Why Vegan, Cow-Free Dairy Milk Presents a Major Problem for the Organic Food Industry

Do you buy organic milk because you care about the environment? Good news: there's something even better (and vegan) -- but it's not organic.

Aug 10, 2014 at 10:20AM

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"Dairy To Go" may be more accurate than you think. Source: Author image.

You're standing in the dairy section of your local supermarket, ready to cross one of the staple items off of your grocery list. Which milk product do you reach for? If you factor in the treatment of dairy animals and what gets injected into their bodies, you may reach for an organic product. After all, foods produced organically have the lowest environmental impact of available foods, right?

Not so fast.

Several teams of biohackers are leveraging the fast-falling costs of designing with biology to produce dairy milk and derivatives such as cheeses, desserts, and toppings that are 100% vegan and free of lactose, LDL cholesterol ("bad" cholesterol), hormones, pasteurization, and antibiotics -- not to mention dairy animals. Animal-free milk boasting all of those benefits -- and more -- presents an interesting dilemma for the organic food industry and consumers. Whole Foods Market (NASDAQ: WFM) and WhiteWave Foods (NYSE: WWAV) have cashed in on the marketing machine of the organic food industry, which uses terms such as "happy cows" to persuade consumers to purchase its products. I'm sure removing the cow from the dairy process altogether would make for some pretty happy animals, too. So how will the industry approach ultrasustainable cow-free milk?

What is animal-free milk?
The only difference between animal-free milk and what you buy today is the pureness; it's free of everything that is not a component of milk -- a simple mixture of six proteins (for structure and function) and eight fatty acids (for flavor and richness). Synthetic biology start-up Muufri (pronounced "moo free") has set out to use fermentation to engineer yeast in producing each component, which can then be combined in various ratios to create cow milk, goat milk, buffalo milk, and more. It's a biotech company founded by animal lovers who want to make dairy production more humane and ultrasustainable.

There will certainly be a "yuck factor" to the first food products created with industrial biotech and tissue-engineering platforms, but a steel fermentation vessel is a heck of a lot more sterile than a dirty cow or dairy farm. As Ryan Bethencourt, co-founder of synthetic biology incubator and accelerator hybrid Berkeley BioLabs, recently quipped:

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Besides, you don't drink milk because it comes from cows; you drink milk because you want milk. In other words, the milk is the product, not the cow. So why should the production system come into play in your purchasing decision? If you truly care about the impacts of your food, then you'll consider the benefits of each on a case-by-case basis, not because one is labeled organic.

Why animal-free milk blows up organic food arguments
The organic food industry relies heavily on advertising. Discussions about food are often framed as black and white, organic versus biotech, natural and good versus lab-grown and evil. Whole Foods Market is among the worst offenders in spreading this dichotomy. The argument works well because the benefits of biotech crops are largely invisible to the consumer (lower food prices, less pesticide use, and the like), not directed at the consumer at all (easier pest management and higher yields for farmers), or portrayed as a corporate biotech extending its reach over the food supply. The argument may be less relevant when it comes to dairy milk, but that hasn't stopped the organic food industry from hyping the benefit of organic products in this space as well.

Consider the vast differences in total sales and advertising costs between WhiteWave Foods, owner of the popular organic milk brand Horizon, and Dean Foods (NYSE: DF), the largest processor of milk and dairy products in the United States.

 

2013 Advertising Budget

2013 Total Sales

% of Total Sales

WhiteWave Foods

$169.5 million

$2,542 million

6.7%

Dean Foods

$22.0 million

$9,016 million

0.2%

Source: SEC filings.

Perhaps larger ad budgets are necessary for organic products, but more advertising comes with added scrutiny. WhiteWave Foods was named in a class action lawsuit filed in the U.S. District Court for six different jurisdictions alleging it lacked scientific evidence for claims surrounding its Horizon Organic products supplemented with DHA Omega-3. Worse than false and misleading claims, Horizon has been accused of using factory farms to produce its organic milk. This suggests that as long as animals are used as production vessels, it will be difficult to offer consumers truly sustainable and low-impact dairy products.

Animal-free dairy products provide the only real solution. Consider the comparison between the proposed benefits touted by organic food companies such as WhiteWave Foods and biohacker-led companies such as Muufri.

 

Organic Milk

Animal-free Milk

Growth hormones used

No

No

Antibiotics used

No

No

Factory farms used

Yes

No

Pasteurization used

Yes

No

Shelf life

Weeks

Months

Vegan

No

Yes

Lactose

Removed with enzymes

Never present

LDL cholesterol

Yes

Never present

U.S. pasture lands required

2,500,000 acres

0 acres

Do-it-yourself kits available

No

Yes

All of the benefits of organic dairy milk are offered by animal-free milk -- and then some. It's a landslide victory for biotech.

What will the organic food industry and consumers do?
The goal of WhiteWave Foods and Whole Foods Market is to make a wide range of premium and organic products accessible to a larger population. Many consumers happily purchase foods they believe are better for the environment and free of residue from synthetic chemicals and pesticides, which are widely believed to be benefits associated with the organic label.

However, the benefits of organic foods will soon be bested by biotech platforms that remove inefficient agricultural or animal production systems from the equation altogether. If you really care about the environmental impact of your food -- which is independent of the production system -- then animal-free dairy products will be your only choice.

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolioCAPS pageprevious writing for The Motley Fool, or his work for SynBioBeta to keep up with developments in the synthetic biology industry.

The Motley Fool recommends WhiteWave Foods and Whole Foods Market. The Motley Fool owns shares of WhiteWave Foods and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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