Top three trends driving the dairy industry

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In 2025, the global retail value of the dairy products and alternatives industry is projected to reach USD 705 billion. Growth in 2025 is expected at 2.0% in constant terms (excluding inflation) and 6.4% in current terms (including inflation), (fixed 2025 exchange rates), with pricing playing a central role in driving value sales. In 2025, the global dairy industry is under mounting pressure, facing challenges ranging from trade tensions in the US and disease outbreaks in Europe to extreme weather events in Australia, including floods and droughts. These disruptions have tightened supply and driven up prices. Yet, despite the turbulence, retail volume sales edged up by 1.3% in 2025 compared to 2024, reflecting resilient consumer demand.

To stay competitive amid ongoing volatility, companies must reinforce supply chains, diversify geographically, particularly in markets with high unmet potential, and balance affordability with value. It is also essential to move beyond price and product to incorporate emotional and functional benefits.

In this context, Euromonitor International has identified three key trends shaping the future of the dairy industry. These trends align with evolving consumer lifestyles and priorities, and offer brands a pathway to create added value, strengthen consumer connections and enhance market positioning.¹

Intentional wellness for everyday value

Dairy is evolving into a multifunctional health platform, driven by consumer demand for wellness, affordability and clean label. Functional formats like kefir, probiotic yoghurt and high-protein dairy products are gaining traction, blurring lines with sports nutrition and supplements. Botanical ingredients like lavender, ginger, matcha and citrus are targeting need states like calm, digestion and immunity, while protein isolates move beyond fitness into everyday use. RTD milk drinks and yoghurt pouches are key to offering convenience, while science-backed claims and clear functional messaging are key to success.

Recent launches reflect this trend. The Collective’s yoghurt pouches in the UK, launched in late 2024, are tailored to specific need states such as “restore” (apple, kiwi, spirulina), “kickstart” (oats, whole grains, blueberry, raspberry), and “invigorate” (passionfruit, ginseng), tapping into demand for botanical and benefit-led dairy. The brand’s success with children’s pouches and relevant innovation were key reasons behind its acquisition by Yeo Valley through the purchase of Epicurean Dairy in March 2025.

Protein is another key area of innovation. Danone’s Oikos Fusion, launched in summer 2025 in the US, is high in protein and designed for GLP-1 users. In addition, established products like Arla Protein and Danone’s Get Pro ranges continue to perform well, reinforcing protein’s central role in functional dairy. With consumer choices evolving, the share of consumers choosing dairy as their preferred protein source has shifted from 54% in 2020 to 47% in 2025,² according to Euromonitor’s Health and Nutrition Survey, but markets such as France, Japan and the US show renewed interest, signalling opportunities for targeted innovation.

The role of gut health beyond digestion is also becoming increasingly relevant. This is reflected in the strong performance of categories such as sour milk products, including kefir, which is expected to be among the leading global growth categories, with a forecast CAGR of 4.7% (2025–2030, constant terms). Probiotics, in association with fibre, botanicals and proteins, continue to evolve as the benefits linked to probiotics expand. A case in point is Japan’s Meiji W Skin Care Yoghurt, launched in March 2025, which targets rising concerns around skin health. Its unique blend of probiotics (L. bulgaricus OLL1247 and S. thermophilus 3078), collagen peptides and sphingomyelin are designed to help protect against UV-induced irritation and maintain skin moisture levels.

Source: Euromonitor’s Health and Wellness 2025ed 

To succeed in this space, brands must align with modern routines and wellness aspirations, positioning dairy as a daily health staple.³

Life stage reimagined

Demographic shifts are reshaping innovation. Declining birth rates challenge infant nutrition, yet demand for premium formulas and baby snacks remains strong. Chinese Feihe’s premium launches, such as Astrobaby Zhuorui, have performed steadily, while Yili’s organic formulas with HMO blends like Jinlinguan and Sainamu now account for a significant part of its revenue, succeeding through added-value offerings.

Another pocket of growth to combat pressure in the baby food category is baby snacks. Indonesia’s Yummy Bites is a strong example of a successful brand in this space. It offers allergen-free and organic options across a wide range of baby snacks, including rice crackers, yoghurt melts and uniquely flavoured snacks such as cheesy seaweed and custard chocolate. Its success is driven by affordability, offline retail expansion and celebrity endorsements.

Meanwhile, ageing populations also present a major growth opportunity. The global population aged 65+ is projected to grow by 54% between 2025 and 2040,⁴ according to Euromonitor’s Consumer data. This demographic is driving demand for clean label* foods and functionality that support heart health, digestion, sleep and energy boosting, with APAC leading in targeted offerings that resonate with older consumers.

Source: Euromonitor's Voice of the Consumer: Health and Nutrition Survey, fielded Jan-Feb 2025 (n= 21,207)

In Japan, Morinaga’s new Ninchi Kinou Taisaku probiotic yoghurt, launched in April 2025, supports cognitive functions that decline with age, such as memory and spatial awareness. This is just one example of Asia Pacific’s leadership in senior-focused innovation.

To remain competitive, companies must embed life-stage nutrition into their strategy, with success depending on things like use of natural ingredients and alignment with evolving health priorities.

Everyday escapes: Indulgent, portable and guilt-free

Dairy snacking is evolving into a wellness-driven space, with consumers seeking indulgent yet functional formats. Indulgence is no longer seen as a guilty pleasure but as a form of emotional wellness, with consumers seeking comforting, enjoyable moments throughout their day. Global consumers are increasingly treating snacks as moments of emotional reward, as shown by Euromonitor’s Lifestyle Survey, where the percentage of respondents selecting this reason rose from 19.1% in 2023 to 27.5% in 2025.⁵ This shift opens measurable opportunities for growth through premium, multifunctional formats that blend rich textures, layered flavours, emotional satisfaction and health benefits.

For example, in Hungary, Pöttyös Protein Rudi launched in January 2025, offering a guilt-free modern twist on a traditional chilled dairy snack by incorporating whey protein isolate, inulin for added fibre and no added sugar. In Finland, Arla’s Luonto+ Poksis, also introduced in 2025, brings a playful, layered yoghurt experience with fruit jam and popping juice bubbles, offering a no-added-sugar treat that resonates with families and texture-loving consumers.

On the other hand, targeting specific moments and opening up new consumption occasions such as breakfast, fitness and social sharing will be relevant. For instance, in China, The Laughing Cow tapped into local breakfast habits in 2025 by pairing cheese with familiar items such as youtiao (fried dough sticks) and guokui (crispy stuffed flatbread). The aim is to unlock new consumption occasions, considering that cheese manufacturers in China have long struggled to find relevant consumption moments, as cheese is often viewed as overly Western and difficult to integrate into local dietary habits.

As snacking becomes part of daily wellbeing, dairy brands must innovate through multifunctionality, portion-controlled formats and multisensory experiences that align with modern routines and eating occasions.