Milk does more than add liquid volume to cake batter. It plays an important role in the chemical reactions that occur during baking, such as the Maillard reaction, which creates caramelization. There are substitutions, however, that replicate dairy action in baking and, sometimes, lead to a better product.
Whey Protein Concentrate and Isolate
Whey protein does everything milk does, but better, except that it also adds liquid volume. When used in cakes, whey, the liquid protein that remains after milk coagulates during cheese production, increases moisture, crumb density, caramelization and volume. Whey protein concentrate and whey protein isolate -- both powdered forms of whey, with the latter containing almost no lactose -- work as a milk substitute when you use them in conjunction with a liquid to compensate for the volume milk contributes. You can mix whey protein with numerous types of non-dairy milk to improve cake quality and supply the required amount of moisture and volume.
Most non-dairy milks make capable milk substitutes, but some work better than others. Almond milk makes the best non-dairy milk substitute; its fat content gives it a creaminess and palatability you don't get in other nut milks, and its mild flavor works in any type of cake. Coconut milk is a good choice, but only if you can fit it in the cake's flavor profile. Other non-dairy milks that work in cakes include oat, rice and soy milk. You can substitute non-dairy milk for an equal amount of regular milk in a recipe. However, if you mix 1 tablespoon of whey protein isolate or concentrate with each cup of non-dairy milk, you get better browning, more lift, increased moistness, and a denser crumb.
Substitutions With Culture
Regular, full-fat yogurt gives you the browning effect of milk, increases the moisture and chewiness of the crumb, and adds a pleasant tang in the finish. Yogurt works chemically in cake recipes when you substitute it on an equal basis. However, some cakes support the taste of yogurt better than others. Generally, any cake with lemon and most white cakes work with a yogurt substitution better than chocolate cakes. Kefir behaves in a similar manner to yogurt in baked goods, and you can do a straight one-for-one substitution with it when replacing milk. Don't use Greek yogurt in cakes if you can avoid it, but, if you must, add 1 to 2 tablespoons of water to thin it first. If you have a cake recipe that calls for heavy cream -- which is rare -- you can substitute Greek yogurt on a one-for-one basis.
Powdered, condensed and evaporated milk are godsends when you notice you ran out of regular milk in the middle of a recipe. Because it's reduced over heat, condensed milk adds a bonus: a caramelized sweetness that accentuates the richness of all cakes, especially chocolate. Substitute 1/2 cup of condensed milk or evaporated milk and 1/2 cup of water for each cup of regular milk; use 1/4 cup of powdered milk, 7/8 cup of water and 1 tablespoon of butter for each cup of regular milk.