Key findings include: 

• Cost and volume growth are the top strategic priorities of dairy leaders: Approximately 65% 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% 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% of U.S. 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 U.S. 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% 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. 

“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," said Ludovic Meilhac, partner at McKinsey.

Added Karl Nilsson, partner at McKinsey: “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.”