Milk is displayed at a hypermarket in Seoul on March 23.YONHAP
Milk is losing its place in the home fridge, but dairy makers are finding new life for it elsewhere. Demand is growing at cafes, bakeries and convenience stores, and companies are betting on lattes, desserts, cheese and ice cream to offset the decline in households.
The shift is evident in the data. Per capita consumption of white milk hit its lowest level since 1986 last year, falling 9.5 percent on year to 22.9 kilograms (50.5 pounds), according to the Korea Dairy Committee. In 1986, it stood at 20.1 kilograms.
The slide is largely demographic. Fewer children mean fewer cartons on school lunch trays. The share of students in the school milk program fell from 50.3 percent in 2019 to 30.8 percent in 2024, according to the government's school milk information system. Korea's total fertility rate hit a record low of 0.72 in 2023, and the same squeeze has weighed on infant formula, long a core business for dairy firms.
Adults, meanwhile, have drifted toward protein and plant-based drinks, and imported sterilized milk sells online for about half the price of domestic fresh milk.
"With fewer children, the main consumer base has shrunk a lot," said a representative from the Korea Dairy Industries Association. "And as more nutritional alternatives to milk have emerged, consumption naturally keeps falling."
The business-to-consumer milk market shrank from 1.75 trillion won ($1.31 billion) in 2020 to 1.54 trillion won in 2025, according to the Korea Agro-Fisheries & Food Trade Corporation. Over the same period, the business-to-business (B2B) market, which covers cafes and school meals, grew from 412 billion won ($308.4 million) to 624 billion won, an average annual increase of about 8.7 percent.
That is where Seoul Dairy Cooperative and Namyang Dairy Products are pouring their efforts.
Seoul Dairy, which supplies Starbucks Korea, Mega MGC Coffee and Paik's Coffee, said B2B accounted for about 29 percent of its milk sales volume in the first half of this year, up from about 27 percent a year earlier. Its sales of milk for cafes have grown about 10 percent a year over the past four years.
The cooperative's first-half revenue rose 3.5 percent to 1.07 trillion won, and operating profit more than doubled to 19.2 billion won.
"Amid continued uncertainty in the business environment, including rising raw material prices and exchange rates, we are working to improve profitability by strengthening product competitiveness and diversifying our business portfolio," Seoul Dairy said.
Milk products are displayed in the dairy aisle of a discount store in central Seoul on Monday. The Korea Dairy Committee resumed price-setting negotiations for raw milk prices the same day.YONHAP
Namyang has rebuilt its B2B operations since private equity firm Hahn & Company took control in 2024.
"We merged our scattered B2B sales teams into the food service division and built specialized teams for each channel," the company said. "Beyond simply supplying ingredients, we are expanding customized supply, including developing exclusive products for partner companies."
Sales at the food service division, which supplies franchise cafes, restaurants, school meals and the military, rose 11 percent on year in the first half. Namyang's first-half revenue rose 7.9 percent to 483.2 billion won, and operating profit rose 79.5 percent to 1.8 billion won. Its gross margin narrowed from 21.3 percent to 19 percent.
"Higher plastic and packaging costs from rising naphtha prices, along with exchange rates and logistics costs, affected the cost of sales," the company said.
Milk products fell to 48.9 percent of Namyang's revenue from 54.4 percent, as sales of products such as protein drink brand Take Fit grew. "This can be seen as the result of diversifying our revenue base away from a business structure centered on milk toward growth categories," the company said. Its cafe chain Baekmidang will have 63 stores by the end of this month.
Starbucks Choux Cream Lattes and assorted menus including bread, sandwiches and custardSTARBUCKS KOREA
Maeil Dairies is the exception.
"White milk B2B is a business that cannot make a profit," the company said, adding that it aims to reduce B2B's share of its white milk sales and focus on premium organic and lactose-free milk. Its first-half operating profit rose 54.3 percent, led by infant formula and soy milk.
Seoul Dairy also acknowledged limits to the cafe channel. "As domestic white milk consumption declines, the expansion of B2B is helping secure new demand, but there are limits to responding to market changes with B2B growth alone," the cooperative said. It is building revenue from ice cream, desserts, nutrition products and exports alongside new B2B clients.
The raw milk system is also adjusting. On Sept. 30, farmers and processors agreed at a Korea Dairy Committee subcommittee to cut the annual raw milk quota for drinking milk by 26,000 tons, to 1.915 million tons, for 2027 and 2028, and shift the same volume to processed products such as cheese and ice cream. Domestic raw milk used for processing already rose about 20 percent, or 60,000 tons, in 2025, according to the Korea Rural Economic Institute (KREI).
Milk's sweeter side is paying off on store shelves too. Convenience stores have built a dessert category on dairy brands. CU's Yonsei Milk cream bun sold 110 million units as of August since its 2022 launch, and GS25's dessert line with Seoul Dairy has passed 16 million units since May 2025.
Tariff-free imports have not yet changed the picture. Tariffs on U.S. milk were lifted in January and on EU milk in July. Sterilized milk imports reached about 32,000 tons from January to August, up about 10 percent on year, but fell to about 7,000 tons in July and August from about 9,300 tons a year earlier, according to KREI, which said two months of data are too few to judge.
"So far, since the EU milk tariffs were lifted, there has been no movement among major B2B clients to switch to imported sterilized milk," Seoul Dairy said.
