The dairy products market, which will be worth USD 649.88 billion in 2025, is expected to reach USD 813.58 billion by 2035, with a CAGR of 2.3% from 2025 to 2035. The growth is driven by numerous factors, such as the growing population globally, growing disposable incomes, and changing dietary habits. With customers becoming more health-conscious, the demand for dairy items like milk, cheese, yogurt, and butter has grown and now is found to be abundant in nutritional content.
Major drivers for this sector are the growing consumer base, especially in developing economies, due to rising urbanization and lifestyle changes, which have lifted the use of dairy products. Also, increasing awareness of the role of dairy in delivering nutrients like calcium, protein, and vitamins has once again spurred demand.
Urbanization is a key trend fueling the dairy industry, with time-starved consumers opting for convenient, ready-to-eat, and shelf-stable dairy foods like flavored milk and probiotic yogurts. Technological advancements in milk production and packaging are also increasing the shelf life and quality of the product, making them more attractive to a broad majority of consumers.
Sustainability initiatives in the form of environmentally friendly practices of cultivation, as well as preservation of resources in the production process, are also on the increase, most notably in terms of meeting demands for echogenicity in products. These innovations make it possible for dairy products to keep pace with the changing needs of a contemporary consumer industry, specifically those of sustainable and ethically sourced ones.
Dairy exporters have in place suitable circumstances with increased globalization to unlock growing industries whose demand for high-end options is on the increase. Growing consumer affluence in these industries is propelling premium dairy product consumption, which is largely responsible for industry growth.
This increased demand for value-added, healthy options also affects industry trends. With the dairy industry changing to fulfill these new demands, continuous product and process innovations can be helped.
In total, the dairy industry will experience steady growth boosted by technological advances, sustainability policies, and a higher global consumer count. The conjunction of these parameters indicates a good development of the dairy industry with new prospects both in developed economies and emerging nations.
Market Metrics
| Metrics | Values |
|---|---|
| Industry Size (2025E) | USD 649.88 billion |
| Industry Value (2035F) | USD 813.58 billion |
| CAGR (2025 to 2035) | 2.3% |
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Consumer trends, product development, and technological advances, to name a few, influence forces that hit the dairy industry. One of the most significant trends is consumers are increasingly choosing healthier convenience dairy foods. Functional foods are consumer trends with health benefits, like probiotics and fortified dairy foods.
This is part of a broader trend toward wellness and nutrition, and milk is part of a healthy diet. The trend for sustainable, organic and ethically milks will likely also increase as the interest in environmental sustainability and provenance continues to grow. This is increasingly the case in those industries where sustainability is an increasingly important consideration.
Product Development: Dairy companies are focusing more on developing new product lines to fulfill particular consumer needs. Low-fat and dairy-free products, as well as flavored milk, have improved considerably in recent years.
The industry has responded with products that cater to emerging trends in health and wellness. In particular, the rise in popularity of plant-based dairy alternative products, like almond and oat milk, is changing the dairy industry. And based on transformations from those changes, traditional options like milk and cheese remain the favorite household products in most households worldwide.
Being well aware of the continuous technological advancement of the industry; therefore, many dairy companies are pouring extended capitals into technology to upgrade the shelf lives and efficiency of production for the products. Innovative types of packaging such as vacuum-packing and high-refrigeration are making products more appealing by keeping them fresh and usable.
This comes at a time when consumers are opting for increasingly more ready-to-eat or quick-to-prepare options that align with the fast-paced nature of their lifestyles. Overall, these trends and buying factors show that the dairy industry is steadily diversifying and opening with a mix of healthy eating options, technological innovation, and changing consumer values.
The below table gives an overview of the change in CAGR over six months of the base year (2024) and current year (2025) for the industry. This analysis uncovers the critical fluctuations of performance and shows the pattern of revenue realization - giving stakeholders a clearer sight on the annual growth trajectory. H1 is short for the first six months of the year, from January to June. H2, the latter half of the year, the months of July through December.
| Particular | Value CAGR |
|---|---|
| H1 (2024 to 2034) | 2.7% |
| H2 (2024 to 2034) | 2.8% |
| H1 (2025 to 2035) | 2.3% |
| H2 (2025 to 2035) | 2.4% |
The above table presents the expected CAGR for the global demand space over the semi-annual period spanning from 2025 to 2035. In the first half (H1) of the year 2024, the business is predicted to surge at a CAGR of 2.7%, followed by a slightly higher growth rate of 2.8% in the second half (H2) of the same year.
