UK dairy market projected to reach US$26.6B by 2035

UK – The United Kingdom’s dairy market is set for consistent growth over the next decade, driven by rising consumer demand for dairy products, according to a report by IndexBox. 

The market, valued at US$20.6 billion in 2024, is expected to expand to US$26.6 billion by 2035, with a compound annual growth rate (CAGR) of 2.4% in value and 0.3% in volume, reaching 22 million tons. 

This upward trend reflects the enduring popularity of dairy staples like milk and cheese, despite challenges such as fluctuating production costs and competition from plant-based alternatives.

Whole fresh milk remains the cornerstone of the market, accounting for 72% of consumption in 2024 with 15 million tons consumed. Skim milk and cheese followed, representing significant shares of the market. 

The report highlights a 5.1% revenue increase from 2023 to 2024, signaling robust demand. 

“Dairy remains a vital part of the UK diet, and we’re seeing steady growth in consumption, particularly for fresh milk and specialty products,” said an IndexBox analyst. 

The production of dairy goods also rose, reaching US$19.2 billion in 2024, with whole fresh milk leading output at 16 million tons.

Exports played a key role in the market’s performance, with the UK shipping US$2.2 billion worth of dairy products in 2022, primarily to the Netherlands, Ireland, and France. 

Whole fresh milk led exports at 746,000 tons, followed by cheese and powdered milk. Egypt emerged as a fast-growing export destination, with a CAGR of 79.5% in shipment volume from 2013 to 2023. 

However, imports, particularly from Ireland and Germany, remain critical to meeting demand for non-indigenous products like specialty cheeses, reported by the UK Food Security Report 2024.

Challenges persist, including rising production costs and environmental regulations. 

The adoption of technologies like IoT devices and robotics is helping farmers improve efficiency, but wet weather in 2024 impacted milk yields, according to the Agriculture and Horticulture Development Board (AHDB). 

“Weather has been a hurdle, but higher milk prices are encouraging farmers to invest in feed and technology,” noted an AHDB spokesperson. 

Additionally, consumer shifts toward plant-based alternatives pose a competitive threat, though demand for high-protein and organic dairy products is rising.

The UK’s dairy sector, supported by major players like Arla Foods and Müller, is adapting to these dynamics. 

With a focus on sustainability and innovation, the industry is well-positioned to meet growing demand while navigating economic and environmental pressures, ensuring dairy remains a staple for years to come.

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