This presentation will offer an overview of recent and expected future developments of milk and dairy markets in Brazil, which have expanded significantly in the last 15 years. Since 2000, per capita consumption moved from 122 to 176 kg/year in 2014 (in milk-equivalent terms). As population grew from 173 million to 203 million in the same period, total market increase almost 70% or 14.6 billion kg in volume. This growth was accomplished mainly by domestic production, which expanded from 19.7 billion kg (2000) to 34.3 billion (2013). From 2001 to 2013, the amount of milk delivered to dairy companies for processing increase 6.5× more than the amount unprocessed, a rate of growth of 5.4% per year. Cheese production increased from 440.000 metric tons in 2000 to nearly 1 million tons in 2013, a growth of 6.6% per year, reaching 5 kg/person/year. In the last 10 years, fresh dairy products doubled its market size, from 780,000 tons in 2003 to 1,450,000 tons in 2013, reaching 7.5 kg/person/year. Fluid milk market grew 2.3% per year, with a gradual replacement of raw and pasteurized milk by UHT milk. Income growth and better income distribution were the most important drivers for this growth. Since 1994, minimum wage grew 2× more than milk prices. From 2004 to 2013, salaries grew 72% over inflation, with 17 million new jobs created. Middle class expanded from 33% to 42% of total population. What are the challenges? Economic performance is lagging behind what Brazil experienced during the last decade and past income gains are being challenged. Also, more strict regulation regarding labeling and claims may negatively affect innovation. There have been milk quality problems, suggesting weak supply chain coordination. Productivity, production per farm, cost of production and overall farm efficiency also factors that need to be greatly improved. Anti-dairy groups are not an important factor yet, but there is a growing number of health professionals not recommending dairy products. Brazil is a large and still growing dairy market, but a more challenging environment demands a more active approach to ensure market expansion.