EUROPEAN DAIRY MARKET 2025–2026
This dynamic reflects a rebalancing of the relationship between production, processing and value creation, where the pursuit of profitability now takes precedence over the sole logic of volume.
According to the USDA report - Dairy and Products Semi-annual: European Union, this trend signals a long-term reconfiguration of the relationships between dairy production, processing, and product positioning, where economic performance increasingly depends on the ability to transform milk into high value-added products.
European milk production in transition
This change reflects profound structural trends. In particular, the report highlights the continuing decline in dairy livestock, with the number of dairy cows estimated at around 19.2 million in 2025, down 3.5% year-on-year. Environmental constraints, rising costs and pressure on profitability are limiting the incentives to increase volumes.
Production also remains concentrated in a few large dairy regions, notably Germany, France, the Netherlands and Poland, which continue to shape the European milk supply. For 2026, the USDA report anticipates a continuation of this restrained growth, confirming a trend that is more focused on optimising avenues rather than increasing volumes.
Cheese, the cornerstone of European milk value creation
In the context of limited milk availability, cheese processing is becoming an increasingly important factor in industrial decision-making. The European Union produced around 10.8 million tonnes of cheese in 2024, a volume that is expected to remain dynamic despite the decline in collection. According to USDA forecasts, cheese production reached around 10.72 million tonnes in 2025, an increase of 0.2% compared to the previous year.
This resilience in the production of cheese illustrates its central role in value creation within the European dairy market. Unlike other more standardised dairy products, cheese allows for a wide variety of positioning: mass-market cheese, speciality cheeses, geographical indications and quality label cheeses. This diversity is a major asset in responding to increasingly segmented markets, both in Europe and internationally.
The USDA report also highlights the strength of external markets. Cheese exports from the European Union reached around 1.39 million tonnes in 2025, confirming cheese's role as a key product of European dairy exports on global markets.
Butter and powders: volumes under adjustment
The trend is similar for powders. Skimmed milk powder production is expected to reach around 1.36 million tonnes by 2026, a decrease of around 3% year-on-year. Whole milk powder is expected to see an even sharper decline, with production estimated at 590,000 tonnes, down 6% compared to 2024.
In response to these developments, European manufacturers are adjusting their volumes to limit the risk of overstocking and price pressure, favouring the allocation of milk to the most profitable segments, foremost among which is cheese.
Economic conditions and value creation strategies
The economic environment remains a key factor in industrial decisions. The USDA report indicates that the producer price of milk in the European Union was around €53.7/100 kg in 2025. However, this price level must be viewed in the context of continuously rising production costs, particularly for energy, labour and agricultural inputs.
In this context, the priority given to cheese appears to be a strategic tool for better absorbing these costs. Thanks to its ability to sustain higher price levels and offer stronger differentiation, cheese strengthens the economic resilience of the entire sector. Since 2025, cheese has thus established itself as a central element of the European dairy market. More than just a processed product, it now serves as a key economic lever at the crossroads of production, competitiveness, and milk valorisation.
Read also:
Visit the Cheese and Dairy Products Show from Sunday 7 to Tuesday 9 June 2026, the unmissable event for professionals in the sector.