Moving into year 2025, the CAGR is projected to decrease slightly to 2.3% in the first half and remain relatively moderate at 2.4% in the second half. In the first half (H1 2025), the industry witnessed a decrease of 40 BPS, while in the second half (H2 2025), the industry witnessed an increase of 10 BPS.
From 2020 to 2024 upon realization the consumers were believing in health and nutrition value of the dairy product on large basis thus they resulted broad-based growth in the dairy product industry. Consumption of protein-rich options like yogurt, cheese, and fortified milk was increasing, while functional dairy drinks and probiotic-enriched goods were increasing too.
Health-conscious consumers were drawn to organic and clean-label dairy goods, which, in turn, drove the growth of the value-added and premium dairy sector. Further processing technology improved product quality, while packaging technology improved shelf life but also convenience.
Food safety, antibiotics use and the environment forced milk producers to become more sustainable in the manufacture. The plant-based dairy alternative industry opened up, a sign that consumer consumption would slowly begin to change, as the traditional dairy industry expanded.
There will be a transition on the dairy front with sustainability and innovation on top of the agenda before 2025 to 2035. Food choices will continue to emphasize ethical sourcing, sustainable farming and green packaging. The growth of lactose-free, digestive-friendly, and plant-based options will reshape the competitive landscape, which will impact producers of traditional options.
AI-enhanced dairy farms, precision livestock monitoring, and blockchain supply chain transparency will all accelerate efficiency and sustainability. Alternative dairy and cultured dairy technology are on the evolutionary path that will change the industry forever giving us more consumer choices and less dependence on traditional livestock agriculture.
Regulatory frameworks will evolve and strengthen, with increasing emphasis on emissions reduction, animal welfare and food fortification quality. As the industry continues its transformation, both conventional and alternative dairy producers will be forced to balance innovation and sustainability.
Comparative Market Shift Analysis (2020 to 2024 vs. 2025 to 2035)
| 2020 to 2024 | 2025 to 2035 |
|---|---|
| Growing demand for high-protein dairy. Development of functional dairy drinks and probiotic products. | Higher demand for plant-based dairy product alternatives. Larger industry for fortified and personalized nutrition milk products. |
| Rising tendency towards organic and clean-label milk products. Large demand for value-added and flavored milk products. | Preference towards sustainability and ethical milk sourcing. Increased demand for dairy-friendly and digestive products. |
| More rigorous demands on food quality and safety. Controls on the use of antibiotics in milk production. | More stringent controls on sustainability and emission. Production policies in line with the manufacture of dairy substitutes. |
| Embracing processes of automation in dairy production. Enhanced packages for longer storage. | Machine-based dairy farming livestock and precise livestock tracking based on AI technology. Better manufactured cultured dairy improvements. |
| Dependence on local and regional dairy production. Challenge in cold-chain logistics and storage. | Blockchain transparency of dairy supply chains. Production of alternative protein sources to reduce livestock dependence. |
The industry, although set to grow steadily, is confronted with a number of possible risks that may affect its path. Raw material price fluctuation, especially the fluctuation of milk price, is one of the most significant risks.
Feed price fluctuation, transportation, and labor fluctuation can have a substantial impact on the profitability of dairy producers, particularly small- and medium-sized enterprises. These factors can increase the cost of production, which can pass through to consumers in the form of higher product prices and, consequently, lower demand for some dairy products.
Growing competition from plant-based foods is another threat to the dairy industry. With changing consumer preferences towards dairy-free foods for health, environmental, or ethical considerations, conventional dairy farmers can find it difficult to hold market share.
While plant-based options like almond, oat, and soy milk are becoming popular, the dairy sector is countering with innovations in conventional as well as plant-based dairy alternatives. However, growing plant-based industry penetration is an emerging threat that needs to be countered.
Finally, regulatory changes and sustainability pressures are the biggest threats to be looked out for. The dairy sector is also facing mounting pressures from governments and green groups on its environmental record, especially with regard to greenhouse gas emissions, water usage, and waste management.
Regulatory pressures or consumer boycotts on account of sustainability issues can cause supply chain disruption and require significant investments in altered production methods. Whereas the industry continues towards sustainability, regulatory threats still hold high-risk status.
Health-driven preferences elevate milk consumption worldwide.
| Segment | Value Share (2025) |
|---|---|
| Milk (Product Type) | 42.3% |
In 2025, milk remains the largest segment among dairy products, with a market share of 42.3%, followed by cheese with a market share of 25%. Milk maintains its position as the frontrunner, considering the necessity that it serves in terms of users and stakeholders - households, food service, and industry consumption.
