Dairy milk is already a nutrition powerhouse. A single glass is a source of protein, calcium, and vitamin B12 and B2, but for today’s health-conscious consumers, naturalness is only part of the appeal.
In 2026, consumers are increasingly looking for food and beverage products with elevated nutritional profile. Thanks to rising interest in gut health and digestive wellbeing, the functional beverage market is booming, with cultured and probiotic dairy products such as kefir and drinking yogurt among the main beneficiaries of the trend.
Dairy milk, on the other hand, has been in a steady decline for decades as consumers have turned away from the humble glass of milk. Demand for natural products has seen whole milk return to growth in recent years, but added functional and digestive benefits is where the game is at. Lactose-free milk, for example, is outperforming conventional milk in the US according to Circana data, with label claims such as protein, lower sugar and ultra-filtered driving category growth.
But beyond protein and reduced sugar claims, how else can brands elevate milk’s nutritional image to appeal to health-conscious consumers?
Functional milk targets health-conscious consumers
Enter Lullaa – a new functional milk that combines New Zealand milk with functional botanicals, prebiotic fibre, collagen peptides and MGO mānuka honey. Formulated by Vineet and Vibhah Shiriwastow, co-founders of Four Leaves Co, the product is positioned as part of an entire functional dairy platform.
“Traditional milk remains one of the world’s most complete and trusted foods, but modern consumers increasingly expect more from everyday nutrition,” Vineet Shiriwastow told us.
“Many functional beverages deliver added benefits through water, powders or heavily processed formulations, while milk has remained relatively unchanged despite its outstanding nutritional foundation.
“Rather than replacing milk, we asked a different question: what could milk become if it were redesigned for today’s wellness consumer?
“That thinking led to NZSmartMilk – our functional milk platform. Lullaa is the first commercial expression of that platform. We believe milk can deliver protein, naturally occurring dairy nutrition and carefully selected functional ingredients in one convenient product while maintaining a clean-label philosophy.
“Our aim was to evolve milk, not reinvent it.”
Building a premium functional dairy proposition
Added benefits unlock premiumisation, but also increase formulation challenges. How did the company overcome the task of combining so many ingredients without resorting to preservatives?
“Achieving long-term stability without relying on gums or stabilisers was undoubtedly the greatest technical challenge,” he explained.
“Each functional ingredient behaves differently within dairy, particularly during heat treatment and shelf-life. Rather than masking those challenges with conventional additives, we focused on developing our own formulation and processing approach to achieve stability while maintaining a clean ingredient declaration.
“The result is a product that combines collagen, prebiotic fibre, mānuka honey, vitamins, minerals and botanicals in a functional dairy format without gums, preservatives or refined sugar. Considerable development work went into balancing ingredient interactions while preserving taste, texture and consumer appeal.”
Despite the R&D challenges, the market was clear – functional nutrition needs to go hand in hand with clean-label credentials to truly stand out in an increasingly crowded market. “Throughout development we gathered feedback from consumers, retailers and dairy professionals. One consistent message emerged: people wanted fewer artificial ingredients, more transparency and functional benefits delivered through foods they already know and trust,” he said.
“That feedback helped refine our formulation and reinforced our decision to remain focused on clean-label dairy rather than adding unnecessary complexity.”
Lullaa is one of the freshest functional dairy products on the market, having only launched in March 2026. Already in June, the product made waves at the Global Dairy Congress in Barcelona, where it won the Best Dairy Drink category at the World Dairy Innovation Awards. The two co-founders were also invited to address delegates as speakers during the conference.
“Our central message was simple: if milk is already one of the world’s most trusted foods, why shouldn’t it become one of the world’s most functional? Rather than asking consumers to leave dairy for alternative functional beverages, we believe dairy itself can evolve. , said Shiriwastow.
Scaling the future of functional milk
As for the future, the priority now is scaling up commercially.
“We intend to establish Lullaa successfully in New Zealand, validate the business model, and then scale internationally through carefully selected licensing and manufacturing partnerships,” Shiriwastow said.
“Success for us won’t simply be measured by bottles sold. It will be measured by seeing functional milk recognised as a genuine category within dairy – where consumers actively seek milk designed to deliver additional nutritional benefits while retaining the trust, familiarity and quality associated with New Zealand dairy.
“If other dairy companies begin developing functional milk products because consumers expect more from milk, we’ll know we’ve helped move the category forward.”
Besides New Zealand, the company is eyeing expansion into India at a later stage. “India represents one of the most exciting long-term opportunities because of its enormous dairy market and rapidly growing interest in premium nutrition,” he said. “Beyond that, we see strong potential throughout Asia and selected international markets that value premium New Zealand dairy.”
