Dairy products and alternatives in 2025: The big picture
In 2025, Australia’s dairy products and alternatives market is navigating a complex macro landscape shaped by tightening domestic supply, rising on-farm input costs, and global market volatility. While consumer demand remains steady particularly in cheese, yoghurt, and dairy spreads retailers are facing mounting pressure on pricing and assortment strategies. Dry weather conditions and increased reliance on supplementary feed have pushed production costs higher, contributing to a forecasted decline in national milk output. This is placing sustained upward pressure on retail prices and limiting the scope for deep promotional activity. Concurrently, elevated global dairy prices and a weaker Australian dollar are making imported products less cost-competitive, reinforcing a preference for domestically sourced options and accelerating a consumer shift towards private label and value-tier alternatives.
Key trends in 2025
Australia’s dairy and alternatives market has been shaped by three defining forces in 2025, namely health and nutrition, sustainability, and value-driven consumption. As consumers have balanced economic uncertainty with long-term wellness goals, manufacturers have responded through targeted innovation that delivers functional benefits, caters to diverse dietary needs, and aligns with ethical and environmental values.
Competitive Landscape
Bega has reinforced its position as the overall leading company in Australia’s dairy and alternatives market in 2025, driven by a strategy centred on functional innovation, agile brand architecture, and expansion across both traditional and emerging categories. The company has successfully aligned with consumers’ evolving health priorities by embedding wellness-forward attributes, such as high protein, reduced sugar, and lactose-free, across its diverse portfolio. Standout launches like Dairy Farmers protein boosted milk, Dare’s no-added-sugar iced coffee, and Farmers Union gut good yoghurt have captured the surging demand for satiety, digestive health, and low-sugar indulgence, strengthening Bega’s relevance in both staple and discretionary occasions.
Channel developments
Supermarkets continue to dominate sales of dairy products and alternatives in Australia, with sustained growth supported by aggressive pricing strategies, expansive assortments, and accelerated investment in private label innovation. Amid ongoing cost-of-living pressures and heightened scrutiny from the Australian Competition and Consumer Commission over alleged price gouging, both Coles and Woolworths have responded by reinforcing their value credentials and rebuilding consumer trust through impactful price reductions and loyalty-focused campaigns.
What next for dairy products and alternatives?
Australia’s dairy products and alternatives market is entering a new era, driven by multifunctional innovation and values-based positioning that are set to underpin future value growth. As consumers balance wellness goals with financial pressures, success will depend on the ability of brands to deliver products that integrate health, sustainability, and affordability. Core dairy staples such as drinking milk products, cheese, butter, and cream are expected to retain steady demand due to their everyday relevance. Within drinking milk products, barista-style formats are poised to lead growth, as cost-conscious consumers look to replicate the café experience at home. Both dairy and plant-based variants are gaining momentum, combining indulgent textures with functional performance tailored to personalised coffee rituals.
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Overview:
Understand the latest market trends and future growth opportunities for the Dairy Products and Alternatives industry in Australia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
Key trends are clearly and succinctly summarised alongside the most current research data available. Understand and assess competitive threats and plan corporate strategy with our qualitative analysis, insight and confident growth projections.
Data and analysis in this report provides further detailed coverage dedicated to a comprehensive range of core packaged food categories.
If you're in the Dairy Products and Alternatives industry in Australia, our research will help you to make informed, intelligent decisions; to recognise and profit from opportunity, or to offer resilience amidst market uncertainty.
The Dairy Products and Alternatives in Australia report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volume and value sizes, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent research methodology, conducted in-country
This report answers:
- What is the market size of Dairy Products and Alternatives in Australia?
- Which are the leading brands in Dairy Products and Alternatives in Australia?
- How are products distributed in Dairy Products and Alternatives in Australia?
- How is the rise of e-commerce and/or the expansion of modern grocery retail impacting traditional retail?
- What are the key health and wellness concerns driving, or challenging, sales in Dairy Products and Alternatives?
- How significant are vegan and vegetarian dietary requirements in determining sales growth in Australia?
- How has COVID-19 impacted consumer demand? To what extent have lockdown, home seclusion and stockpiling boosted sales? Will the longer term economic repercussions of the pandemic stimulate or suppress future growth?
- Where is future growth expected to be most dynamic?
- How significant will values-based claims, such as sustainability and ethical labelling, be in supporting future growth and brand equity?
Dairy Products and Alternatives in Australia
Dairy products and alternatives in 2025: The big picture
Key trends in 2025
Competitive Landscape
Channel developments
What next for dairy products and alternatives?
DISCLAIMER
Baby Food in Australia
KEY DATA FINDINGS
Baby food faces ongoing challenges amid demographic and behavioural shifts
Nutricia leads baby food while specialist products gain momentum
Supermarkets dominate sales but health and beauty specialists see growing appeal
Value-led growth set to reshape the category
Health-led innovation driving growth in plant-based and alternative milk formula
Regulatory shift set to reshape the market
Butter and Spreads in Australia
KEY DATA FINDINGS
Value growth backed by butter blends and health-driven premium innovation
Fonterra maintains leadership, but divestment signals a shift in the competitive landscape
Supermarkets successfully adapt to polarised demand
Sales set to be boosted by premiumisation and evolving household dynamics
Health consciousness and ingredient transparency reshaping consumer priorities
Butter and spreads set to enter transformative phase as Fonterra divests
Cheese in Australia
KEY DATA FINDINGS
Cheese sales backed by innovation and evolving consumption occasions
Fonterra leads cheese while Coles sees dynamic growth with its private label line
Supermarkets lead distribution through private label innovation and value-tier expansion
Bright outlook for cheese as domestic players battle with imports
Health-lead innovations set to steer the future expansion of cheese
Fonterra’s potential exit from Australia set to disrupt the competitive landscape
Drinking Milk Products in Australia
KEY DATA FINDINGS
Premiumisation and diversification fuel value growth in drinking milk products
Bega strengthens its lead through innovation and strategic expansion
Supermarkets maintain dominance while e-commerce gains ground
Drinking milk products set to benefit from health-focused innovation
Flavoured milk drinks to focus on functional indulgence and innovation
Private label to expand share through health-led differentiation and format flexibility
Yoghurt and Sour Milk Products in Australia
KEY DATA FINDINGS
Yoghurt and sour milk products benefits from healthy image
Bega leads while Chobani benefits from innovation-led growth
Supermarkets dominate while e-commerce drives premiumisation and diversification
Yoghurt set to benefit from functional innovation and rising private label competition
Convenient packaging to propel category growth
Sustainable packaging emerges as a strategic lever for creating brand equity
Other Dairy in Australia
KEY DATA FINDINGS
Other dairy benefits from shift to in-home consumption and premiumisation
Bulla leads while Lactalis benefits from health-led innovation
Supermarkets increase their dominance through premium private label and strategic price positioning
Other dairy set to be boosted by premium innovation and functional indulgence
Plant-based innovation set to accelerate in other dairy
Frozen dairy desserts could unlock growth for other dairy, led by private label innovation and premium indulgence
Plant-Based Dairy in Australia
KEY DATA FINDINGS
Plant-based dairy posts solid value growth in 2025
Sanitarium cements leadership while Noumi benefits from innovation
Omnichannel strategies power the next phase of expansion in Australia
Structural instability in traditional dairy offers potential for plant-based growth
Health and wellness redefines plant-based dairy as a daily nutritional staple
New technologies set to have a big influence on the market
The following categories and subcategories are included:
Dairy Products and Alternatives
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- Dried Baby Food
- Prepared Baby Food
- Other Baby Food
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- Liquid Standard Milk Formula
- Powder Standard Milk Formula
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- Liquid Follow-on Milk Formula
- Powder Follow-on Milk Formula
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- Liquid Growing-Up Milk Formula
- Powder Growing-Up Milk Formula
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- Liquid Special Baby Milk Formula
- Powder Special Baby Milk Formula
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- Butter
- Cooking Fats
- Margarine and Spreads
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- Spreadable Cheese
- Processed Cheese excl Spreadable
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- Packaged Hard Cheese
- Unpackaged Hard Cheese
- Soft Cheese
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- Dairy Only Flavoured Milk Drinks
- Flavoured Milk Drinks with Fruit Juice
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- Fat-free Fresh Milk
- Semi Skimmed Fresh Milk
- Full Fat Fresh Milk
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- Fat-free Shelf Stable Milk
- Semi Skimmed Shelf Stable Milk
- Full Fat Shelf Stable Milk
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- Goat Milk
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- Powder Milk
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- Sour Milk Products
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- Drinking Yoghurt
- Flavoured Yoghurt
- Plain Yoghurt
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- Chilled Dairy Desserts
- Shelf Stable Dairy Desserts
- Chilled Snacks
- Coffee Whiteners
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- Flavoured Condensed Milk
- Plain Condensed Milk
- Evaporated Milk
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- Cream
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- Flavoured Fromage Frais and Quark
- Plain Fromage Frais and Quark
- Savoury Fromage Frais and Quark
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- Soy Drinks
- Other Plant-based Milk
- Plant-based Yoghurt
- Plant-based Cheese
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This report originates from Passport, our Dairy Products and Alternatives research and analysis database.
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