As domestic consumption of white milk declines and sales of imported sterilized milk gain traction, Korea's dairy industry is accelerating a pivot toward protein, plant-based, and functional products. Still, Namyang Dairy Products continues to maintain a structure with a high share of milk and formula sales, drawing attention to the reason.
According to the Korea Dairy Committee on the 28th, per-capita white milk consumption last year was 22.9 kilograms, down 9.5% from 25.3 kilograms a year earlier. It is the lowest level since the late 1980s, when white milk consumption took off. Low birthrates, changing eating habits, and the expansion of substitutes such as coffee, carbonated drinks, and plant-based beverages are seen as jointly influencing the trend. Also, starting this year, sterilized milk from the United States and the European Union (EU) is being imported tariff-free.
As market conditions shift, major dairy companies are moving to diversify their business portfolios beyond milk. Maeil Dairies is expanding its protein brand "Selex" and plant-based beverage business. According to the Financial Supervisory Service's electronic disclosure system, the share of Maeil Dairies' other institutional sector sales steadily increased from 38.5% in 2023 and 39.8% in 2024 to 40.5% last year, topping 40% for the first time. Compared with 16.4% in 2021, it rose by more than 24 percentage points (p).
Seoul Dairy Cooperative is also expanding premium products such as A2 milk and low-carbon milk, while strengthening its fermented milk, cheese, and dessert businesses. It is also increasing the share of processed products such as Byot and Greek yogurt, and cheese. Seoul Dairy's fermented milk institutional sector sales rose to 159.5 billion won in 2023, 176.4 billion won in 2024, and 187.4 billion won in 2025. Seoul Dairy Cooperative said, "As the fermented milk institutional sector is maintaining its growth trajectory, we are within sight of entering the roughly 200 billion won range in sales this year."
By contrast, Namyang Dairy Products saw the share of milk and formula increase. The share of Namyang Dairy Products' milk and formula sales rose from 70.1% in 2023 to 71.9% in 2024 and 75.1% last year. The share of milk within total sales also increased to 51.1% in 2023, 52.6% in 2024, and 54.0% last year.
Industry watchers say Namyang Dairy Products' pace of structural change is slower than its rivals. From 2021 through last year, lawsuits between current major shareholder Hahn & Company and former major shareholder, ex-Chairman Hong Won-sik's side, consumed considerable time in stabilizing the organization and resolving governance issues. While competitors focused on expanding protein, plant-based, and functional products, Namyang Dairy Products placed more weight on restructuring, such as normalizing management and shedding noncore operations.
However, some in the industry note that the raw milk quota system is a shared burden across all dairy companies, making it hard to view the issue as solely Namyang Dairy Products' strategy. Because the industry operates under a "raw milk quota system," even if white milk consumption falls, companies are required to purchase a certain minimum volume of raw milk.
Introduced in 2002, the raw milk quota system was implemented to address problems stemming from oversupply under a structure of many dairy farms and a few dairy companies, where companies effectively set raw milk prices. Its aim is to control dairy farms' output and guarantee an appropriate farm-gate price. Because of the quota system, dairy companies are currently obligated to purchase a fixed volume of raw milk.
A Namyang Dairy Products official said, "Even if we want to immediately reduce the share of milk in line with declining consumption, it is not a structure that corporations can easily adjust on their own," adding, "We are using surplus raw milk by channeling it into protein drinks, fermented milk, and processed milk, among other products."
Some in the industry also say the raw milk quota system is currently acting as a burden across the dairy sector. As companies must maintain contracted volumes despite weaker consumption, there are many cases where surplus raw milk is converted into products such as skim milk powder and stored as inventory. The government and industry will begin discussions on adjusting raw milk purchase volumes by end use. The Korea Dairy Committee will form a subcommittee to discuss adjustments to raw milk volumes and end-use allocation structures for about a month starting on the 1st of next month.
Meanwhile, Namyang Dairy Products is also moving to diversify its business by expanding its protein brand "Take Fit," strengthening lactose-free and low-sugar products, and widening overseas channels. A Namyang Dairy Products official said, "As exports of sterilized milk and formula increase, the shares of milk and formula may appear relatively larger," adding, "We expect continued results as overseas business for other product lines such as Take Fit is also entering full expansion."