Dairy Ingredients Market to Grow at a Phenomenal CAGR in the Forecast Period

Market Research Future (MRFR) has published on the “Global Dairy Ingredients Market”.

Dairy Ingredients Market Highlights

According to the MRFR analysis, the global Dairy Ingredients market was valued at USD 66,489.5 million in 2022 and is projected to reach USD 1,35,791.9 million by 2032 at a CAGR of 7.5%.

The key factors driving the growth in the market are the increasing preference for snack products that have higher protein content along with the shift in the trend of consuming organic and non-meat protein products. However, the growing preference and launch of plant-based protein ingredients and the veganism culture are anticipated to hamper the growth of the market during the forecast period. Nevertheless, the technological advancements by the key players coupled with escalating milk production are creating lucrative opportunities for manufacturers in the global dairy ingredients market.

COVID-19 Impact on the Dairy Ingredients Market

The COVID-19 outbreak has had a significant impact on the dairy ingredients market. The pandemic has disrupted global supply chains, leading to fluctuations in demand and supply dynamics. The closure of restaurants, cafes, and other foodservice establishments resulted in a decline in the demand for dairy ingredients used in these sectors. However, there has been a surge in demand for dairy products in retail channels as consumers stockpiled essential items during lockdowns. The shift in consumer preferences towards healthier and immune-boosting foods has also influenced the demand for dairy ingredients with functional properties. Additionally, there have been challenges in logistics and transportation, affecting the timely delivery of dairy ingredients. Companies have adapted by implementing safety measures, exploring online sales channels, and focusing on product innovation to cater to changing consumer needs. 

The COVID-19 outbreak has had a significant impact on dairy ingredients production. The implementation of lockdowns, travel restrictions, and workforce disruptions in various regions have led to challenges in dairy farms and processing facilities. Labor shortages, reduced milk collection, and limited access to processing plants have hampered production capabilities. The need for stringent health and safety measures has also affected production efficiency and capacity. The dairy ingredients market has faced disruptions in the supply chain due to COVID-19. Movement restrictions, closures of borders, and logistical challenges have led to delays in transportation and distribution. Import and export activities have been affected, impacting on the availability of raw materials and finished products. Supply chain disruptions have led to inventory management challenges, shortages, and imbalances in supply and demand. The pricing dynamics in the dairy ingredients market have been influenced by the COVID-19 outbreak. Fluctuating demand and supply imbalances have led to price volatility. The closure of foodservice establishments and disruptions in the hospitality industry have shifted demand patterns, affecting pricing strategies. Moreover, increased production costs due to implementing safety protocols and adapting to changing market conditions have further impacted pricing dynamics. Beyond production, supply chain, and pricing, the COVID-19 outbreak has presented other challenges and opportunities for the dairy ingredients market. Changing consumer behaviors, such as increased demand for long-lasting and pantry-stable products, have influenced product preferences. There has been a surge in online purchases and e-commerce platforms for dairy ingredient sales.

Competitive Landscape

The global Dairy Ingredients market is driven and consists of several organized and unorganized industry players. The main companies in the global Dairy Ingredients Market are aiming at growth strategies such as innovation in products and evolving technologies on a global level to gain a maximum share of the global market. The key players operating in the global Dairy Ingredients market comprise FrieslandCampina N.V. (Netherlands), Arla Foods (Denmark), Glanbia Plc (Ireland), Fonterra Co-operative Group Limited (New Zealand), Kerry Group plc (Ireland), Dairy Farmers of America Inc. (United States), Groupe Lactalis (France), Ornua Co-Operative Limited (Ireland), Saputo Inc. (Canada), Volac International Ltd. (the United Kingdom), Nestle (Switzerland), Danone S.A.(France), among others.

Segmentation

By Product Type

• Milk Powders: The growth of dairy ingredients in the milk powder segment has been substantial. Milk powder offers convenience, extended shelf life, and versatility, making it a popular choice for various applications. The demand for milk powder is driven by factors such as increasing consumer preference for long-lasting dairy products, rising demand for infant formula, and the convenience it provides in baking, cooking, and beverage preparation.


• Milk Protein Concentrate and Milk Protein Isolate: Milk Protein Concentrate (MPC) is a type of milk protein that has been processed to increase the protein content and reduce the lactose and fat content. It is produced by ultrafiltration, which separates the protein from the other components of milk based on size. The demand for MPC is driven by the increasing awareness of the health benefits of protein, as well as the growth of the sports and nutrition industry.


• Whey Ingredients: The growth of dairy ingredients in whey ingredients has been remarkable. Whey, a byproduct of cheese and yogurt production, has gained significant recognition for its high protein content and nutritional value. Whey ingredients, such as whey protein concentrate and whey protein isolate, are widely used in the sports nutrition, functional food, and beverage industries. The increasing consumer demand for protein-enriched products, coupled with the rising popularity of fitness and wellness trends, has fueled the growth of whey ingredients.


