FROM RESILIENCE TO REDESIGN: WHY 2026 WILL DEFINE THE NEXT DECADE OF DAIRY

THE YEAR THAT CHANGED NOTHING - AND EVERYTHING

2025 will be remembered as a holding pattern. For producers across the UK and Ireland, it was a year of consolidation rather than expansion. Input costs that had threatened to spiral stabilised at elevated levels. Retail consolidation continued its relentless march. Consumer behaviour shifted in subtle but significant ways. And the structural pressures that have been mounting since the pandemic - supply chain fragility, labour scarcity, sustainability expectations, data-driven ranging - simply entrenched themselves more deeply than before.

On the surface, this looks like continuity. Underneath, it was the year the old operating model finally began to break.

The numbers tell part of the story. Volume growth across most categories remained anaemic. Promotional intensity held firms in place rather than driving genuine market expansion. Own-label market share continued its incremental climb, now accounting for over 60% of packaged cheese sales in UK supermarkets. A handful of global dairy companies consolidated further, whilst mid-market producers found themselves navigating increasingly narrow margins and complex retailer negotiations.

But the deeper story is structural, not cyclical.

THE DEATH OF THE CURATED AISLE

To understand why 2026 matters so much, it is worth briefly looking back - not in nostalgia, but in context. In the mid-1990s, the UK dairy market rewarded scale, consistency and patience. Brands were built by earning distribution, delivering dependable quality and staying visible. Retailers curated ranges; brands filled them. The system was competitive, but it was intelligible.

A producer of note made cheese. It was good. Retailers recognised it and stocked it. Time, visibility and consistent quality did the rest.

That system no longer exists.

Today's cheese and dairy aisle is one of the most strategically complex spaces in grocery. It is shaped by margin architecture, shopper missions, loyalty data and increasingly sophisticated own-label portfolios. The aisle itself is no longer a neutral forum where products compete on merit. It is actively engineered - designed around what data reveals about how different customer segments shop, what occasions they are shopping for, and what price points deliver the best return on shelf space.

Brands no longer compete simply with other brands; they compete with retailer strategies. Space is no longer won on heritage alone, but on purpose.

This shift has redefined what it means to build, sustain and grow a dairy brand. Where once the challenge was securing space, today it is earning relevance week after week. Where once innovation centred on flavour and format, it now extends into function, convenience, provenance and credibility. Where once own label was a secondary consideration, it now behaves like a disciplined brand portfolio in its own right - with segmentation, investment and strategic intent that rivals anything a traditional brand can deploy.

THE COMFORT TRAP

The uncomfortable truth is that many producers are still operating with assumptions formed in a previous era.

Exceptional products continue to be made across the UK and Ireland. The quality of British and Irish cheese, in particular, has never been higher. Producers are experimenting with new techniques, exploring niche ingredients, and building distinctive positions in ways that would have been unimaginable a generation ago. Yet quality alone no longer guarantees commercial momentum. It is a necessary condition for entry, not a sufficient condition for success.

Mid-scale and artisan producers, in particular, are finding themselves squeezed between increasingly capable private-label ranges - many now positioned at the premium end of their categories, backed by sophisticated marketing and supply chain discipline - and a small number of powerful branded platforms that anchor retailer categories. These anchor brands have the scale to invest, the data to inform decisions, and the market presence to negotiate favourable terms.

In the space between them sits a vast middle market of producers who built their businesses on steady growth, loyal stockists and gradual market expansion. Many of these businesses are still genuinely profitable. But their growth trajectories have flattened. Their negotiating power with retailers has diminished. And the playbook that worked for twenty years - make good products, build brand awareness, expand gradually - no longer delivers the returns it once promised.

The issue is not ambition. It is alignment.

RETHINKING THE GAME

Modern retail rewards brands that understand the role they play in the wider system. Not every brand needs to be a growth driver. Not every innovation needs to be transformational.

Some brands anchor volume and stabilise categories. A retailer needs a trusted cheddar that shoppers rely on - something that delivers on quality and value, that doesn't surprise and that provides a reference point against which premium offerings can be positioned. These anchor brands perform a critical function. They may not drive excitement, but they drive traffic and trust.

