McKinsey releases 2026 dairy executive survey: Protein innovation and margin discipline emerge

Top priorities amidst industry pressures 

New research reveals a dairy industry facing intense cost and margin pressures, even as demand grows, and outlines key leadership priorities among dairy organizations and leaders moving forward.

New research released by McKinsey & Company (McKinsey) finds that cost management and volume growth are among the top

strategic priorities for dairy organizations in 2026 at a time when the industry continues to cope with a challenging operating environment, defined by persistent cost inflation, labor constraints, input volatility, and rising uncertainty around trade and regulation.

Surveying over 200 dairy industry executives across the US and Europe – in partnership with the International Dairy Foods Association and the European Dairy Association – McKinsey’s eighth annual The dairy industry’s 2026 playbook: Protect margins, pursue growth report reveals industry leaders’ top priorities and concerns, and highlights the emerging trends that are shaping the dairy space in 2026.

Key findings include:

• Cost and volume growth are the top strategic priorities of dairy leaders: Approximately 65 percent of US respondents ranked cost management among their top three priorities—consistent with 2024 (69 percent) and up from 2023 (48 percent)—reflecting sustained cost increases in raw materials and logistics. European leaders report similar pressure, with roughly half placing cost among their top three priorities.

• Most organizations report flat or shrinking margins: Nearly 70 percent of surveyed dairy companies reported flat or shrinking margins in 2025, up from 66 percent in 2024 and 58 percent in 2023. Europe shows a comparable dynamic, with 57 percent reporting flat or shrinking margins in 2025.

• Protein is a key innovation and growth engine: 88 percent of US dairy executives cite protein as the most influential consumer demand trend, far ahead of convenience, premiumization, or plant-based alternatives.

• AI adoption rates are deliberate, but expectations are rising: Roughly four in five US dairy executives report using AI or advanced analytics in some capacity, primarily in administrative efficiency, maintenance, planning, and knowledge retention.

• Diverging sustainability priorities across regions: In Europe, 53 percent of executives rank sustainability among their top three priorities, compared with only 16 percent in the US – up slightly from 12 percent in 2024 but still well below 44 percent in 2023.

At a macro level, the research finds that dairy leaders remain optimistic about long-term demand fundamentals, even as cost pressures persist. Across the US and Europe, the agenda is sharpening around a small number of value-creating priorities including, protecting margins through disciplined cost and operational management, pursuing profitable volume growth anchored in protein-led innovation, and prioritizing sustainability initiatives that deliver measurable impact and operational value.

Ludovic Meilhac, Partner at McKinsey, said: “The 2026 operating environment is marked by resilient demand, persistent cost pressures, ample milk supply, and regulatory and trade uncertainties. Leaders who pair disciplined execution with sustained investment in the capabilities that matter most will be best positioned not only to weather volatility but also to capture the industry’s next wave of growth.”

Karl Nilsson, Partner at McKinsey, added: “Dairy processors across the United States and Europe find themselves operating in a challenging environment. At the same time, supply-side risks are increasing as producers contend with animal health issues alongside climate-related disruption and structural constraints on milk supply growth in several European markets. Yet core demand remains resilient. For executives, these crosscurrents translate into a clear imperative: protect margins and execution in the near term, while selectively investing behind durable growth themes—most notably, protein-led innovation.”

To read McKinsey’s analysis in detail, click here.

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In the fourth quarter of 2025, McKinsey, the International Dairy Foods Association, and the European Dairy Association jointly surveyed 204 executives in the dairy industry (116 in the United States and 88 in Europe) and conducted interviews with 41 executives (28 in the United States and 13 in Europe). Participants came from a variety of company types—including processors, retailers, and packaging companies—and revenue sizes. Most participating companies are headquartered in the United States and Europe (Denmark, Germany, France, Italy, Netherlands, Portugal, Spain, and the United Kingdom); others are based in Oceania and elsewhere in North America.

Survey questions were tailored to respondents’ areas of expertise. Only those in C-level and vice president roles in strategy and operations were asked about the company’s business strategy and operations, and only those with roles in sustainability or environmental, social, and governance strategy were asked about sustainability.

To quantify and analyze data from the interviews, McKinsey coded keywords from interview responses, grouped them by subject, and aggregated the results.