USDA sees EU fluid milk use slipping to 23.2 million tonnes in 2027

EU fluid milk consumption is forecast at 23.2 million tonnes in 2027, down 0.1% from 2026, according to the US Department of Agriculture's Foreign Agricultural Service (FAS). The forecast extends a multi-year decline driven by shifting diets and plant-based alternatives that keep getting cheaper.

The pace of contraction is slowing, though. FAS credits consumers searching for more natural, less processed, protein-rich products — a segment where dairy still competes. For 2026, the agency estimates EU fluid milk consumption at 23.22 million tonnes, a 0.3% drop from 2025, driven by steadily smaller household purchases.

What is happening to prices?

Price remains the primary factor in consumer food choices, and the inflation data explains much of the demand picture:

• EU27 general inflation stood at 3.2% in August 2026, down from its 11.5% peak in October 2022 but up from 3% in July 2026.
• Food inflation has fallen since August 2025 and reached just 0.3% in August 2026.
• Milk and dairy inflation, which rose until July 2025, has since reversed into deflation, hitting -0.9% by August 2026.
• Whole milk prices have declined since May 2025, with inflation of -2.2% in August 2026.

Declining farm-gate milk prices are being passed through to consumers, putting dairy inflation below both food and general inflation. Plant-based drinks are falling in price too, posting -0.2% inflation in August 2026, keeping pressure on the fluid milk segment.

Cheap milk at retail has not stopped the volume decline — the takeaway is that price is now working against processors' margins, not for them.

How will processors respond?

With milk production declining, FAS forecasts factory use consumption to fall 0.1% in 2027, after a 1.6% increase in 2026. That forces dairy processors to make hard choices about which products to manufacture from available milk.

Cheese remains the growth area of factory use, at the expense of other products. In 2026, higher milk deliveries are expected to lift production of longer shelf-life products — butter and skim milk powder (SMP) — alongside more cheese, building stocks of those commodities.

That stock build sets up the next problem. FAS forecasts a decline in production of butter and SMP in 2027 as inventories weigh on the market — a reminder that today's processing decisions shape next year's balances.

The open question is whether protein-seeking consumers can offset cheaper alternatives long enough to stabilize fluid demand before the 2027 production cuts bite.