The most common and most likely answer to this crossword clue is the 7 letter word YOGURTS
I've seen this crossword clue in The Daily Telegraph
Y
O
G
U
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More clues leading to the result YOGURTS
Buddy explains!

The straight part
We know that "Dairy products" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case dairy products = yogurts.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does YOGURTS mean?
YOGURTS noun- A milk-based product stiffened by a bacterium-aided curdling process, and sometimes mixed with fruit or other flavoring.
- (especially in compounds) Any similar product based on other substances (e.g. soy yogurt).