Global Dairy Market By Product Type (Drinking Milk, Cheese, Yogurt, Butter & Others), By Distribution Channel (Departmental Store, Independent Stores, Hypermarket/Supermarket & Online), By Region, Competition, Forecast & Opportunities, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 1018.83 Billion
CAGR (2026-2031)	4.82%
Fastest Growing Segment	Yogurt
Largest Market	Asia Pacific
Market Size (2031)	USD 1351.35 Billion

Market Overview

The Global Dairy Market will grow from USD 1018.83 Billion in 2025 to USD 1351.35 Billion by 2031 at a 4.82% CAGR. The global dairy market encompasses the harvest and processing of liquid milk derived from mammals, primarily cows, buffaloes, goats, and sheep, into various consumable goods such as butter, cheese, yogurt, and milk powders. The expansion of this sector is fundamentally driven by sustained population growth in developing regions and rising urbanization, which collectively elevate disposable incomes and facilitate access to commercial food supply chains. Additionally, the increasing consumer recognition of dairy as a critical source of dietary protein and essential nutrients continues to solidify demand for these staple products across diverse demographics, distinct from fleeting consumption trends.

Market volume continues to demonstrate resilience despite economic fluctuations. According to the Food and Agriculture Organization, in 2024, world milk production was forecast to increase by 1.5 percent to reach nearly 981 million tonnes. Notwithstanding this growth, the industry encounters obstacles that may hamper future progress. One significant challenge impeding market expansion is the volatility of operational input costs, particularly regarding animal feed and energy, which compresses producer margins and creates supply chain instability.

Key Market Drivers

The surging demand for value-added dairy products serves as a primary catalyst propelling market expansion. Consumers are increasingly prioritizing processed items such as cheese, yogurt, and functional proteins over liquid milk, driven by their longer shelf life and perceived nutritional density. This structural shift motivates processors to diversify their portfolios and ramp up manufacturing capabilities to meet international requirements. According to the U.S. Dairy Export Council, February 2025, in the '2024 U.S. Dairy Exports' report, U.S. cheese export volume grew 17 percent year-over-year to reach a record 508,808 metric tons. Consequently, the industry is witnessing a strategic pivot where high-margin, shelf-stable goods are becoming the focal point of global trade.

Increasing disposable income in emerging economies further accelerates industry momentum by facilitating access to commercial food supply chains. As purchasing power rises in developing regions, households are transitioning from informal markets to packaged dairy goods, prompting significant recovery in regional production hubs. According to the United States Department of Agriculture, December 2025, in the 'Dairy: World Markets and Trade' report, milk production in Argentina was estimated to rebound by 8.5 percent in 2025 following improved sector conditions. This rising demand supports overall trade value despite volume fluctuations. According to the International Dairy Foods Association, in 2025, U.S. dairy exports achieved a total value of USD 8.2 billion for the preceding year, highlighting the sector's economic resilience.

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Key Market Challenges

The volatility of operational input costs, particularly regarding animal feed and energy, creates a precarious financial environment for dairy producers that directly hampers market potential. Feed and energy expenditures constitute a substantial portion of the total cost of production for dairy farming. When these costs fluctuate unpredictably or remain elevated, profit margins for farmers are severely compressed, reducing the capital available for herd expansion or essential technological upgrades. This financial strain often forces producers to make difficult operational decisions, such as limiting herd sizes or reducing the quality of nutritional rations, which inevitably leads to lower milk yields and restricts the raw material availability required by processors.

This dynamic of cost-induced supply restriction curtails the industry's ability to fully meet rising demand. According to Dairy Australia, in December 2024, the industry body forecast a contraction in the national milk pool to 8.3 billion liters for the 2024-2025 season, attributing the decline largely to the pressure of persistently high operating costs and tightening margins. Such contractions in primary milk supply limit the manufacturing volume of downstream products like cheese and milk powder, thereby stalling the volume expansion of the global dairy market and creating instability within the supply chain.

Key Market Trends

The integration of precision dairy farming technologies is fundamentally altering production mechanics as producers seek to optimize milk yields while mitigating labor shortages. Farmers are increasingly deploying automated milking systems, robotic feeding solutions, and sensor-based health monitoring tools to enhance herd management efficiency. This technological shift allows for real-time data analysis regarding animal health and milk quality, reducing reliance on manual intervention and optimizing resource allocation. According to Lely, March 2024, in the 'Annual Report 2023', the company reported a total turnover of EUR 888 million, representing a 25 percent growth primarily attributed to the continued adoption of robotics and data management applications by dairy farmers globally. This adoption trajectory indicates a long-term structural change where digitalization becomes essential for maintaining operational viability in competitive markets.

