Dairy Based Beverages Market Size & Share Analysis - Growth Trends and Forecast (2025 - 2030)

Global Dairy Based Beverages Market Trends and Insights

Growing demand for high-protein functional drinks among millennials

The protein-rich dairy beverages segment is experiencing substantial growth, driven by millennials and Gen Z consumers who increasingly regard protein as a vital nutritional component. This demographic shift is transforming the global functional beverage market. Protein is widely acknowledged for its role in muscle development, weight management, satiety, and overall wellness. With a growing emphasis on fitness, consumers are seeking nutrient-dense beverages that deliver both refreshment and functional benefits, which dairy-based protein drinks effectively provide. According to Sport England, participation in sports and physical activities among adults in England reached 30 million weekly participants during 2023-2024, demonstrating an increase of 2.4 million individuals ^{[1]Source: Sport England, " Record numbers playing sport and taking part in physical activity", sportengland.org} . This trend has expanded beyond traditional sports nutrition, as consumers actively integrate protein into their daily diets. In response, key industry players are introducing strategic innovations. For instance, in May 2025, Oikos expanded its product portfolio with shelf-stable protein shakes, marking its first venture beyond dairy products. The new protein shakes contained 30g of complete protein to support muscle strength and satiety, along with 5g of prebiotic fiber for digestive health. The product contained no artificial sweeteners. 

Growth in foodservice and café culture

As coffee houses and specialty cafés continue to expand, they are driving a notable increase in dairy consumption within beverages, thereby strengthening the interconnection between the coffee and dairy sectors. According to the Ministry of Health, Labour and Welfare of Japan, the number of licensed coffee shops in the country reached 47,530 in 2024 ^{[2]Source: Ministry of Health, Labour and Welfare of Japan, "Report on public health administration - food hygiene FY 2023" e-stat.go.jp} . This trend is particularly evident in the quick service restaurant (QSR) market, where the growing demand for specialty coffee beverages has significantly elevated the use of dairy, establishing milk-based drinks as essential offerings on café menus worldwide. Moreover, the increased trend of urban consumers socializing and working in cafés drove the demand for milk-based beverages, including lattes, frappés, and specialty flavored milk drinks. Foodservice chains and quick-service restaurants expanded their dairy beverage offerings to cater to younger consumers who sought trendy options. This trend was particularly evident in metropolitan areas, where café culture aligned with lifestyle preferences and convenience. Starbucks and Costa Coffee played a significant role in popularizing cold brew with milk, flavored lattes, and dairy-based specialty beverages worldwide.

Cold-chain expansion enabling ambient yogurt drinks

Cold chain logistics are playing a transformative role in the dairy beverage market, particularly fueling the growth of ambient yogurt drinks that do not require refrigeration. This innovative solution, first introduced in China, has rapidly gained global momentum by addressing the inefficiencies and challenges associated with traditional cold chain systems, especially in emerging markets where infrastructure constraints are more pronounced. Companies like Rivigo are leading this transformation by implementing advanced technologies and operational models that ensure precise temperature control and significantly enhance supply chain efficiency. For example, Rivigo's driver relay model has successfully reduced the transit time between Mumbai and Guwahati from the typical 10-12 days to just four days. This reduction in transit time allows manufacturers to respond swiftly and effectively to dynamic market demand, ensuring better product availability and quality. Furthermore, the continuous expansion of cold-chain infrastructure is emerging as a pivotal factor in driving the growth and sales of yogurt drinks, enabling the industry to meet evolving consumer preferences and market requirements.

Premiumization driving artisan kefir and cultured smoothies

Kefir and cultured smoothies are experiencing a transformative shift, evolving from niche products to widely accepted mainstream options. This transition is being driven by the premiumization trend within the dairy beverages market, which emphasizes high-quality and value-added offerings. Kefir sales have exhibited substantial growth, primarily attributed to increasing consumer awareness of its functional health benefits. These benefits are particularly centered around its probiotic properties, which play a crucial role in supporting gut health and enhancing immune system functionality. Furthermore, ongoing scientific research continues to validate the potential of this category, emphasizing kefir's unique microbial composition and its associated health advantages, such as improved digestion and better lactose tolerance. The convergence of rising consumer demand, scientific backing, and strong market performance is solidifying artisanal cultured dairy beverages as a dynamic and rapidly expanding high-growth segment within the broader dairy market.

