The demand for dairy products is growing rapidly, especially in emerging markets. Dairy products are nutrient rich and, therefore, an important food group for ensuring nutrient security in the future. In many countries, dairy contributes significantly to nutrient intake. Meta-analyses have shown that consumption of dairy may reduce the risk of chronic diseases and thereby lower healthcare costs. Milk production and processing contribute to greenhouse gas emissions, estimated at 2.7% (cradle-to-retail) of the world’s total. Evaluating the position of dairy in the diet should take into account the impact of both nutritional and environmental factors. Local conditions are also important; in many parts of the world, the cow is an efficient converter of human-inedible resources into nutrient-dense food. Increased productivity of cows is a decisive factor in realizing sufficient milk production with optimal resource efficiency and minimal greenhouse gas emission. Models that optimize total diets, rather than individual food products, for their nutritional and environmental impact are the preferred approach for developing realistic alternative consumption strategies.