WHY DAIRY STILL MATTERS AND HOW IT’S CHANGING IN ASIA PACIFIC, MIDDLE EAST AND AFRICA

By Craig Finney, General Manager, Foodservice Chains, Kerry Southeast Asia

Across Asia Pacific, the Middle East and Africa (APMEA), dairy is a source of nutrition, a comforting indulgence, and a critical ingredient across beverages, bakery, desserts, sauces and snacks. From milk in tea and coffee to yoghurt drinks, frozen desserts and functional beverages, dairy is a fundamental ingredient in regional food traditions.

Yet, how dairy is consumed is changing. While consumers still want the richness and emotional familiarity that dairy delivers, they now want dairy to meet their needs and modern realities: digestive health, affordability, sustainability and consistent quality.

APMEA at a Structural Turning Point for Dairy

Globally, dairy markets are undergoing a structural shift rather than a cyclical one. Milk supply constraints, climate pressure, tightening environmental regulations and higher production costs are reshaping availability and economics.

Between Q4 2023 and Q2 2025, liquid cream prices in Europe rose by more than 42%, while global milk volumes declined sharply between 2020 and 2023, with only modest recovery expected. These pressures ripple directly into APMEA markets, which remain highly import-dependent for many dairy ingredients.

At the same time, demand across APMEA continues to grow.

By 2031, the Middle East and Africa dairy market alone is projected to reach USD 56.23 billion, fuelled by premiumisation, convenience-led formats and the rapid rise of functional and nutrition-forward dairy products. Consumers are not turning away from dairy, they are asking more of it.

For manufacturers, this creates a delicate balancing act:

Delivering nutrition and indulgence, while managing fat, sugar and saturated fat
Advancing sustainability goals, despite dairy’s inherent carbon intensity
Ensuring accessibility, in a region where lactose intolerance is widespread
Maintaining consistency and affordability, amid volatile raw material costs

Meeting these expectations requires not just incremental reformulation but a re-examination of how dairy is designed, processed and experienced. The challenge with dairy is how to deliver more value with fewer resources.

Lactose Intolerance: A Defining Reality, Not a Niche Concern

Few factors shape dairy consumption in APMEA more widely than lactose intolerance.

Across East and Southeast Asia, more than 90% of the population experiences lactose intolerance. India reports prevalence of around 40%, while many parts of the Middle East and Africa reach 80–90%. Genetically, reduced lactase enzyme activity affects many East Asian adults.

Yet dairy consumption persists and continues to grow, driven by urbanisation, café culture, premium indulgence and the growing influence of Western-style dairy formats. Consumers are not turning away from dairy but asking for dairy that works better for their bodies.

This convergence has reshaped how dairy innovation is approached across the region.

Rather than positioning lactose-free as a niche or medicalised offering, Asia is increasingly embracing digestive-friendly dairy as the default, particularly in beverages, yoghurt drinks, desserts and ambient dairy formats. Advances in lactase science now allow manufacturers to improve digestibility while preserving the creamy taste and mouthfeel consumers expect, and even support sugar reduction without introducing alternative sweeteners.

From Avoidance to Access: Redefining the Dairy Experience

The fastest-growing dairy segments globally are those that remove barriers rather than replace dairy altogether. Lactose-free, reduced-sugar and functionally enhanced dairy products allow consumers to enjoy dairy while meeting their health, wellness and lifestyle needs.

Advances in lactase science have made it possible to:

Improve digestibility without altering taste or texture
Reduce added sugars by leveraging lactose’s natural sweetness when hydrolysed
Enable cleaner labels and simpler ingredient statements
Support regulatory compliance in lactose-free claims

For manufacturers, this shifts lactose-free from a specialty offering to a mainstream strategy, particularly in APMEA, where accessibility often leads to growth.

It is within this broader industry transformation that ingredient science and application expertise play a critical enabling role.

Optimising Dairy in a High-Cost, High-Expectation World

Beyond digestibility, today’s dairy challenges are economic and environmental.

Rising cream, milk powder and butterfat costs place pressure on margins, while sustainability commitments demand measurable reductions in carbon intensity. At the same time, consumers are unwilling to accept compromises in taste, creaminess or indulgence.

This has accelerated interest in dairy optimisation, approaches that preserve the sensory and nutritional qualities of dairy while using raw materials more efficiently.

In practice, this means re-engineering dairy systems to deliver:

Creaminess, viscosity and mouthfeel with lower fat inclusion
Balanced dairy flavour profiles despite reduced dairy solids
Improved nutritional outcomes alongside cost and carbon reductions

The Role of Science-Led Partnership

As dairy evolves, manufacturers increasingly seek partners who understand both the heritage of dairy and the science required to future-proof it.

This is where companies like Kerry shape outcomes behind the scenes.

With more than five decades in dairy processing and flavour and nutrition science, Kerry works with manufacturers to help them create better dairy.

Across APMEA, this support spans:

Dairy taste and optimisation technologies that reduce cost and carbon while maintaining indulgence
Rapid lactose detection tools that support compliance and quality assurance
Advanced lactase solutions that improve digestibility and enable sugar reduction
Clean-label flavour systems that meet premium and natural positioning needs

Rather than offering one-size-fits-all solutions, the focus is on co-creating region-specific dairy systems that reflect local preferences, regulatory frameworks and consumption habits.

In one recent application example, cream-powder-reduction strategies delivered significant economic savings, material carbon reduction, and measurable reductions in fat and saturated fat, without eroding the dairy experience consumers expect.

Sustainable Dairy for Nutritional Balance

A recent fact sheet released by the European Dairy Association illustrates the complementary role of dairy and plant foods in sustainable diets.

Sustainable diets are plant-based diet optimised with animal-sourced foods to guarantee nutrient adequacies for all populations.
Due to its nutrient richness, documented health benefits, affordability, and high consumer acceptance, dairy foods can play an important role in healthy, nutritious, sustainable plant-based diets. Both dairy and whole, plant foods contribute to nutritional adequacy of sustainable diets, which is well reflected in national Food Based Dietary Guidelines.
By recognising the complementary roles of dairy and plant-sourced products, we can create more balanced dietary patterns that meet nutritional needs and support environmental sustainability.
Embracing the strengths of both can pave the way for a more inclusive approach to nutrition, catering to diverse consumer preferences while ensuring adequate nutrient intake.

A Hybrid, Nutrition-Forward Dairy Future

Looking ahead, dairy in APMEA is unlikely to follow a single path. The future is hybrid and highly contextual.

We will see continued growth in:

High-protein and functional dairy
Probiotic and fermented products
Reduced-sugar and lactose-free formats
Dairy-inspired experiences across both animal-based and plant-based systems

Faced with supply constraints, health realities and sustainability demands, the industry is being challenged to rethink how dairy is formulated, processed and positioned. Those who succeed will be the ones who treat accessibility, nutrition and sustainability as design principles rather than trade-offs.

Through science-led collaboration and deep dairy expertise, Kerry continues to support manufacturers across APMEA as they navigate this transformation, ensuring that dairy remains delicious, nutritious, and rewarding for the next generation of consumers. The future of dairy goes beyond overcoming limitations to unlocking what dairy can become.