Whether it’s that morning cup of energising coffee or a summer-day ice cream, there’s plenty to thank the dairy industry for. Its evolution has been remarkable, beginning as a subsistence activity and becoming a sophisticated, billion-dollar global enterprise at the intersection of food and culture. The industry—spurred through early advancements like pasteurisation and industrialisation—has grown to be a vital part of people’s everyday lives, and further trends beckon as consumers chase various preferences and manufacturers work on meeting them with modern techniques.
Discover the vital dairy trends for 2025 and tap into them to stay ahead of the competition and leave an impression on the market.
Dairy Industry Overview
The global dairy industry is in a good place, with an estimated market value of around a trillion US dollars as of 2024. It is driven primarily by the global popularity of cow milk—a staple that continues to captivate consumers despite facing challenges such as growing demand for plant-based foods and price volatility. In recent times, dairy products have come to include various sorts of cheese, butter, ice cream, condensed milk, yoghurt, and more inventions catering to an increasingly adventurous consumer base. And it’s not just variety in type and flavour: Dairy products are reaching people through various channels (dairy sales are even rising in e-commerce platforms in some regions), and there’s no sign people will ever tire of delicious mozzarella on their pizzas!
Over the past decade, the industry has experienced considerable innovation in areas such as dairy engineering and food machinery engineering, besides packaging innovation that plays a vital role in supply chain and storage. With these advancements, manufacturers are able to adapt to modern issues around supply and safety. What was once the battle against tuberculosis and E. coli has now turned to keeping pace with global market dynamics and finding solutions to environmental challenges. There will be more on that below.
Dairy Industry Highlights from Asia
Recent dairy innovations in Asia have been significant for various reasons. Chilled butter and spreads, spurred by activity in India, have increased. Notably, most of these chilled launches saw a rise in the share of clean-label and vegetarian claims. Among the trends catching the eye, consumer interest in wellness is reflected by the increasing number of dairy products focused on health. Spoonable yoghurt and drinking yoghurt launches with a digestive support claim increased from 10% to 15% from March 2019 to February 2024 (Mintel GNPD, March 2019–February 2024). Flavoured milk products with a functional health claim, noticeably those with immune system claims, have risen in the five years to February 2024 (Mintel GNPD, March 2019- February 2024). As for ice creams, Asian brands have been fixated on texture, with smooth and crunchy product launches stealing the limelight in recent years.
In India, the plain/unflavoured yoghurt market is still significantly more oversized than the flavoured market. Yet, both segments have grown tremendously between 2019 and 2023. Revenues for the flavoured segment grew an astounding 245% in this period, indicating customers are willing to give new dairy products a chance and are also driving demand. The market for flavoured and fresh/plain milk products has also been on an upward trajectory, and this trend will continue in the coming years. And after a slump, sales of ice creams in 2023 have rebounded to pre-pandemic numbers. Consumers are open to both traditional ideas of comfort and experimenting!
Top Dairy Market Trends in 2025
Keep an eye on the following dairy industry trends to stay ahead and connect with as many consumers as possible:
1. Sustainability
The dairy industry contributes to greenhouse emissions massively, adds to the stress on land systems, and adversely impacts soil health. Moreover, extensive portions of natural habitats are being turned into agricultural lands to cater to the increasing demand for feed crops. The logistics of livestock management aside, conventional dairy products still leave a vast environmental footprint across the supply chain, from manufacturing to packaging. Sustainability trends like the upcycling of dairy byproducts and the use of digital tools to assess the environmental impact of products will be in focus all over again as manufacturers commit to their carbon goals. Efforts will be taken to improve feed production and manure management through up-and-coming methods.
2. Rise of Plant-based and Dairy Alternatives
Plant-based dairy alternatives have slightly impacted the sales of traditional products in different markets through their increased visibility and growing consumer interest in sustainability. (For example, according to Mintel’s Global Consumer, in March 2024, 32% of consumers in China said they are reducing their dairy intake most of the time.) And this trend will continue to shine. While cow milk is still the drink of choice for most people, other alternatives will find ways to capture particular market segments with hyper-specific targeting. Plant-based milk is already popular in places like the USA and Germany, with as much as 40% of households in Spain buying plant-based milk at least once in 2023, according to insights. And while some markets are contending with poor sales due to macroeconomic conditions, it allows brands to re-strategise and reconnect with lost audiences.