Rise of plant-based alternatives cannibalizing dairy shelf space

Traditional dairy beverages are increasingly encountering significant competitive pressure from the expanding plant-based milk sector. Globally, products such as almond milk, oat milk, soy milk, and coconut milk are not only gaining widespread consumer acceptance but are also becoming essential components of modern diets. These plant-based beverages are now available in a wide range of flavors and are frequently fortified with nutrients or enriched with protein, positioning them as strong competitors to traditional dairy beverages. Marketed as "cleaner" and "healthier" alternatives, these products emphasize key benefits such as lower cholesterol levels and the absence of hormones and antibiotics, which resonate strongly with health-conscious consumers. However, it is crucial to recognize that price fluctuations tend to impact plant-based alternatives more acutely than traditional dairy products. This indicates that, despite their growing shelf presence and increasing popularity, plant-based beverages remain susceptible to economic pressures and continue to face challenges in overcoming consumer loyalty to the taste and nutritional benefits traditionally associated with dairy products.

Farm-gate milk price volatility squeezing processor margins

Dairy processors are increasingly grappling with significant margin pressures caused by the volatility of farm-gate milk prices. This persistent unpredictability poses challenges to their ability to formulate effective long-term planning and investment strategies. In 2023, the financial performance of major dairy companies reflected this volatility. FrieslandCampina reported a 7.1% decline in revenue, amounting to EUR 13.1 billion, primarily due to currency fluctuations and reduced consumer market demand. These financial challenges also impact strategic positioning. For example, Danone, despite outperforming some competitors, encountered significant obstacles. To address these pressures, dairy processors are adopting innovative business models. A prominent shift is the transition to direct-to-consumer (D2C) strategies, which bypass intermediaries, offering greater control over branding and customer engagement. This evolution in distribution models is a strategic response to margin constraints, enabling processors to capture higher value while strengthening direct relationships with consumers.

Segment Analysis

By Product Type: Fermented Drinks Outpace Traditional Options

Yogurt beverages held 24.11% of the dairy beverages market in 2024, driven by consumer demand for products containing live cultures. Yogurt drinks maintained their strong market position through diverse flavor offerings and their association with digestive health benefits. Their commercial momentum continues as processors introduce lactose-free versions to attract sensitive consumers. Parallel to this, kefir growth at a 6.47% CAGR outpaces the parent category, powered by medical studies linking its multispecies microbiota to gut-barrier integrity. Shelf-stable probiotic formats remove refrigeration barriers, supporting volume gains in emerging geographies where cold-chain coverage lags.

Kefir’s tangy flavour profile, once considered niche, is now normalised by crossover consumers seeking sour notes similar to kombucha. The product’s thicker mouthfeel enables meal-replacement positioning, creating incremental use occasions beyond refreshment. Innovation is accelerating: brands combine kefir with fruit purees, ancient grains, and plant-derived sweeteners, tapping flexitarian preferences while maintaining dairy provenance. Additionally, the dairy beverages market capitalises on these launches to defend probiotic mindshare against non-dairy ferments. As fermented SKUs proliferate, retailers allocate dedicated refrigeration bays, cementing their status as a core sub-category rather than a specialty aisle curiosity.

Note: Segment shares of all individual segments available upon report purchase

By Fat Content: Whole/Fat Preferences Driving Segmentation

In 2024, whole-fat beverages accounted for 50.62% of the dairy market, reflecting a sustained preference for rich flavors and satiety. Millennials have emerged as key adopters of whole milk, challenging traditional dietary norms that previously stigmatized fats. Sensory evaluations indicate that consumers can readily detect reductions in fat content. These findings have driven manufacturers to prioritize maintaining creaminess while employing protein filtration and lactose hydrolysis to enhance nutritional value.

Meanwhile, low-fat products are projected to grow at a 5.50% CAGR by 2030, supported by advancements in stabilizers that restore texture lost during the skimming process. Innovations such as micro-filtered milk concentrate solids-not-fat are improving mouthfeel without increasing butterfat levels. The dairy beverages market addresses both ends of the fat spectrum, recognizing the diverse lifestyle preferences of consumers. By maintaining a balanced portfolio, companies can ensure market resilience, adapting to regulatory shifts that alternate between favoring low-fat guidelines and whole-food advocacy, thereby navigating ongoing nutritional debates effectively.

