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Cost Pressures and Innovation Drive 2025 Priorities for Dairy Industry Leaders

The latest annual McKinsey & Company survey, conducted in collaboration with the International Dairy Foods Association (IDFA), reveals the top business concerns of dairy industry executives in 2025. Now in its seventh year, the survey collected insights from over 100 senior leaders across North America, Europe, and Oceania.

A Shift in Priorities

In 2024, the top three business priorities for dairy executives were:

Corporate purpose
Talent
Cost

But in 2025, cost has surged to the top, reflecting growing economic pressures. Talent remains the second-highest priority, while volume growth has climbed to third place. Corporate purpose dropped to fourth, and sustainability slipped further down the list—from fifth to seventh place, overtaken by digital data and analytics, which now hold the sixth position.

Cost Concerns Dominate

For 69% of respondents, managing costs is the primary focus—a sharp increase from 48% and 50% in the past two years, respectively. According to McKinsey, this surge stems from ongoing challenges in logistics, inflation, and volatile production costs, all of which continue to erode profit margins.

Talent Still a Key Challenge

67% of executives identified talent as a major concern, underscoring the persistent skills gap across agriculture, processing, and manufacturing. The difficulty in attracting and retaining qualified workers remains a top operational challenge for the sector.

Confidence in Growth and Innovation

Despite cost and labor headwinds, optimism is on the rise:

80% of respondents expect dairy volumes to grow more than 3% over the next three years, up from 76% in 2024.
65% plan to increase investment in product innovation over the next 3–5 years.
79% aim to boost manufacturing innovation in the same timeframe.

Artificial Intelligence Gaining Traction

Digital transformation is accelerating across the industry.

54% report current use of artificial intelligence (AI) in areas such as pricing, production optimization, and supply chain management.
Among the 29 executives also interviewed directly, nearly all plan to use AI in the future, though some expressed reservations about the maturity of existing solutions.

Sustainability: Declining Priority, But Long-Term Value Remains

Although sustainability remains important, it has become a lower strategic priority for dairy leaders:

Only 12% ranked it in their top three, down from 44% the previous year.

However, McKinsey notes that sustainable dairy products are still gaining market traction. Products labeled as "sustainable" recorded a 3.5% sales increase compared to conventional alternatives—suggesting the topic remains commercially relevant even if it has lost executive focus.

Top Priorities for Dairy Leaders in 2025 (McKinsey & Company / IDFA Survey):