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🥛 Where Are the New Product Development Opportunities for Dairy Brands in 2025?

Consumer concerns

Wellness and functionality will continue to be top-of-mind for consumers this year, according to U.S. market research firm Spins.

From personalized diets to products that support weight management and healthy aging, dairy brands are expected to build momentum in the functional and high-protein segments and explore categories with growth potential.

So where are the opportunities? Here's a breakdown of Spins’ 2025 industry outlook focusing on dairy:

💪 High-Protein: The Category That Keeps Growing

With nearly $5 billion in sales and a projected growth of 9.3%, the snacks and beverages category is expected to drive high-protein innovation—great news for dairy-based protein ingredient companies.

According to Spins:

Sales of whey and milk proteins—the dominant protein ingredient category—reached nearly $705 billion, with an annual growth of 8.6%.
Whey and casein combined grew by 120%, overtaking standalone whey by almost $26 million.
Protein blends (animal + plant-based) declined by 8.2%, though they remained the second-largest segment with almost $532 billion in sales.

✅ Opportunity: Develop protein-rich drinks, functional yogurts, and refrigerated snacks with clear high-protein labeling.

🧃 Functional Foods – Underutilized Potential

In terms of NPD (New Product Development) activity:

Yogurt is the only dairy or plant-based dairy category in the Top 10 busiest NPD categories, with an innovation rate of 12.4%, above the food and beverage industry average of 10.5%.
However, yogurt is below average in dollar share, suggesting brands can enhance their value proposition to boost sales.

✅ Opportunity: Reformulate with clear health benefits (e.g., digestion, mood, detox), and highlight these on-pack.

💉 Functional Shots – The Emerging Format

Functional drink shots—some dairy-based—are showing growth across three major consumer health trends:

Digestive health: +13.6% / $80 million
Mood support: +6.5% / $6 million
Detoxification: +16.4% / $15 million

Top functional ingredient: Probiotics, driving:

$270 million in digestive health solutions
$5 million in mood support
$12 million in detox products

✅ Opportunity: Launch dairy-based fermented shots combining probiotics and adaptogens, positioned around gut-brain health, energy, and clarity.

🧀 Emerging Subcategories – Cottage Cheese, Colostrum, A2 Dairy

🥄 Cottage Cheese

Likely to continue its renaissance as a natural, low-calorie, high-protein food.
Segment includes farmer cheese and ricotta, which have grown their current dollar share.
Innovation in flavors, textures, and protein claims on-pack will be key.

💊 Colostrum

The dairy-derived supplement ingredient is booming, with +140% growth, now generating $1.8 million.
Has strong cross-functional potential: gut health and immune support.

🐄 A2 Dairy Products

Fluid milk dominates the A2 segment (87% of sales), while yogurt (9%), cheese (3%), and butter/cream (1%) remain underdeveloped.
Despite strong consumer interest in butter (up 18% over the past decade), the U.S. market leader A2 Incorporated reported FY24 EBITDA losses of $15.5 million, although its a2 Milk Grassfed line saw growth.

✅ Opportunity: Expand A2 dairy into high-demand categories like butter, cheese, and yogurt, which have low market penetration.

📦 Conclusion: 2025 Strategic Focus Areas for Dairy Brands

Opportunity

Format

Focus Areas

High-Protein Products

Beverages, Yogurt, Snacks

Whey, Casein, Natural Dairy Proteins

Functional Benefits

Yogurt, Shots

Gut, Mood, Detox

Emerging Subcategories