By Packaging Type: Innovation Driving Convenience and Sustainability

In 2024, cartons accounted for 40.19% of the dairy beverages market share, driven by their lightweight structure and strong integration into widely accepted recycling systems. Continuous advancements in material science have further enhanced their appeal, making them a preferred choice for sustainable packaging. The addition of resealable spouts has enabled cartons to penetrate the "on-the-go" consumption segment, a space traditionally dominated by PET bottles. This innovation has expanded the functionality of cartons while maintaining their environmental credibility, aligning with the growing consumer demand for eco-friendly solutions.

Pouches, on the other hand, are anticipated to witness the fastest growth, with a projected compound annual growth rate (CAGR) of 6.51%. This growth is fueled by their convenience and their ability to reduce material usage, which aligns with sustainability goals. Notable innovations, such as SIG’s dome-shaped carton bottle, combine the portability of traditional bottles with the recyclability of cartons, offering a unique value proposition. The dairy beverages market is further supported by the increasing adoption of eco-score labels by retailers. These labels encourage consumers to choose packaging with a lower carbon footprint, thereby driving the demand for renewable and sustainable material solutions.

Note: Segment shares of all individual segments available upon report purchase

By Distribution Channel: Digital Transformation Reshaping Retail Dynamics

The off-trade channel held 65.74% market share of the dairy beverages market revenue in 2024. This position results from established retail distribution networks across supermarkets, hypermarkets, convenience stores, and online grocery platforms. Consumers purchase dairy drinks in bulk for household consumption, utilizing available packaging options from single-serve bottles to family packs. The off-trade segment maintains growth through extended shelf life (ESL) milk, flavored milk, and ready-to-drink (RTD) products. The expansion of e-commerce and quick-commerce grocery delivery services has increased market penetration and purchase frequency. Companies like Amul and Danone are expanding their digital presence and multi-pack product lines to address market demand.

Meanwhile, the on-trade channel demonstrates a projected CAGR of 7.21%, driven by the expansion of cafés, quick-service restaurants, and specialty beverage outlets. Dairy-based beverages, including frappés, milkshakes, and lattes, generate increased revenue as complementary food items and standalone purchases. Foodservice operators are diversifying their product portfolios with flavored dairy beverages and functional ingredients to address evolving consumer requirements. Market growth concentrates in urban regions, where the younger demographic demands customization and premium beverage options. Major operators such as Starbucks and Café Coffee Day have increased market penetration through cold coffee, flavored lattes, and seasonal dairy-based beverages, integrating conventional dairy products with modern café operations.

Geography Analysis

In 2024, Asia-Pacific holds a commanding 35.43% share of the global dairy beverages market, driven by population growth, rising incomes, and shifting consumption patterns. China and India are the primary contributors to this growth. In India, urbanization and increasing incomes support higher per capita milk consumption, highlighting the region's capacity for innovation. The rise in milk production enables the development of a diverse range of dairy beverages, including flavored milk, yogurt drinks, lassi, and chaas. According to the Ministry of Fisheries, Animal Husbandry and Dairying, India produced 239.3 million tons of milk in 2024 ^{[3]Source: Ministry of Fisheries, Animal Husbandry and Dairying, "Animal Husbandry Statistics 2024", dahd.gov.in} , ensuring a stable supply of raw materials to support large-scale processing and innovation.

The Middle East and Africa are positioned as the fastest-growing region for dairy beverages, with a projected CAGR of 7.23% from 2025 to 2030, presenting significant opportunities for market expansion. This growth is attributed to advancements in cold chain infrastructure and increasing disposable incomes across the continent. The region's dairy farming systems are undergoing transformation, characterized by trends such as the semi-intensification of production systems and the settlement of nomadic herders. However, challenges remain in milk purchasing and consumption patterns, particularly among low-income households. Despite these obstacles, with consumption levels below recommended standards, the region offers substantial growth potential as incomes rise and formal distribution channels expand.

Europe and North America, while mature markets with established consumption patterns, continue to lead in innovation, particularly in premium and functional dairy beverages. North America maintains a leading market share, supported by growing demand for functional beverages. In Europe, significant growth opportunities exist, especially in hybrid dairy products that combine dairy and plant-based ingredients. This trend reflects the increasing number of flexitarian consumers seeking to incorporate more plant-based options while retaining dairy in their diets.