Daniel Peter (1836 - 1919) was responsible for another development which had a far-reaching impact on chocolate making everywhere. In 1875, after many years of experimentation and research, Peter found a way to make milk chocolate. He was not the first to try, but all attempts to use normal milk had failed because its high water content meant it was unable to combine satisfactorily with the cocoa paste and the chocolate soon turned rancid.

Peter's breakthrough came when he combined cocoa with the condensed milk invented by Henri Nestlé seven years earlier. Milk chocolate for drinking appeared in 1875, followed by eating chocolate in the 1880s. The addition of milk took away the bitter taste of the chocolate and was a great success. Even today, milk chocolate accounts for over 80% of the Swiss market, although dark chocolate is making a come-back.

The addition of milk enabled manufacturers to cut down on the proportion of expensive cocoa in their products. The invention also gave a boost to thousands of farmers, as it greatly increased the demand for milk.

Peter, the son of a butcher, had not started out as a chocolate maker. He first tried his hand at making candles, but the invention of kerosene lamps completely undermined the industry. He became interested in chocolate after he met Fanny Cailler, the eldest daughter of François-Louis Cailler, whom he subsequently married. It was when their eldest daughter, Rose, proved difficult to breastfeed that Nestlé, who happened to be their neighbour, suggested giving her his "farine lactée", a milk food for babies. This in turn inspired Peter to develop his new product.