(Seoul Dairy Cooperative)
South Korea’s dairy industry is focusing on the business-to-business (B2B) market as a new growth engine as the business-to-consumer (B2C) milk market rapidly shrinks due to low birth rates, changing tastes, and the spread of alternative beverages.
According to the Korea Agro-Fisheries & Food Trade Corp. on Monday, the country’s B2C milk market declined by an annual average of 2.6 percent over five years from 1.75 trillion won ($1.18 billion) in 2020 to 1.6 trillion won in 2024 and 1.54 trillion won in 2025.
In contrast, the B2B market expanded from 412 billion won in 2020 to 564.8 billion won in 2024, and 624 billion won in 2025 – an average annual growth rate of about 8.7 percent.
“Due to structural factors such as declining demand from children and teenagers caused by low birth rates and the rise of plant-based alternatives, there are limited ways to reverse the contraction of the B2C market,” said an industry official. “For now, maximizing revenue in the B2B market is the best option.”
Last year, per capita while milk consumption fell to a record low of 22.9 kilograms, down 9.5 percent from the previous year.
Seoul Milk, Korea’s No. 1 daily company, is increasing the share of its B2B business to respond to market changes. The B2B portion of its total milk volume rose from 26 percent in 2023 to around 28 percent in 2024 and to 29 percent last year.
Over the past two years, its average annual B2B sales growth rate was 5.7 percent.
Seoul Milk supplies milk to major coffee brands across both premium and budget segments, including Starbucks, Mega MGC Coffee, Paik’s Coffee, and A Twosome Place.
“We go beyond supplying raw materials by offering customized products such as high-fat milk, plant-based blends, and lactose-free options tailored to each clients’ needs,” said a company official.
Seoul Milk also noted that it is expanding its business scope beyond cafes and bakeries to desserts, dining, and catering, while also broadening its product lineup.
Namyang Dairy Products has also maintained double-digit growth, with its B2B sales rising 27 percent in 2024 and 14 percent last year.
The company is focusing on developing customized milk and cream products tailored to specific franchises, leveraging its in-house R&D capabilities.
“We aim to maintain double-digit growth this year as well,” said a company official.
Konkuk Dairy is also focusing on developing high-functional customized milk that meets specific protein and fat content requirements demanded by individual franchises, moving beyond standard white milk supply.
According to the National Tax Service, the number of coffee and beverage shops nationwide reached 93,453 as of last month, up about 28 percent from February 2021. Competition among dairy companies to secure these clients is intensifying.
For Seoul Milk, sales of milk for cafes have increased by about 10 percent annually over the past four years.
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