufacturing costs also influence the overall costs of vegan milk products.
Packaging - When you go to the market to buy milk, (or when you used to be able to go out before COVID :P) you’re able to get most milk variants either in temporary packaging or in some cases even without any packaging. However, in the vast majority of cases, the same can not be done with any vegan milk variants. As a result, you almost always have to pay for quality packaging as well as the product! This leads to additional costs. However such packaging also increases shelf stability or consumable life of the milk!
Demand - Possibly the most important factor influencing the cost of vegan milk is the demand for it, or rather the lack thereof. Don’t get us wrong, we know that veganism is extremely popular in India and that more and more people are trying out veganism! However, it can’t be denied that the demand for vegan milk falls way short of the demand for dairy milk. This means that manufacturers of vegan milk are not able to achieve the economies of scale that manufacturers of dairy milk enjoy!
To understand why vegan foods are considered to be more expensive in general, check out our blog - Why is Vegan Food Costly? – Vegan Dukan
All of these factors together create a situation where the cost of vegan milk is much higher than that of dairy milk!