Others drive margin or trade shoppers up the value ladder. These are the brands that create emotional connection, tell a story about provenance or craftsmanship, command premium pricing and turn a category into a destination rather than a commodity purchase. They are the brands that appear in lifestyle publications, that drive social media conversation, and that justify their shelf position through the premium they command.

A smaller number act as signals of future relevance - through health benefits, functional positioning, sustainability credentials or new usage occasions. These are the brands that retailers stock not because they are today's volume drivers, but because they signal that the category is evolving. They give shoppers permission to explore, they attract media attention and they help retailers stay positioned as contemporary rather than stale.

The brands that endure are clear about which role they play and design everything around it. A premium artisanal producer that tries to also compete on volume distribution is diluting its positioning and competing where its strengths don't lie. A mass-market value brand that invests in premium packaging and premium positioning is conflating two distinct customer missions and confusing both.

Too many businesses are still trying to be everything at once. They want distribution and exclusivity. They want volume and margin. They want to be accessible and premium. They want to appeal to health-conscious shoppers and indulgent occasions. They want to be both traditional and innovative. The result is a muddy middle ground that rarely succeeds at anything.

THE STRUCTURAL SHIFT

But the challenge extends beyond positioning clarity. 2026 will force a reckoning on three fronts that will reshape the sector.

The first is data literacy as competitive advantage. Retailers now expect their suppliers to engage with data in real time. They want to understand promotional elasticity, what drives category growth, and they want to make decisions based on shared intelligence rather than historical relationships. Producers who treat data as a reporting function - something that gets done quarterly and filed away - are not equipped for this conversation. The firms that thrive will be those where data informs product development, guides which customers to serve, shapes marketing strategy and drives pricing discipline. This is not optional. It is existential.

The second is supply chain flexibility and resilience. The era of long production runs sold through stable distribution is ending. Retailers want flexibility. They want to scale up when something works and scale down quickly when it doesn't. They want multiple supply options as insurance against disruption. And they want producers who can move at the speed of retail, not at the historical pace of dairy farming. Producers with rigid supply chains, long lead times and inflexible production schedules will find themselves increasingly marginalised.

The third is purpose beyond product. Sustainability is no longer a nice-to-have marketing angle. It is becoming embedded in how retailers select suppliers, how consumers choose brands and how the sector measures itself. Producers need to articulate what they are trying to achieve beyond maximising output. What is your relationship to the land? How are you managing resources? What does your business mean to the communities it operates in? These are no longer peripheral questions. They are central to how modern retail and modern consumers evaluate a brand.

THE ROLE OF INDUSTRY PLATFORMS

This is the defining backdrop for Dairy Connect.

Dairy Connect has been created not as another event brand, not as another awards programme competing for attention and sponsorship, but as a connective platform for the industry - one that recognises the structural changes reshaping cheese and dairy and responds to them directly.

It exists to help the sector move from reaction to design; from instinct to insight; from isolated decision-making to shared intelligence.

The pressures facing the industry now as 2026 gets underway are not transient. Input cost volatility is the new baseline, not a temporary aberration. Labour constraints will tighten further as demographic change accelerates. Sustainability scrutiny will intensify as retailers respond to consumer expectations and regulatory pressure. Data-led ranging decisions are now embedded in how major retailers operate. And consumer expectations around provenance, health, functionality and convenience will continue to evolve.

The next phase will not be defined by incremental change, but by sharper choices.

For individual producers, the isolation has become untenable. A mid-sized cheese maker cannot single-handedly develop the expertise to understand retailer algorithms, build sophisticated data capabilities, navigate sustainability frameworks, communicate credibly about health positioning and maintain relevance across wholesale and direct-to-consumer channels. The workload is immense. The expertise required is distributed. And the cost of getting it wrong is significant.

This is where platforms matter.

Dairy Connect's ambition for 2026 is to provide the industry with a neutral, commercially grounded space where these conversations can happen with honesty and intent. Not as a lobbying organisation making claims about the sector, but as a facilitation engine that connects insight, capability and opportunity across awards, forums, EXPO activity and intelligence platforms.

The International Cheese & Dairy Awards programme will evolve to recognise not just product excellence, but strategic excellence. Which producers are making the sharpest choices about who they serve and how? Which businesses are building genuinely differentiated positions? Where is innovation happening that signals where the sector is heading?

