For a seventh year running, McKinsey & Company, alongside the International Dairy Foods Association (IDFA), surveyed more than 100 dairy industry executives to find out what are their main business priorities.
The survey was carried out during Q4 2024 among respondents from companies based across North America, Europe and Oceania.
In 2024, corporate purpose, talent and cost were the top three priorities for dairy execs.
This year, purpose has dropped to fourth place while cost has shot up to the top of the list. Talent remained in second, followed by volume growth in third.
At the other end, sustainability has dropped from fifth to seventh, leapfrogged by digital data and analytics in sixth.
Squeezed margins
It’s no surprise that for 69% of execs, cost is top of mind, compared to 48% and 50% in the two prior years.
This reflects ongoing concerns around logistics, inflation and input costs volatility that continue to squeeze margins, according to McKinsey analysis.
Talent, a top priority for 67% of those surveyed, is also high on the agenda, highlighting ongoing challenges in filling the skills gap in agriculture, processing and manufacturing.
Product & processing innovation
More industry executives expect the sector to grow in the next three years, with 80% vs 76% of respondents in 2024 who think volume will grow beyond 3% in the near term.
Demand for dairy is also set to fuel innovation pipelines, with 65% of those surveyed stating they plan to increase investment in product innovation over the next 3-5 years; while 79% plan to boost innovation in manufacturing in the period.
AI uptake
In a shift from last year, there’s an increased focus on digital and analytics, with more than 5 in 10 (54%) stating they use artificial intelligence (AI) in pricing, manufacturing optimization, supply chain management and other areas.
Importantly, nearly all of the 29 executives who were also interviewed as part of the research stated they planned to use AI in the future – though some had concerns over the current technology’s effectiveness.
Sustainability’s relevance fades
While sustainability is now a core priority for dairy execs, it’s not top of mind for leaders. Only 12% of the respondents ranked it in their top 3, down from 44% a year ago.
But according to McKinsey, consumers are likely to keep sustainability relevant for dairy firms in the long run – products marketed as ‘sustainable’ saw a 3.5% growth in sales compared to conventional products, according to research cited by the company.
The top priorities of dairy leaders in 2025 according to the latest McKinsey & Company / IDFA survey are as follows:
- Cost
- Talent
- Volume growth
- Corporate purpose
- Supply chain resilience
- Digital and analytics
- Sustainability