• Lactose: The growth of dairy ingredients in the lactose segment has shown notable expansion. Lactose, a natural sugar found in milk, is a key dairy ingredient widely used in various food and pharmaceutical applications. The demand for lactose is driven by factors such as its functional properties, wide availability, and its use as a flavor enhancer, bulking agent, and binder in food formulations. Additionally, the pharmaceutical industry utilizes lactose as an excipient in medication formulations. The rising demand for lactose-free and low-lactose products has further spurred the growth of lactose alternatives and specialty lactose products.


• Others: The demand for dairy ingredients in the other product type segment is diverse and encompasses a range of applications. This segment includes dairy ingredients used in products such as infant formula, nutritional supplements, animal feed, cosmetics, and personal care items. In the infant formula sector, dairy ingredients like milk powders and specialized formulations are in high demand due to their nutritional benefits for infants. Nutritional supplements, including protein powders and meal replacements, utilize dairy ingredients such as whey protein and casein for their high protein content. Additionally, dairy ingredients find application in animal feed for livestock and pet nutrition.

By Form

• Powder: Powdered form of dairy ingredients, which is obtained by removing the moisture content from liquid protein in dairy products. This process helps to increase the shelf life of the milk protein and makes it easier to transport and store. The dry form of dairy ingredient is used as an ingredient in various food and beverage products, including sports nutrition products, infant formulas, bakery products, dairy products, and confectionery items.


• Liquid: Liquid dairy ingredients is the form that is sold in a liquid or semi-liquid state. It is derived from fresh milk by separating the protein from the other components of milk. Liquid dairy ingredients is used in various food and beverage applications, including nutritional drinks, sports supplements, and infant formula.

By Category

• Organic: The demand for organic dairy ingredients has witnessed a substantial increase in recent years. Consumers are increasingly seeking products that are produced without the use of synthetic pesticides, hormones, or genetically modified organisms (GMOs). Organic dairy ingredients such as milk, cheese, butter, and yogurt have gained popularity due to their perceived health benefits and environmental sustainability. The demand for organic dairy ingredients is driven by a growing awareness of the potential risks associated with conventional farming practices and a desire for more natural and ethically sourced products.


• Regular: The demand for regular dairy ingredients remains strong and continues to be a staple in consumer diets worldwide. Regular dairy ingredients such as milk, cheese, butter, and yogurt are widely consumed and incorporated into various culinary applications. For instance, in many households, milk is an essential part of daily breakfast routines, used in cereal, coffee, or tea. Regular dairy ingredients are favored for their taste, versatility, and nutritional value, providing essential nutrients like calcium, protein, and vitamins. Despite the increasing popularity of alternative dairy products, regular dairy ingredients maintain a significant market share due to their long-established presence and familiarity among consumers.

By End Use

• Commercial: The commercial sector's demand for dairy ingredients remains high, as they are essential components in many food products such as bakery, confectionery, and frozen desserts. Dairy ingredients like milk, cream, cheese, and butter are popular choices in the foodservice industry due to their taste, texture, and functional properties.


• Residential: The residential segment continues to drive the demand for dairy ingredients, as consumers incorporate them into their daily cooking and meal preparations. Dairy ingredients like milk, cheese, yogurt, and butter are staples in households worldwide. One recent product launch catering to the residential segment is a premium artisanal cheese collection by a renowned dairy company. This collection features a variety of handcrafted cheeses made from high-quality milk sourced from local farms. The launch reflects the ongoing demand for premium and specialty dairy ingredients in residential kitchens, as consumers seek to elevate their culinary experiences with authentic and flavorful dairy products.

By Distribution Channel

• Supermarkets/Hypermarkets: The demand for dairy ingredients in the Supermarkets & Hypermarkets segment remains robust. These retail establishments cater to a wide range of consumers seeking convenience and variety in their shopping experience. Dairy ingredients like milk, cheese, yogurt, and butter are prominently displayed in dedicated sections within supermarkets and hypermarkets. They are popular choices for customers looking to stock their pantries and refrigerators with essential ingredients for cooking, baking, and snacking.


• Convenience Stores: The growth of dairy ingredients in the convenience stores segment has been significant. Convenience stores have become increasingly popular as go-to destinations for quick purchases and on-the-go snacks. Dairy ingredients such as milk, yogurt, cheese sticks, and pre-packaged butter have gained prominence in these stores. They cater to consumers looking for convenient and portable dairy products for immediate consumption.