Simultaneously, the industry is undergoing a rigorous transition toward sustainable and eco-friendly packaging solutions to address regulatory pressures and environmental concerns. Dairy processors are actively replacing conventional plastics with bio-based materials, fully recyclable cartons, and tethered cap mechanisms to lower the carbon footprint associated with logistics and post-consumer waste. This movement extends beyond regulatory compliance, becoming a core differentiator for brands aiming to retain environmentally conscious consumers. According to Elopak, February 2024, in the 'Fourth quarter and full year 2023 financial results' presentation, the company achieved a record full-year revenue of EUR 1.13 billion, driven significantly by the increased sales volume of aseptic and sustainable packaging formats in key markets. Consequently, packaging innovation is shifting from a peripheral operational cost to a central element of market strategy and brand equity.

Segmental Insights

Yogurt currently represents the fastest-growing segment within the global dairy market, driven primarily by increasing consumer demand for functional foods that offer digestive health benefits. This expansion is supported by growing awareness regarding probiotics and protein-rich diets, leading to widespread adoption of Greek and fortified variations. Furthermore, favorable guidelines from institutions such as the U.S. Food and Drug Administration regarding health claims for yogurt consumption have bolstered consumer confidence in its nutritional value. Consequently, manufacturers are prioritizing product innovation in this category to cater to the rising preference for convenient, health-oriented nutrition options globally.

Regional Insights

Asia Pacific holds the leading position in the global dairy market, driven primarily by substantial consumption in densely populated nations like India and China. Rapid urbanization and rising disposable incomes have accelerated the shift toward protein-rich diets, significantly increasing the demand for milk and processed dairy items. India remains a critical contributor as a major producer, where initiatives by the Food Safety and Standards Authority of India help standardize product quality. Additionally, the expansion of modern retail infrastructure supports efficient distribution, ensuring that Asia Pacific maintains its dominance in the global dairy sector.

Recent Developments

• In October 2024, Arla Foods entered into a strengthened partnership with the supermarket chain Aldi, involving a substantial investment of over US$39.3 million. This collaboration is intended to support the cooperative's dairy farmers in implementing sustainable farming practices and improving animal welfare standards over a three-and-a-half-year period. The funds will be directed towards the "FarmAhead" initiative, which focuses on reducing on-farm carbon emissions and promoting environmental stewardship. A senior executive at the cooperative noted that this financial commitment would facilitate the acceleration of decarbonization efforts within the dairy supply chain while ensuring the long-term viability of its farmer-owners.
• In July 2024, Nestlé revealed a significant breakthrough in dairy research, announcing that its scientific teams had developed a proprietary method to reduce the fat content in milk powder by up to 60%. This innovation was achieved without altering the product's quality, taste, or creamy texture, which are critical for consumer acceptance. The company's Research and Development experts utilized a controlled aggregation process of milk proteins to mimic the size and light-scattering properties of fat globules. This advancement allows for the creation of lower-fat dairy ingredients that can be used in various applications, ranging from beverages to culinary products.
• In April 2024, Danone North America introduced a new yogurt collection titled "Remix" across three of its major brands: Light + Fit, Oikos, and Too Good & Co. This product launch was designed to cater to the growing consumer demand for convenient, healthy snacking options that do not compromise on taste. The collection features a variety of yogurts paired with textured mix-ins such as graham cookies, dark chocolate, and nuts. The President of the company's North American yogurt business highlighted that this innovation addresses specific consumer needs for high-protein and lower-sugar snacking alternatives in the dairy aisle.
• In January 2024, Müller Yogurt & Desserts announced a strategic collaboration with a multinational confectionery company to expand its portfolio in the United Kingdom and Ireland. This partnership resulted in the launch of a new range of fresh milkshakes under the well-known Cadbury brand, utilizing milk sourced directly from British farms. The new product line features popular flavors such as chocolate and chocolate caramel, aiming to attract consumers seeking indulgent, ready-to-drink dairy beverages. This initiative underscores the company's commitment to leveraging established brand strengths to drive growth and innovation within the competitive flavoured milk category.

Key Market Players

• Dairy Farmers of America Inc
• Lactalis Group
• Fonterra Cooperative Group Ltd
• Danone S.A.
• Yili Group
• Unilever PLC
• FrieslandCampina N.V.
• Arla Foods amba
• Saputo Inc.
• Nestlé S.A.

By Product Type	By Distribution Channel	By Region
Drinking Milk Cheese Yogurt Butter & Others	Departmental Store Independent Stores Hypermarket/Supermarket & Online	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Dairy Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Dairy Market, By Product Type:

• Drinking Milk
• Cheese
• Yogurt
• Butter & Others

• Dairy Market, By Distribution Channel:

• Departmental Store
• Independent Stores
• Hypermarket/Supermarket & Online

• Dairy Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE