Rabobank reports rise in milk supply in Q3 2025

GLOBAL – According to Rabobank’s latest Global Dairy Top 20 report, the dairy industry recorded a modest growth trajectory, with combined turnover among the top companies increasing by 0.6% in 2024 and projected to rise by 0.5% in 2025.

The dairy industry is on the brink of transformative changes, with anticipated mergers and acquisitions (M&A) set to reshape the competitive landscape.

However, the report also highlights that significant shifts are expected in 2026 due to impending mergers and acquisitions (M&A) that could reshape the rankings and competitive dynamics.

Firm dairy product prices have pushed farmgate prices in New Zealand and Europe, rising 27% and 18% YOY, respectively. Well-supplied global feed markets have kept a lid on prices. Overall, good farmgate margins are supporting increased milk production, led by the USA and New Zealand.

Milk production across the Big-7 exporting regions will peak in 2H 2025, with growth continuing in 2026, but at a more moderate rate.

On an annualized basis, milk supply in the Big 7 is forecast to increase by 1.6% in 2025 and 0.6% in 2026, resulting in a combined growth of 7.1m metric tons across the two years. The slowdown in milk production growth in 2026 is primarily due to strong year-on-year comparables.

In the USA, milk production is gaining pace on the back of herd expansion. In South America, milk collections are strong against weak comparables.

The outlook across Europe is mixed, as a slow recovery is underway in regions affected by the bluetongue disease. Some regions are grappling with dry conditions, but supply growth in the EU is expected to be positive, led by Ireland and Poland.

The Oceania spring flush is fast approaching. October will be the peak volume month for both Australia and New Zealand.

While Australia is facing a weaker spring peak due to feed shortages and a smaller herd, New Zealand has a solid footing for a strong peak. The forecast payout is currently at a record high, and seasonal conditions are generally favorable in many regions of Oceania.

Foodservice channels remain a key area to watch for demand settings. Foot traffic is sluggish in many major economies, and ongoing weakness in consumer confidence continues to weigh on discretionary spending among low- and middle-income consumers.

Dairy demand in grocery channels is also underwhelming in many countries. Households are paying more for dairy products, as inflation in the dairy aisles is on an upward trend in some regions.

Eight companies have swapped positions within the rankings, illustrating the intense competition and strategic repositioning that characterise the industry. Such movements reflect not only changes in market share but also shifts in consumer preferences and operational efficiencies.

One of the factors influencing this growth is consumer demand: a growing preference for health-conscious and premium dairy products is reshaping purchasing patterns.

Manufacturers are urged to respond by diversifying their product offerings to include functional dairy items, organic options and plant-based alternatives.

Second is the economic pressures. Fluctuations in global economic conditions, including inflation and supply chain disruptions, continue to impact production costs and pricing strategies for dairy manufacturers.

Despite the overall growth, the report underscores the challenges faced by dairy manufacturers. The projected 0.5% growth in 2025 is relatively modest, indicating that while the market remains stable, manufacturers must continue to innovate and adapt to maintain profitability.

Implications for dairy manufacturers

1. Strategic positioning in a changing landscape.

The potential for significant mergers and acquisitions (M&A) activity presents both challenges and opportunities for dairy manufacturers.

To navigate this evolving landscape, companies should consider forming partnerships and alliances.

Collaborating with other manufacturers or forming strategic alliances can enhance market positioning and foster innovation. By pooling resources and expertise, companies can better respond to consumer demands and competitive pressures.

Market intelligence is another consideration. Staying informed about competitors’ moves and market trends will be crucial for strategic planning.

Manufacturers should invest in market research and analytics to anticipate shifts in consumer preferences and adjust their strategies accordingly.

2. Innovation as a key driver. As consumer preferences evolve, innovation will be paramount for dairy manufacturers. Companies should focus on product development, expanding their product lines to include health-oriented and premium options, which will be essential for attracting a diverse consumer base.

Investing in R&D can help manufacturers create unique offerings that stand out in a crowded market.

Companies should also consider Quality improvement: ensuring the highest quality standards will differentiate products and build consumer loyalty. Manufacturers must prioritise quality control and invest in technologies that enhance product consistency.

3. Adapting to regional trends

The report highlights regional milk price trends that may impact profitability. Dairy manufacturers should adopt local sourcing strategies: evaluating local sourcing options can help mitigate risks associated with global supply chain disruptions and fluctuating milk prices. Establishing relationships with local farmers can also enhance brand reputation and sustainability efforts.

They should also ensure cost management by implementing efficient production practices and cost control measures will be essential to maintain margins during periods of price volatility. Manufacturers should explore automation and lean manufacturing techniques to optimise operations.

 Top 10 dairy companies in 2025

1. Lactalis – US$31.9 billion

Lactalis continues to solidify its position as the largest global dairy company, expanding its operations through strategic acquisitions.

Noteworthy acquisitions include Nestlé’s coffee creamer brand Cremora in South Africa and General Mills’ US yogurt business, which is expected to add US$1.5 billion to net sales. This also includes the recent purchase of Fonterra’s consumer and associated businesses for US$2.3 billion.

2. Nestlé – US$23.9 billion

Nestlé faces challenges in its dairy segment, particularly after spinning off Froneri, which now operates independently. The company’s dairy sales have plateaued around €22 billion for three consecutive years, with declines in turnover across multiple regions, except for slight growth in China and Taiwan.

3. Dairy Farmers of America (DFA) – US$23.0 billion

DFA retains its third-place position, with revenues slightly lower than its record high in 2022. The cooperative’s performance is heavily influenced by US milk prices, which averaged US$22.55 per hundredweight in 2024.

Despite fluctuations, DFA’s strong market presence ensures its continued ranking among the top dairy companies.

4. Danone – US$20.7 billion

Danone has made divestments to streamline its operations, including exiting the Russian market and selling its majority stake in Horizon Organic.

However, its dairy segment performed well on a like-for-like basis, achieving 1.1% price growth and 2.9% volume growth, resulting in a 4.0% increase in turnover. Danone’s focus on health-oriented products is expected to bolster its market position moving forward.

5. Yili – US$15.8 billion

Yili remains a key player despite facing challenges in the Chinese market, including weakened consumer demand and oversupply issues.

The company has reported a 12% drop in revenue from its liquid milk division, although its powder and dairy products segment saw an 8% increase, driven by strong performances in adult milk powder and cheese.

6. Arla Foods – US$15.0 billion

Arla experienced a modest revenue increase of 0.8% in 2024, primarily due to its acquisition of Volac’s whey nutrition division.

The cooperative’s stable growth reflects its effective management strategies, although it faces competition from other European dairy cooperatives.

7. Fonterra – US$14.7 billion

Fonterra’s drop in ranking reflects its decision to divest its consumer and associated businesses, focusing on core foodservice and ingredients.

This pivot aims to maximise long-term shareholder value for its farmers. However, the divestment is expected to significantly impact Fonterra’s revenue, potentially dropping it to tenth place next year.

8. FrieslandCampina – US$14.0 billion

FrieslandCampina’s performance remained stable, although it experienced a slight decline of 0.5% in turnover.

The cooperative is actively seeking ways to enhance its market position amid challenges related to member retention and milk supply. FrieslandCampina’s ongoing efforts to innovate and adapt to market changes will be crucial for its future success.

9. Saputo – US$13.9 billion

Saputo led all companies in revenue growth, achieving an 8.4% increase in 2024. The company’s strong performance is attributed to improved operations across all divisions, except in Argentina, where currency struggles impacted results. Saputo’s focus on efficiency and cost-saving measures has positioned it well for continued growth.

10. Mengniu – US$12.3 billion

Mengniu’s revenue has declined due to a challenging operating environment in China, marked by oversupply and declining prices.

The company has faced double-digit drops across its liquid milk, ice cream, and milk powder divisions. Despite these challenges, Mengniu remains focused on maintaining its market share and adapting to changing consumer preferences.

Emphasising sustainability

As sustainability becomes increasingly important to consumers, dairy manufacturers must prioritise environmentally friendly practices.

The report emphasises that implementing sustainable sourcing, production, and packaging practices can enhance brand reputation and meet regulatory requirements. Manufacturers should consider certifications that highlight their commitment to sustainability.

Second is transparency: Communicating sustainability efforts, particularly in resource-intensive industries such as dairy, to consumers can build trust and loyalty. Brands that effectively share their sustainability stories are likely to resonate with environmentally conscious consumers.

Finally, as companies navigate these changes, strategic agility, innovation, and a focus on sustainability will be vital for success. The following year promises to be pivotal for the dairy sector, with significant implications for both established players and emerging competitors.

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