The stakeholders who have kept expanding their milk product portfolios include Nestlé, Danone, and Lactalis, which have all introduced organic, lactose-free, and enriched varieties that reflect changing consumer tastes. Moreover, the growing focus on healthy diets has increased the demand for functional options, such as protein-enriched and vitamin-fortified milk, which have contributed significantly to the growth of the industry.
Moreover, several government programs promote the consumption of milk among children in schools and developing regions, which has increased the presence of the industry. The FAO has also set up several dairy development projects aimed at increasing the consumption of milk among African and South Asian countries, both of which have positively impacted this segment's growth.
Cheese captures quite a significant 25% of the industry and forms a very important part of the world's cuisines - practically all have their version of cheese. Emerging industries in this regard are witnessing a progressive demand for food from food service establishments, fast-food chains, and home kitchens.
Companies such as Arla Foods, Fonterra, and Bel Group are unveiling innovations and ranges of cheese products, including plant-based options, to attract a broader consumer base. In addition, the growing trend of on-the-go snacking, ready-made portions, and gourmet dining is increasingly driving up demand for such specialty and artisanal cheeses.
The menus of husky outlets such as McDonald's, Domino's, and Subway rely heavily on items made from quality cheese, resulting in a higher volume of cheese being consumed worldwide. International cuisines also extend to cover products such as mozzarella, cheddar, and feta, particularly in emerging industries.
Growth has also been reported in the cheese category involving Greek yogurt, ricotta, and paneer, which are increasingly consumed in nations such as India and the USA. To meet this demand, Kraft Heinz and Saputo have embarked on a mission to increase their cheese production facilities. The demand for cheese has also surged due to the growing trend of vegetarian diets as an alternative to protein.
Dairy Demand Surges in Retail Sector
| Segment | Value Share (2025) |
|---|---|
| Convenience Store | 66.6% |
Convenience stores will dominate the dairy segment, with the largest share of 66.6% by 2025, while supermarkets and hypermarkets will capture only 15% of the industry.
For this reason, convenience stores have this continued stake because they have expanded their locations and accessibility to consumers when quick dairy purchases (milk, cheese, yogurt, butter) are needed. 7-Eleven, Circle K, and Lawson expanded their single-serve milk cartons, ready-to-drink dairy beverages, and grab-and-go cheese snacks, targeting busy consumers who happened to be in this way.
This trend of on-the-go consumption and impulsive buying is driving even more dairy sales in convenience stores. Urbanization and fewer households have contributed to the turn toward buying dairy products by weight instead of bulk buying. In this value chain, FamilyMart and QuickChek's introduction of premium dairy lines, like organic yogurt and fresh cream, are opportunities for tapping into even more health-conscious consumers.
Yet, supermarkets and hypermarkets do not cease being critical players in the distribution of dairy, enjoying a poor 15% industry share. Retailing powerhouses such as Walmart, Carrefour, and Tesco had augmented their interest in premium and organic dairy segments-focus on specialty cheese, fortified milk, and plant-based dairy alternatives.
Such stores draw health-conscious consumers who prefer buying in bulk and using quality dairy in their homes. Promotions, loyalty schemes, and in-store tastings further cue dairy sales at these. Costco and ALDI are also expanding private-label dairy ranges, offering competitive pricing on high-quality products to win over cost-conscious and bulk buyers.
With sustainability high on the priority list, retailers such as Whole Foods and Trader Joe's will increase collaboration with local dairy farms to deliver organic and hormone-free options. This should build the premium dairy industry presence in supermarkets and hypermarkets, while convenience shops will continue thriving due to accessibility and impulse purchases.
| Countries | CAGR (2025 to 2035) |
|---|---|
| USA | 4.8% |
| UK | 3.6% |
| France | 3.2% |
| Germany | 3.5% |
| Italy | 3.1% |
| South Korea | 5.2% |
| Japan | 2.9% |
| China | 6.4% |
| Australia | 4% |
| New Zealand | 4.5% |
The USA dairy industry is expected to post a consistent CAGR of 4.8% during 2025 to 2035. Trends in consumption are changing with an increase in demand for plant-based dairy items and lactose-free items. However, conventional options like cheese and butter are still in consistent demand, especially in the food service and retail industries.
Better technology in dairy processing and production is increasing production efficiency and sustainability. The industry is underpinned by strong export prospects, led in the Asia-Pacific region, where healthy demand exists for high-quality products. The rising shift towards organic dairy also drives industry growth, with consumers becoming more health-oriented and opting for clean-label and hormone-free products.
