USA – A report by US market research firm Spins indicates that wellness and functionality will remain central to consumer preferences in 2025, shaping new product development opportunities for dairy brands.
Demand for high-protein and functional dairy products is expected to grow, with companies focusing on personalized diets, weight management, and healthy aging.
The high-protein category continues to expand, with the snacks and beverage sector projected to generate nearly US$5 billion in sales, growing at a rate of 9.3%.
Dairy protein ingredients, particularly whey and milk proteins, remain dominant, contributing close to US$705 billion in sales, with an annual growth rate of 8.6%.
According to the report, whey and casein saw a significant surge of 120%, surpassing whey in dollar sales by almost US$26 million.
However, protein blends combining animal and plant components experienced an 8.2% decline in sales but still maintained their position as the second-largest segment in functional protein ingredients, generating close to US$532 billion.
Dairy beverage innovation remains strong, with yogurt emerging as the only dairy category ranked in the top 10 most active food and beverage segments for new product development. Yogurt recorded an innovation rate of 12.4%, exceeding the industry average of 10.5%.
Despite this, its dollar share remains below average, suggesting room for improvement in value propositions to boost sales.
Functional beverage products, including dairy-based gut shots, continue to grow, driven by consumer interest in digestive health, mood support, and detox solutions.
Probiotics are also playing a crucial role, contributing US$270 million in digestive health solutions, US$5 million in mood-supporting formulations, and US$12 million in detox products.
Spins highlights three emerging subcategories within dairy. Cottage cheese, recognized for its natural, low-calorie, and high-protein content, is expected to sustain its upward trend.
“Consumers are rediscovering cottage cheese, and there’s still untapped potential in flavor and format innovation,” a market analyst reported.
Additionally, colostrum, a dairy-derived ingredient widely used in the supplement industry, has gained traction, recording a sales increase of nearly 140% to US$1.8 million.
It is seen as an ingredient with crossover potential, supporting both gut and immune health applications.
The report also notes that the A2 dairy segment could benefit from diversifying into butter and cheese, given the rising consumption of these products in the U.S.
While the segment is valued at US$135.1 million, it remains heavily concentrated in fluid milk, which accounts for 87% of sales.
Cheese, butter, and sour cream hold much smaller shares. A2 Incorporated, the leading brand in this category, reported an EBITDA loss of US$15.5 million in FY24, though its a2 Milk Grassfed product showed growth.
A dairy expert commented, “Expanding into cheese and butter could be a game-changer for A2 dairy, considering the increasing consumer demand.”
As 2025 progresses, dairy brands are expected to capitalize on these trends, leveraging innovation in high-protein products, functional beverages, and emerging dairy subcategories.
The industry will be closely watching developments as companies refine their strategies to align with shifting consumer preferences.
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