The Dairy Mail will shift from sectoral commentary to active intelligence gathering. Rather than reflecting what the industry already knows, it will investigate what is actually working - in supply chains, in retailer relationships, in emerging consumer segments, in new distribution channels. It will ask the questions that individual producers don't have the bandwidth to answer.

The EXPO will function as a working laboratory, not a trade show. It will bring together producers, retailers, service providers and forward-thinking players from adjacent sectors to stress-test ideas, share frameworks and build genuine commercial relationships.

And the underlying intelligence platforms - data, research and insight infrastructure - will create a shared foundation of understanding about how the market is actually moving, so that individual businesses can make decisions from the same starting point.

THE QUESTIONS THAT MATTER

As 2026 unfolds, there are four fundamental questions every producer needs to answer with genuine honesty.

What role does your business actually play in the retail ecosystem? Not what role you want to play, not what role you played five years ago, but the role you occupy right now based on how retailers see you and how consumers choose you. Are you a volume anchor? A margin driver? A signal of innovation? Or are you stuck in a muddy middle ground, trying to be multiple things to multiple customers?

Where do you genuinely add value? What do you do that cannot be replicated by private label? Not your marketing narrative, but your genuine competitive advantage. Is it provenance? Quality consistency? Price? Accessibility or convenience? A specific health benefit? If you cannot articulate this crisply, you are vulnerable.

Which parts of your current proposition are being carried forward by habit rather than relevance? Every producer inherits SKUs, processes, distribution channels and customer relationships that made sense historically but may no longer be optimal. What are you doing simply because you have always done it? Where are you serving customers out of inertia rather than because they represent genuine growth? Where could you exit with minimal impact and free up resources for things that actually matter?

And what capability do you need to build, acquire or partner with to thrive in 2026? Data literacy? Sustainability credential development? Direct-to-consumer capabilities? A presence in emerging channels? A manufacturing partner who can provide flexibility? A marketing partner who understands contemporary brand building? Most producers cannot build everything internally. But successful businesses are explicit about what they need and disciplined about acquiring it.

These are not comfortable questions. Answering them honestly requires stepping back from the day-to-day operational machinery. It requires intellectual distance. It requires data and perspective from outside your own business.

But they are necessary.

THE NEXT CYCLE

The most resilient businesses in the next cycle will be those that think in systems rather than isolated SKUs. They will understand shopper missions as deeply as they understand products. They will treat data literacy as a strategic capability, not a compliance function. And they will recognise collaboration - across supply chains, platforms and routes to market - as something that compounds strength rather than dilutes it.

The companies that built the cheese and dairy sector were those that understood their markets intimately and adapted their businesses to serve them well. That fundamental skill hasn't changed. What has changed is the complexity of the market, the pace at which it moves, and the data you need to see beneath the surface of aggregate numbers.

2026 won't be a crisis year for most producers. But it will be the year when sharper choices become unavoidable. Those who have been coasting on heritage, category position and relationship history will find that insufficient. Those waiting for the market to return to some previous equilibrium will discover it never will.

For those who approach the year with genuine clarity about who they are, real insight about where the market is moving and a willingness to collaborate rather than compete in isolation, the opportunity is significant. The structural shift reshaping dairy will create new winners. The question is whether your business will be among them.

LOOKING FORWARD

As the sector moves into 2026, the framework for success is becoming clearer. It is not fundamentally harder than what came before. It is simply different.

The difference is this: success rewards clarity over ambition. It rewards data over assumption. It rewards strategic discipline over reactive expansion. And it rewards businesses that see themselves as part of a system rather than as isolated competitors fighting for the same shelf space.

Dairy Connect's role is straightforward: to provide the forums, the intelligence, the frameworks and the genuine connections that allow the sector to move through this transition with intention rather than drift. Not to prescribe what businesses should do, but to create the space where producers can understand the market more clearly and make sharper decisions.

The industry does not need more commentary about what used to work. It needs frameworks for what works now - and what will work next.

The next chapter will not look like the last one. But with genuine clarity about who you are, real collaboration across the sector, and structures in place to support both, this chapter can be just as defining. And considerably more exciting for the producers who see the shift clearly and position themselves accordingly.