• Specialty Stores: The demand for dairy ingredients in the specialty stores segment has experienced notable growth. Specialty stores, known for their focus on high-quality and unique products, cater to consumers with specific tastes and preferences. These stores offer a wide range of artisanal and imported dairy ingredients, including specialty cheeses, gourmet butter, organic milk, and cultured dairy products. Consumers frequent specialty stores seeking unique flavors, superior quality, and niche dairy products that are not easily found in mainstream retail outlets.


• Online: The growth of dairy ingredients in the online segment has been remarkable. With the increasing popularity of e-commerce, consumers now have access to a wide variety of dairy ingredients at their fingertips. Online platforms offer convenience, choice, and often competitive pricing, making it an attractive option for purchasing dairy ingredients. Consumers can easily compare products, read reviews, and make informed decisions from the comfort of their homes. The online segment has witnessed the emergence of specialty dairy ingredient retailers, subscription services, and direct-to-consumer brands, further driving the growth of dairy ingredient sales.


• Others: The growth of dairy ingredients in the others distribution channel segment has shown significant potential. This segment encompasses various distribution channels such as foodservice providers, institutional buyers, wholesale markets, and direct sales to businesses. While not falling under the traditional categories, these channels play a crucial role in the distribution of dairy ingredients to sectors like restaurants, hotels, cafeterias, and catering services. The demand for dairy ingredients in this segment is driven by the need for bulk quantities, specialized products, and customized solutions to meet the specific requirements of these businesses.

By Application

• Bakery and Confectionary: Bakery and confectionery are important application areas for dairy ingredient market. dairy ingredients such as whey protein concentrates and isolates, dairy ingredient concentrates, and caseinates are used in bakery and confectionery products to enhance their nutritional value and provide a range of functional benefits. Also, dairy ingredients play a crucial role in the bakery and confectionery industry, providing nutritional benefits, improving texture, and enhancing the overall quality of a wide range of products. These factors will further drive demand for bakery and confectionery in dairy ingredient market.


• Food and Beverages: The application of dairy ingredient in the beverage industry is becoming increasingly popular due to its nutritional properties and functional benefits. dairy ingredient is commonly used in the production of various beverages, including sports drinks, dairy-based drinks, and nutritional drinks. Sports drinks are one of the most common beverages that use dairy ingredient. The high protein content in dairy ingredient helps in muscle recovery and growth, making it a popular ingredient among athletes and fitness enthusiasts.


• Infant Milk Formula: Infant formula is one of the major applications for dairy ingredient in the market. Infant formula is a substitute for breast milk, which is designed to provide essential nutrients to infants who are unable to be breastfed or who require additional supplementation. dairy ingredient is a key ingredient in infant formula as it provides the necessary amino acids and protein needed for healthy growth and development.


• Others: The others application segment in the dairy ingredient market includes a wide range of products where dairy ingredients are used as an ingredient. This segment includes products such as sauces, dressings, soups, ready-to-eat meals, pet foods, and sports nutrition products. In sauces and dressings, dairy ingredients can be used as a thickening and stabilizing agent. In soups and ready-to-eat meals, they can be used to enhance the nutritional value and texture of the products. The global market for dairy ingredients in the others application segment is expected to grow in the coming years, driven by the increasing demand for convenience foods and the growing popularity of natural and healthy ingredients.

By Region

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  North America: The North America dairy ingredients market is expected to grow at a significant CAGR from 2022 to 2028. Increase in athlete population and increased health and diet consciousness among youth has increased the growth in dairy ingredients market of North America. Inclusion of technology and new features by vendors has proven to have a positive impact in the industry. Veganism trends with surge in demand for plant-based products have been detrimental for the dairy ingredients market.

  
  


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  Europe: Europe has more than 12,000 milk processing and production facilities across the continent, being a significant player in the global food and beverage market. In terms of consumption, EU countries have the largest consumer base in the global market. The European Whey Producers Association has stated that Europe ranks 1 as dairy producer with 300 registered kinds of cheese and dairy products. Moreover, new products and processes are also being introduced to ramp up growth.

  
  


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  Asia-Pacific: Increase in disposable income, rapid urbanization and and growing awareness about health and wellness is a major driver of the dairy industry in this region. Asia-Pacific has the largest consumer base for dairy products in the world. The growing population in the region and rising middle class especially in countries such as India and China have doubled the consumption of dairy products over the last 30 years. %. In this region liquid milk is the most consumed dairy product however it is adopting to other dairy products includes yogurt and sweetened or flavored milk as well. India and Indonesia are the fastest growing dairy markets in this region.

  
  


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  Rest of World: The dairy ingredients market in the rest of the world (ROW) region, which includes countries in South America, the Middle East, and Africa, is expected to grow steadily in the coming years. The market is driven by increasing awareness of the health benefits of protein consumption, rising disposable incomes, and the growing demand for functional foods and supplements.