It revealed that pricing is set to play a greater role than in 2025, given that growth in value sales is strengthening (versus 5.4% in 2025) while volume growth is expected to soften from 0.7% in 2025 to 0.5% in 2026.
What are the key trends shaping dairy products and alternatives as the industry heads towards 2027?"
At home coffee drives innovation
Coffee whitener is predicted to be the leading category over the forecast period with 4.1% CAGR. reaching USD12.2 billion in retail value sales by 2031, driven largely by demand in the US.
At-home coffee premiumisation is driving demand for innovative café-style creamers and cold foam products.
This marks continued growth momentum from the historic period at 3.9% CAGR (2021-2026). According to Euromonitor, this reflects steady value-driven new product activity and resilient consumer consumption.
Volume declines for milk formula and plant-based dairy
Milk formula and plant-based dairy are predicted to be the only two categories to experience volume declines in 2026, at -0.2% and -0.6%, respectively.
Companies in both categories are pivoting into value-added occasions and opportunities, through functional and fortified products, as well as launching more convenient formats fit to a broader range of lifestyles.
Emil Fazira, Insight Manager for Food at Euromonitor said: “Over the next five years, both categories are predicted to pick up value growth - milk formula more marginally with 0.2% CAGR (constant terms, fixed exchange rates) and plant-based dairy more optimistically at 1.5% CAGR.”
New consumption occasions
The industry continues to realign itself around value-added propositions to compete with other packaged food and health industries as a source of wellness and nutrition.
Fazira said: “Building new consumption occasions, consumer segmentation and dairy use cases are also a priority to create new revenue generators in an increasingly competitive market.”
Cost and supply pressures have also divided the market into two tiers, causing mass-market brands to create new strategies to retain both volume and value growth, Euromonitor said.
Premium vs economical
Polarised spending habits have created a deeper divide between the premium and economical segments.
The more significant move for mass brands is to tap into higher-value, or affordable premium goods, causing the average unit price of dairy products and alternatives to grow by 5.2% in 2026 (up from 4.7% growth between 2024 and 2025).
At the same time manufacturers are maintaining a range of economical, everyday staples to retain consumer trust and stable volume demand.
Innovation in chilled formats
Innovations will push deeper into chilled formats to tap into the growth of refrigerated displays, alongside greater consumer demand for fresh ready-to-eat, healthy and portable snacks.
As a result, chilled snacks (8.2%) and cheese (6.6%) are going to be amongst the fastest growing categories as brands launch dairy-based snack and desserts in on-the-go formats into retailers.
Wellness
The current wellness proposition of dairy is redefined by GLP-1. Brands are doubling down on functional attributes such as fibre content, protein-density and digestion claims.
There is an opposing trend where consumers are opting for holistic wellness features. Rather than focusing solely on nutrient reduction, brands are controlling portion sizes and offering more balanced dairy solutions, benefitting categories such as fromage frais and quark (forecast a 3.8% CAGR over 2026-2031).
Wellness is venturing into categories such as calm and focus, beauty-from-within and hydration cues.
These trends are predicted to take a longer time to generate a sizeable market and will likely embed in mature categories first, driving growth in drinking milk products (4.2% CAGR) and yoghurt and sour milk products (4.5% CAGR) over the forecast period of 2026-2031 (value sales, constant terms and fixed exchange rates).
Café Culture
Café culture is giving premiumisation and indulgence opportunities to dairy players, as they tap into trends through speciality tea and coffee shops and cafés to improve on their professional/on-trade portfolios and expand on barista SKUs through retail channels.
Beverage and dessert ingredients such as condensed and evaporated milk (7.9%) and cream (7%) led growth in 2026 and are set to continue a stable growth path up to 2031 (4.1% CAGR and 3.6% CAGR, respectively).