Where would the category go from here? According to Circana, the increased use of weight-loss formats such as GLP-1s are putting the food and beverage industry at an inflection point as consumers look to holistic lifestyle changes that include a combination of diet, exercise and behavior changes.

Nutrient-dense foods such as high-protein dairy can play a role by supporting consumers’ weight-loss journey once they discontinue the medication. Low-calorie options and smaller portion sizes can also help drive purchases in the category.

Circana also found that GLP-1 users shifted their supermarket purchasing away from frozen foods (down 3 points from their pre-usage baseline over the first year on the drug) and increased spending on deli items, further signalling opportunities for low-fat, high-protein cheese.

Functionality and fortification

Moving beyond protein, how can dairy brands tap into functional dairy in 2025?

Fermented dairy, positioned as a gut health-boosting superfood, is likely to continue to trend. Kefir – a global market expected to grow at 6.8% CAGR to $2.44bn in value in 2027 – and the broader drinkable yogurt segment will continue to be a category to watch in 2025.

For one, Danone has ramped up its interest. The dairy major launched an Activia kefir line in the UK, a market dominated by Biotiful with a circa 70% marketshare. In the US, Danone recently attempted to acquire kefir market leader Lifeway (in which it already owns a stake).

With fluid milk consumption in decline in most major markets, could added functionality get milk back in vogue? In 2023, Dairy Farmers of America and Good Culture released a lactose-free probiotic-enriched UHT milk; but the product has since been discontinued. With foodtech and packaging advancements, there’s now scope to add live microorganisms to products such as heat-treated dairy beverages ahead of the UHT treatment; simplifying production and safety considerations.

Still, there are have been two major challenges: higher pricing (with plain milk viewed broadly as an affordable every-day food staple) and convincing shoppers that they need the health benefits of the added nutrients through milk consumption (rather than naturally probiotic-rich dairy such as yogurts, for example).

Lactose-free

Lactose-free dairy is another category that has been in growth; with some evidence from the US that consumers are turning to lactose-free dairy at the expense of plant-based. In markets such as the US and Asia, lactose-free’s potential is particularly significant due dietary reasons, but the category’s new-found appeal as a healthy option is also presenting fresh opportunities for brands.

With milk being the largest segment within lactose-free, marrying lactose-free milk and protein claims is one route to success. Lactaid and many others have done it in the US; and in Europe, Poland’s Łaciate recently launched a high-protein lactose-free milk.

In the ultra-filtered category in the US, Coca-Cola is expanding capacity to produce Fairlife – the lactose-free brand that also leverages low-sugar and high-protein claims – with a new production plant set to become operational in Q4 2025. Already in 2022, the brand surpassed $1bn in retail sales and the dairy brand was a major growth driver for the company according to its Q3 2024 results. But capacity constraints are holding growth back, with Coca-Cola reporting 3% decline across juice, plant-based and dairy beverages.

And it’s not just about milk – Challenge Dairy launched a lactose-free butter in the US.

Healthy aging

Changes to global dairy trade patterns – particularly China’s decreased imports of whey and milk powder – has forced brands to rethink their strategies in Southeast Asia and increasingly bet on specialized ingredients and products.

With countries such as China, Japan and South Korea all facing a growing share of their population being aged 65 or older, dairy products that promote muscle health, nutrition and immune function can be positioned as healthy aging products.

These may vary from gut health-boosting yogurt and milk beverages to whey-fortified protein drinks and more premium offerings that contain ingredients such as lactoferrin. At SIAL Paris 2024, French dairy major Savencia presented two lactoferrin-enriched beverage prototypes: a powdered milk beverage for children and a protein drink for adults.

Other specialized dairy ingredients such as MFGM (milk fat globule membrane) and BLG (beta lactoglobulin) can enable dairy players to diversify their portfolios into the adult supplement and early-life nutrition fields, as these dairy-derived ingredients have become increasingly desirable thanks to their cognitive support and immunity regulation functions.

The market for bovine colostrum and colostrum-enhanced products is also expected to grow over the next decade, and dairy companies have opportunities to leverage colostrum in both food and feed products that boast therapeutic and nutraceutical benefits.