The UK dairy industry is expected to grow at a CAGR of 3.6% during the period 2025 to 2035. Although the consumption of milk has reduced in the past several years, the industry has seen a rise in demand for premium products, including artisanal cheeses and organic milk. The growth of dairy-free alternatives has changed the competitive scenario, with an impact on product innovation from the conventional dairy firms.
Brexit has affected trade policies in such a way that import-export trends have altered. Local dairy production remains focused on sustainability, with ethical sourcing and carbon footprint minimization at the top. Increasing demand for functional products, such as probiotic yogurts and fortified milk, also fuels industry expansion.
France, one of the countries with a rich dairy culture, will expand at a CAGR of 3.2% from 2025 to 2035. France is one of the world's largest consumers of cheese, and premium products are driving growth. Conventional dairy consumption is preserved, albeit with growing diversification in the industry, on account of changing consumer choices. Consumption of organic and A2 milk is increasingly gaining momentum, and butter and cream continue to play a crucial role in culinary procedures.
Dairy exports from France are a major support pillar for the country's economy, with the European and Asian industries being key trading partners. Sustainable and animal-friendly operations are on the rise, affecting the manufacturing process as well as regulatory standards.
The German dairy industry is expected to grow at a CAGR of 3.5% during the forecast period. The industry is well-organized, with sophisticated dairy farm practices leading to stable levels of production. Cheese is the most resilient dairy category, with strong domestic and export demand.
Yogurt and dairy-style yogurt, functional and protein-fortified versions, have enjoyed increased popularity as consumed by shoppers. Control over the dairy industry is high in Germany to prevent low standards and unsustainable farming practices.
Demand in the direction of ecologically sustainable packaging and substitutions produced from vegetative material has prompted manufacturers of milk derivatives to expand and enhance their variety portfolios. Choking eating adjustments with increased demand towards a trend of flexitarianism has realigned traditional diets.
Italy's milk industry is predicted to expand at a CAGR of 3.1% during the period 2025 to 2035. The industry continues to focus on traditional products like specialty cheeses, including Parmigiano Reggiano and Mozzarella. Though there is a downward trend in the consumption of milk, there is high growth in demand for high-quality local milk products.
The Italian milk industry is not consolidated, but the majority comes from artisanal and small-scale players. Italian dairy items have persistent export possibilities in North America and Asia. Rising demand for functional and digestive health-oriented dairy foods, including probiotic yogurts, is also impacting the industry growth.
The industry for dairy in South Korea is likely to expand at a CAGR of 5.2% during 2025 to 2035. The increased urbanization level and rising disposable incomes have driven demand for dairy food such as cheese, flavored milk, and yogurt.
The increased Westernization of food diets has resulted in increased consumption of cheese, especially in fast food and domestic cooking. Functional dairy foods with added probiotics and nutritional fortification are on the rise.
Dairy production is low in the local area and, as such, has a high level of dependence on imports, predominantly from Australia and New Zealand. The government has established support measures for the dairy industry in order to enhance domestic production and stabilize supply chains.
The Japanese dairy industry is expected to record a CAGR of 2.9% during the forecast period. The demand is dominated by high for processed products, such as cheese and yogurt, which are being consumed more and more in traditional and Western-style diets. The demand for milk is moderate, with increasing demand for low-fat and lactose-free products.
Japan's imports of dairy products are required to fulfill domestic demand for butter and cheese. The industry is strongly driven by innovation, and functional dairy foods that promote gut health and the immune system are increasingly popular. Increased age and changed dietary habits are driving demand for dairy nutrition supplements.
China's dairy industry will grow with a CAGR of 6.4% between 2025 to 2035, ranking as one of the fastest-growing industries in the world. There has been increased demand for high-quality, premium options due to accelerating urbanization and rising disposable incomes. Local production is growing, but imports are still leading the way, especially in infant formula and cheese.
Demand for low-fat and organic dairy is increasing among the increasing number of health-conscious consumers. Demand for milk and milk products is being driven most by online retailing and online e-commerce channels, which provide consumers with more access to a complete lineup of products. Official support is geared more towards the dairy sector's upgradation and the promotion of innovation in production plants and quality levels.
The Australian dairy industry is anticipated to expand at 4.0% CAGR from 2025 to 2035. The nation boasts a well-developed dairy sector with robust export industries in Asia. Organic milk and high-protein products are being demanded more and more, which is an indication of changing consumer patterns.
Climate resilience and sustainable agriculture are major areas of concern as the sector tries to keep pace with environmental problems. Australia is still a significant provider of dairy ingredients to the world's food production industries, with cheese and milk powder as major export items. The home industry still encourages innovation within functional dairy, such as probiotic-enhanced yogurts and fortified milk types.
