- Dairy industry producers have experienced an increase in demand worldwide.
- Players are leveraging the power of technology to strengthen the value chain of dairy products.
- For Tanzania, the dairy industry still tackles a wide range of challenges.
Dairy industry players around the world are experiencing an increase in demand for key products to innovate and improve efficiency, reflecting the urgent need for entities across the value chain. A recent industry survey shows that consumers are increasingly choosing dairy products, which “helps an increase in the overall volume of the industry,” according to a report on Dairy Industry Executives 2025 by international advisory firm McKinsey and Company.
“For example, domestic consumption of natural cheese and butter increased by 1.5% and 5.8% from 2023 to 2024, respectively,” the report said. However, recent drastic changes in the global economy, including US tariffs, have also been set to have a dramatic impact on the dairy industry.
For example, “The US dairy industry has experienced many operational headwinds. The decline in herd size, inflation and ongoing labor challenges puts pressure on the volume, prices and costs across the dairy value chain,” the report details.
As of March 2024, avian influenza has been discovered in cattle in North America… These challenges evolved in 2025, with changes in international trade policies adding unknowns. The report is explained.
According to the survey, approximately 80% of dairy sector leaders surveyed expect volumes to rise by more than 3% over the next three years. “Leaders shared a sense that consumers are continuing to choose dairy products or that they are moving back from alternative milking to dairy products…we We have seen a resurgence in consumer demand for dairy products,” the report states.
Market trends support this optimism, with domestic demand for yogurt and cottage cheese rising over the last year, up 6% and 12% from 2023, respectively.
“This is because health-conscious consumers are increasingly looking for simple labels and nutritional benefits,” the report details.
Trends in the dairy industry in Tanzania
At this point, this global price rise is also affecting Tanzania in Zanzibar and Dar es Salaam. This is two important markets where farmers sell milk for less than about $1 per liter (SH2,000). “However, this price has skyrocketed due to the management costs encountered,” explains the Tanzania Dairy Commission.
Tanzania, like elsewhere in the world, faces an increase in inflation, a trend that negatively affects dairy prices. statistics Trade Economics Please show me that Tanzania’s inflation rate was 4.8% as of December 2022, an increase of 3.1% in 2024 from 4.9 in the last quarter.
“As most concentrates come from food crops, it is most likely that the sector is affected,” the board details. As a result, dairy cow breeding could continue to be a self-sufficient business with minimal profits unless farmers choose to sell live animals.
According to the board, Tanzania’s dairy sector has experienced slow growth, if not stagnant, since independence. “As consumers move away from ultra-processed foods, they’ll look for unprocessed foods with functional benefits. Dairy is completely at the heart of this movement,” says the board’s CEO.
Tanzania has a large number of cattle compared to other African countries, with around 33.9 million people according to the National Crops and Livestock Census.
“However, most of these cattle are local breeds and are known for their resistance to disease and pests, but produce little milk, with an average of less than 3.5 liters per cow per day,” the board reported. Given the large domestic cattle population, there is less profitability at the local and national level and limited milk production.
“An estimated 3 billion liters of milk are produced annually, with a 40% difference between the dry and wet seasons, which is a major contribution to the number of local varieties raised in the country,” the board says.
According to the Dairy Commission, milk production in Tanzania is divided into five regions: the southern highlands, north, coastal, central and lake zones. “The central and part of the coastal area produces a large amount of milk because there are many cattle raised.”
Blazing opportunities for “dairy cows” in the dairy sector
To address the growing interest in dairy products, executives plan to invest in innovation. “Most dairy leaders surveyed said they would continue their previous trends with plans to increase investments in product and manufacturing innovation over the next three to five years,” he said. ”
The report says recent product innovations are consumer-driven, with health innovations in particular increasing proteins, for example, while reducing sugar content. Furthermore, manufacturing is also a focus area for leaders. For example, many interviewees pointed out that they invested in packaging capabilities to extend shelf life.
“For example, other investments in AI and Tech are focused on efficiency and operational resilience,” read the report and note Co.ST and talent are increasingly prioritized for dairy industry executives.
