State of the Industry

In the early 1900s, the modern U.S. dairy industry built its foundation on the promise of safe, widely distributed, fluid milk. In the late 1800s, Louis Pasteur laid the cornerstone for dairy through his new method of heating fluids to deactivate harmful bacteria. In the early 1900s, public health official Milton J. Rosenau then championed the application of this pasteurization process to milk, bringing naturally nutritious — and now safe — milk to the masses.

It’s no coincidence that Dairy Foods magazine can trace its publication roots to that same time period at the turn of the century (1899 to be exact). The dairy industry needed a supporting publication, disseminating information to the growing number of dairy processors bringing milk — and soon, a wider range of milk-derived products — to the nation, and eventually the world.

Milk was the backbone of the industry then, and that fact remains today. Not only is fluid milk the starting point for the formulation of the broad range of diverse, delicious, and nutritious dairy products consumed every day around the world, it still sits at the top of the sales data collected from retail consumer sales across the United States.

Retail milk sales are growing, and that’s very good news.

During November, we publish the annual Dairy Foods “State of the Industry,” filled with current retail sales data and fresh insights into what’s driving dairy forward. Our data partner, Chicago’s Circana, reports continued revenue growth for milk over the past year, with the category now responsible for $20.4 billion at retail in the U.S., up 3.5% from last year.

One segment of particular strength in the milk category is “all other” milk products — specialty consumer packaged goods often aligned with specific shopper niches and dietary restrictions or offering specific benefits. That segment grew a notable 21.9% in unit sales versus the prior year.

One of those specialized niches, lactose-free, continues to gain ground, with lactose-free milk up 3.8% in unit sales, according to Circana. Now dairy processors are diversifying their lactose-free product offerings. Adding a lactose-free option in various core dairy product categories, including sour cream and cottage cheese, can serve as a great way to find incremental revenue growth. (Review “There is ‘nothing but upside’ for lactose-free dairy” for a deeper dive into lactose-free strategies.)

We would have seen an even-stronger milk category growth rate if not for the continued decline of the “alternative milk” segment (which Circana includes in the overall milk category), down 5.5% in unit sales for the year, the same rate of decline seen from 2023 to 2024, as noted in our 2024 State of the Industry feature on Milk (“2024 State of the Dairy Industry: Milk sales swirl like fall winds”). Other core dairy categories likewise saw “dairy alternative” unit sales declines:

• Dairy alternative ice cream and sherbet, down 8.3% to $205 million
• Dairy alternative cheese down 6.7% to $91.4 million
• Dairy alternative frozen novelties, down 27.3% to $45 million
• Dairy alternative cream cheese, down 9.2% to $38 million

Unit sales of shelf-stable ready-to-drink coconut milk, almond milk, and soy milk also declined 4.2%, 8.1%, and 2.1%, respectively.

While some “dairy alternative” segments in other categories saw increases, these declines in core diary categories might indicate a plateauing of “dairy-free curious” consumers who had been experimenting with a dairy-free diet.

On the other end of the spectrum, in addition to the revenue growth we’re seeing in the milk category, several core dairy categories saw unit sales increases over the past year:

• Dairy natural cheese, up 1.4% to $15 billion
• Yogurt, up 7.5% in unit sales to $12.4 billion
• Butter, margarine, and spreads, up 0.8% to $7.7 billion
• Refrigerated creams and creamers, up 3.0% to $7 billion
• Refrigerated whipped toppings, up 4.1% to $2.6 billion
• Cottage cheese, up 14.4% to $1.9 billion
• Sour cream, up 0.3% to $1.9 billion

The natural nutrition and wholesome appeal of dairy is shining through to today’s consumers. With the power of milk’s recent resurgence, the rest of dairy has strong momentum to follow, with ample room for continued growth across core global consumer markets. With the right combination of strategic formulation, processing, and marketing initiatives, we can fuel continued growth in the coming year. DF

Brian Berk is Editor-in-Chief of Dairy Foods. Contact him at 516-402-1369 or berkb@bnpmedia.com.