Liquids are necessary in baked goods for hydrating protein, starch and leavening agents. When hydration occurs, water is absorbed and the chemical changes necessary for structure and texture development can take place. Liquids contribute moistness to the texture and improve the mouthfeel of baked products. When water vaporizes in a batter or dough, the steam expands the air cells, increasing the final volume of the product.

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Milk contributes water and valuable nutrients to baked goods. It helps browning to occur and adds flavor. When making yeast dough, milk should be scalded and cooled before adding to other ingredients. This is done to improve the quality of the dough and the volume of the bread. Do not substitute it with water.

Juice may be used as the liquid in a recipe if water is specified. Because fruit juices are acidic, they are probably best used in baked products that have baking soda as an ingredient. 

Juice in bread baking slows fermentation. Because it contains a lot of sugar, fruit juice will slow the yeast's activity. Therefore, sweet breads are usually dense and not as large as sandwich breads. Many times Vital Wheat Gluten is added to help the bread rise.