However, production costs, which are increasingly important for industry investors, cite 69% of executives as a key priority for 2024. “This shows a major jump from 50% to 48% in 2023.
To address the cost challenge, 60% of the leaders surveyed said they changed operations due to changes focused on portfolio streamlining, vendor or customer changes, and infrastructure plans adjustments.
Important areas for improving the development of the dairy sector
Going forward, the research report points to skills as another important aspect driving the dairy sector. “Talent is a top priority for 67% of respondents, with 60% in 2023 and 44% in 2022. This indicates that filling the talent gap is more difficult than expected.”
Furthermore, only 60% of leaders believe that their role is met by optimal talent, especially in skilled manufacturing labor. When it comes to dairy manufacturing and processing facilities, leaders said last year it is difficult to attract and maintain an entry-level workforce, particularly remote locations.
“The lack of technicians to fix equipment was painful for many respondents. According to the interview, more flexible hours and increased plant schedules and salaries influenced the players’ ability to attract the right technical talent,” the details are detailed.
Similarly, respondents reported that they face challenges in office positions and are attempting to address these challenges by providing a hybrid working model and full remote position.
The most notable change from the 2023 survey was the importance of AI, with the importance of AI reduced to 20% points (24%) and sustainability reduced to 32% (12%).
The report also shows the growing reliance on digital and analytics, focusing on AI. 54% of dairy farmers said they reported using AI in other areas of pricing, manufacturing optimization, supply chain management and logistics.
“In the interview, almost all executives said they plan to use AI in the future, but many noted that there is room for improvement in the effectiveness of today’s AI solutions,” the report reads.
Next, according to the report, there is the issue of sustainability, which has shifted from a new topic to a core factor in the dairy industry. According to the report, more than three-quarters of dairy companies surveyed have sustainability strategies, with 84%, the largest share from 74% in 2023, investing funds to implement these strategies.
However, sustainability has declined as a top priority, with only 12% of respondents ranking sustainability as a top priority for 2024 down from 44% in 2023.
“Nevertheless, sustainability continues to play an important role in the dairy industry, particularly in response to customer demand,” the report acknowledges. However, dairy leaders ranked customer requirements as the number one reason to adopt sustainability strategies.
The report says sales data supports this inference. For example, products sold as “sustainable” have experienced a 3.5% increase in sales growth compared to traditional products sold.
“Many executives interviewed remained skeptical that consumers are willing to pay a premium for sustainability in the near future, but they highlighted the importance of sustainability,” the report reads.
As industry leaders look ahead, agility and resilience become important to change the macroeconomic and regulatory environment of the dairy industry.
ResearchEea advice that leaders should consider taking action in four key areas. Consumers, innovation, talent and sustainability to support sustainable success.
SectorPlayers recommends developing and selling new dairy products that meet consumers’ growing preferences for nutritious, simple, minimally processed foods, including high protein and high fat options with reduced additives and sugar.
Finally, investors in the dairy sector are being urged to invest in innovation. “Daily leaders can strategically invest in advanced technologies and AI to increase productivity, efficiency and transparency,” the researcher advises.
Overall, that’s true Workforce development that requires more action. It has been suggested that dairy companies need to promote a supportive work environment, including flexible work schedules, mental health services and open communication channels, to improve their appeal and retention of top talent.
Employers are also encouraged to offer employment packages with competitive wages and comprehensive benefits, including health insurance, retirement plans and performance bonuses.
“Companies can develop and implement training programs for technical skills, including skills related to new technology, along with ongoing learning opportunities,” the research authors urge.
To summarise that, businesses are encouraged to differentiate in sustainability. SectorPlayers can distinguish themselves by mitigating or improving the impact on the company’s environment.
For example, businesses need to broaden their focus beyond greenhouse gas emissions. This includes implementing and/or supporting upstream practices that promote biodiversity, such as adopting regenerative agriculture and creating wildlife corridors.
“There are great growth opportunities in the dairy industry in the future. Milk is a nutritious food, and we are just damaging the surface of value that can be unlocked,” the author concludes.
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