3. Functional Nutrition
Functional dairy products offering added health benefits beyond basic nutritional value will be a trend to watch. A common issue with milk is that pasteurisation and bacterial actions on milk protein decrease the number of polyphenolic compounds and natural antioxidants. Additionally, people who are lactose intolerant cannot consume dairy and are thus deprived of vital milk proteins. Functional products with extra nutrients or bioactive compounds from milk (probiotic microorganisms, oligosaccharides, prebiotic fibres, omega-3 fatty acids, and minerals) can solve both problems. One market survey estimates the global market size of these products to be USD 44 bn in 2023, likely rising to nearly USD 70 bn by 2033. So, don’t be surprised—probiotic yoghurts could take over supermarket refrigerators with their new health claims. (There are also whispers of bovine immunoglobulin-based milk products expanding in the months ahead!)
4. Whey Protein Hydrolysates
Food-grade whey protein hydrolysates (WPHs) tailored with functional and nutritional properties for specific individuals are being studied and developed. Further progress in taste and allergenicity could be realised by researchers and food producers working on the cutting edge of food science. Dairy brands could soon package palatable WPH products as they innovate and reach out to consumers.
5. Automation and Smart Dairy Technologies
Artificial intelligence (AI) could be a game changer for the dairy industry by increasing efficiency across the dairy value chain. AI-powered systems and models that monitor cows and milk quality are already out there! This trend will expand as more dairy farms experiment with digital tools to reduce the burden of manual labour. From predicting equipment maintenance requirements to even offering specific real-time calving insights, these tools are likely to be embraced more robustly. AI-enabled sensors and IoT devices, among other smart technologies, will make it easier to manage livestock by automating repetitive tasks and optimising herd management. Perhaps most importantly for manufacturers, machine learning could be vital to product development and show the way for new launches!
6. Personalised Nutrition in Dairy
As wellness and fitness trends continue to capture our collective imagination, 2025 could see the further development of dairy products tailored to specific dietary needs, such as lactose-free, low-fat, or high-protein options. Brands could connect with consumers personally with personalised nutrition advice over apps and platforms, enriching the product experience and establishing trust. With the abundance of dairy products available in the market, manufacturers taking this approach will win big.
7. Innovations in Packaging
We’re keeping with the theme of sustainability, and more dairy products could very well come wrapped in environmentally conscious packaging. Difficult-to-recycle aseptic packages might still be the standard for most retail beverages. But we could witness increased use of recyclable, biodegradable, and compostable materials made from materials like plants and paper. And don’t forget smart packaging that enhances the consumer experience through technology—QR codes could show up more frequently on bioplastic containers and similar innovative ideas.
Go Where Innovation Goes
The dairy industry will continue to transform as consumer demand, technological advancements, and market dynamics combine to varying degrees. Will people vow to replace paneer with tofu in their recipes? Probably not, but 2025 will be about embracing sustainable practices and a few healthy eating habits. Investing in research, building strong consumer relationships, and welcoming digital technologies can help stakeholders navigate these dairy industry trends successfully and adapt to whatever comes their way.
FAQs
Plant-based alternatives might not dethrone traditional milk products entirely, but the market is showing promise. Plant-based milk made up almost 15 per cent of all dollar sales of total milk in US retail in 2023, while the percentage of households that bought plant-based milk at least once in Germany, Spain, and Great Britain in the same year was significantly large. Drinks like soy milk, oat milk, and almond milk are expected to see greater exposure as more consumers react to environmental concerns and wellness demands.
The dairy industry is one of the most prominent contributors to greenhouse emissions. As a result of land use for dairy cows, the industry is also responsible for negatively impacting soil health and wasting large amounts of water. Conventional dairy products—from farm to table—leave an enormous environmental footprint. And they can have terrible consequences if sustainable production and management methods are not enforced: this is why there is increased noise around plant-based dairy products and ethically sourced dairy items.
Functional dairy products are milk products enriched with bioactive compounds and probiotic bacteria—usually products that have added health benefits in addition to the basic nutritional value of milk. Examples include acidophilus milk, probiotic yoghurt, and whey-protein-based products.
AI-enabled sensors, IoT devices, and more are making it easier to manage livestock by automating repetitive tasks and optimising herd management. AI can also predict equipment maintenance requirements and even offer specific calving insights. Meanwhile, machine learning can help with product development and lead to exciting new launches.
The potential of regions like China and Southeast Asia to shape the dairy industry is evident. Rising urbanisation could lead to a demand for convenience dairy products like cheese and yoghurt, opening opportunities for manufacturers. These markets could also create prospects for innovation and development as dairy companies.