New Zealand's dairy industry is forecasted to grow at a CAGR of 4.5% over the next decade. Being one of the world's greatest dairy exporters, the country plays a central role in the global value chain of dairy. Large cooperative companies with high production efficiency dominate the industry.
Whole milk powder exports, as well as butter and cheese, are of central importance to the country's economy, and China is an important industry. Sustainability initiatives and environmental issues are influencing production activities, focusing on regenerative agriculture. Local dairy product consumption is steady, with growing premium and organic dairy product demand.
The industry is intensely competitive today, with multinational corporations opposed to regional dairy cooperatives and engulfing specialty brands for industry shares. The big players are concerned with the diversification of their products by placing more emphasis on functional dairy innovations, protein-enriched variants, and probiotic-infused products, which seem to sell well among health-conscious consumers.
The competition has become fiercer with the arrival of several plant-based dairy alternatives that have driven traditional products into hybrid development and lactose-free product lines.
Brand differentiation is a major strategy employed by companies focusing on premiumization, organic certification, and sustainable dairy farming practices to build confidence among consumers. Innovations in packaging, such as extended shelf-life and recyclability, have matured into competitive avenues for those concerned about sustainable products.
Distribution is a key battleground in which the industry leaders are fortifying their retail partnerships and diversifying into direct-to-consumer e-commerce and foodservice channels. Regional dairy cooperatives have an edge over large corporations in terms of their closeness to the industry, ensuring freshness and cheaper prices.
On the other hand, global corporations are emphasizing large-scale production efficiency and international expansion. Besides, acquisitions and joint ventures are being strategically used to penetrate emerging industries in which dairy consumption is still on the rise.
Government regulations, dairy subsidies, and an inclination of consumers toward ethical sourcing and animal welfare continue to shape the competitive landscape. The companies that will have gone ahead to ensure a strategic blend of innovation, sustainability, and industry penetration will remain the leaders of the dairy industry in evolution.
Market Share Analysis by Company
| Company Name | Estimated Market Share (%) |
|---|---|
| Nestlé | 20-24% |
| Danone | 18-22% |
| Fonterra | 14-18% |
| Arla Foods | 10-14% |
| Lactalis | 8-12% |
| Other Companies (Combined) | 30-40% |
| Company Name | Key Offerings/Activities |
|---|---|
| Nestlé | Provides a wide portfolio of dairy products, such as fortified milk, infant nutrition as well as functional dairy. Investing in dairy innovation and sustainability. |
| Danone | A global leader in yogurt, probiotics, and plant-based dairy alternatives, emphasizing health and wellness trends. Robust global footprint and sustainability emphasis. |
| Fonterra | Expertise in dairy ingredients and B2B supply chains, growing dairy protein and nutritional products for healthy consumers. |
| Arla Foods | Focusing on organic and premium dairy while investing in carbon-neutral initiatives and expansion to regional industries. |
| Lactalis | Offers a diversified dairy range of cheese, milk, and infant formula, expanding its global reach via acquisitions. |
Key Company Insights
Nestlé (20-24%)
It remains a industry leader with diversified dairy, investing in nutritious dairy products and sustainable agriculture to sustain its lead.
Danone (18-22%)
It focuses on functional dairy, probiotics and plant-based products that meet the needs of health-focused consumers.
Fonterra (14-18%)
Increases its B2B dairy ingredients business, drawing on global dairy trade and value-added dairy protein.
Arla Foods (10-14%)
Increases organic and sustainable dairy growth, aiming for premium dairy segments in industries.
Lactalis (8-12%)
Continues strategic expansions and international expansions, solidifying its leadership position in cheese, milk, and baby nutrition.
Other Key Players (30-40% Combined)
The industry is expected to reach USD 649.88 billion in 2025.
The industry is projected to grow to USD 813.58 billion by 2035.
China is expected to experience significant growth, with a CAGR of 6.4% during the forecast period.
The Milk segment is one of the most popular categories in the industry.
Leading companies include Nestlé, Danone, Fonterra, Arla Foods, Lactalis, Amul, Saputo, Yili Group, Mengniu Dairy, and Kraft Heinz.
By product type, the industry is segmented into milk, cheese, yogurt, butter, and tailor made.
The key end users include households, HoReCa (hotels, restaurants, and cafés), and the food & beverage industry.
By distribution channel, the industry can be classified into supermarkets/hypermarkets, convenience store, online retail store, and specialty store.
By region, the industry is segmented into North America, Latin America, Europe, Asia Pacific, and the Middle East & Africa (MEA).
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Dairy Products Market
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