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Anhydrous Milk Fat Butter Oil Market

ID: MRFR/FnB/21389-HCR
128 Pages
Snehal Singh
October 2025

Anhydrous Milk Fat Butter Oil Market Research Report By Type (Anhydrous Butter Oil, Butterfat, Ghee), By Application (Bakery & Confectionery, Dairy & Frozen Foods, Snacks & Savory Products, Other Applications), By Source (Cow Milk, Buffalo Milk, Goat Milk, Other sources), By Packaging (Pouches, Drums, Cans, Other packaging types), By Distribution Channel (Direct Sales, Retail Stores, Online Marketplaces, Food Service Distributors) and By Regional (North America, Europe, South America, Asia Pacific, Middle East and Africa) - Forec... read more

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Anhydrous Milk Fat Butter Oil Market Infographic
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Anhydrous Milk Fat Butter Oil Market Summary

As per MRFR analysis, the Anhydrous Milk Fat Butter Oil Market Size was estimated at 31.6 USD Billion in 2024. The Anhydrous Milk Fat Butter Oil industry is projected to grow from 32.88 USD Billion in 2025 to 48.91 USD Billion by 2035, exhibiting a compound annual growth rate (CAGR) of 4.05 during the forecast period 2025 - 2035.

Key Market Trends & Highlights

The Anhydrous Milk Fat Butter Oil Market is experiencing a robust upward trajectory driven by evolving consumer preferences and innovative production methods.

  • The demand for natural ingredients is rising, particularly in North America, where health-conscious consumers are driving market growth.
  • Innovation in production techniques is enhancing the quality and efficiency of Anhydrous Butter Oil, the largest segment in the market.
  • Sustainability and ethical sourcing practices are becoming increasingly important, especially in the fast-growing Asia-Pacific region.
  • Increasing health consciousness and expanding applications in the food industry are key drivers propelling the market forward.

Market Size & Forecast

2024 Market Size 31.6 (USD Billion)
2035 Market Size 48.91 (USD Billion)
CAGR (2025 - 2035) 4.05%

Major Players

Fonterra (NZ), Dairy Farmers of America (US), Glanbia (IE), Arla Foods (DK), FrieslandCampina (NL), Saputo (CA), Lactalis (FR), Murray Goulburn (AU), Olam International (SG)

Anhydrous Milk Fat Butter Oil Market Trends

The Anhydrous Milk Fat Butter Oil Market is currently experiencing a notable transformation, driven by evolving consumer preferences and increasing demand for high-quality dairy products. This market segment, characterized by its rich flavor and versatility, is gaining traction among food manufacturers and culinary professionals alike. The growing inclination towards natural and minimally processed ingredients is propelling the popularity of anhydrous milk fat butter oil, as it serves as an ideal substitute for traditional fats in various applications. Furthermore, the rise of gourmet cooking and artisanal food products is likely to enhance the market's appeal, as chefs and food enthusiasts seek premium ingredients to elevate their culinary creations. In addition to changing consumer tastes, the Anhydrous Milk Fat Butter Oil Market is also influenced by advancements in production techniques and supply chain efficiencies. Innovations in processing technology are enabling manufacturers to produce high-quality butter oil with improved shelf life and stability, thereby meeting the demands of both domestic and international markets. Moreover, the increasing focus on sustainability and ethical sourcing practices is prompting companies to adopt more responsible production methods. As a result, the market appears poised for growth, with potential opportunities for expansion in emerging economies where dairy consumption is on the rise. Overall, the Anhydrous Milk Fat Butter Oil Market is likely to continue evolving, reflecting broader trends in the food industry and consumer behavior.

Rising Demand for Natural Ingredients

There is a growing consumer preference for natural and minimally processed food products. Anhydrous milk fat butter oil, known for its purity and rich flavor, aligns well with this trend, making it an attractive option for health-conscious consumers.

Innovation in Production Techniques

Advancements in processing technologies are enhancing the quality and stability of anhydrous milk fat butter oil. These innovations are likely to improve shelf life and broaden its applications in various culinary settings.

Sustainability and Ethical Sourcing

The market is witnessing a shift towards sustainable practices, with companies increasingly focusing on ethical sourcing of dairy ingredients. This trend may resonate with environmentally conscious consumers, further driving demand.

Anhydrous Milk Fat Butter Oil Market Drivers

Growing Export Opportunities

The Anhydrous Milk Fat Butter Oil Market is benefiting from expanding export opportunities, particularly in regions with increasing dairy consumption. Countries with burgeoning economies are showing a rising demand for high-quality dairy products, including anhydrous milk fat. Market data reveals that exports of anhydrous milk fat have increased by approximately 10% in the last year, driven by favorable trade agreements and a growing global appetite for dairy. This trend not only enhances revenue potential for producers but also encourages investment in production capabilities, thereby fostering overall market growth.

Increasing Health Consciousness

The Anhydrous Milk Fat Butter Oil Market is experiencing a notable shift as consumers become increasingly health-conscious. This trend is characterized by a growing preference for natural and minimally processed food products. As a result, anhydrous milk fat, known for its rich nutritional profile, is gaining traction among health-oriented consumers. The market data indicates that the demand for healthier fats is projected to rise, with an estimated growth rate of 5% annually. This shift is likely to drive manufacturers to innovate and promote anhydrous milk fat as a healthier alternative to traditional butter and margarine, thereby expanding its market presence.

Rising Demand for Dairy Alternatives

The Anhydrous Milk Fat Butter Oil Market is witnessing a surge in demand for dairy alternatives, driven by the increasing number of lactose-intolerant individuals and the rise of veganism. This trend is prompting manufacturers to explore innovative formulations that incorporate anhydrous milk fat as a substitute for traditional dairy products. Market data indicates that the dairy alternatives segment is expected to grow at a compound annual growth rate of 7% over the next five years. This shift not only opens new avenues for product development but also positions anhydrous milk fat as a key ingredient in meeting the diverse dietary needs of consumers.

Expanding Applications in Food Industry

The versatility of anhydrous milk fat is propelling its adoption across various segments of the food industry, which is a significant driver for the Anhydrous Milk Fat Butter Oil Market. This ingredient is increasingly utilized in bakery products, confectionery, and dairy formulations due to its ability to enhance flavor and texture. Market analysis suggests that the bakery segment alone accounts for approximately 30% of the total demand for anhydrous milk fat. As food manufacturers seek to improve product quality and consumer appeal, the incorporation of anhydrous milk fat is likely to become more prevalent, further stimulating market growth.

Technological Advancements in Processing

Technological advancements in processing techniques are significantly influencing the Anhydrous Milk Fat Butter Oil Market. Innovations such as improved separation and concentration methods are enhancing the efficiency and quality of anhydrous milk fat production. These advancements allow for better flavor retention and nutritional profiles, which are crucial for meeting consumer expectations. Market Research Future suggest that the implementation of these technologies could reduce production costs by up to 15%, making anhydrous milk fat more accessible to manufacturers. As a result, the industry is likely to see increased competition and a broader range of products featuring this ingredient.

Market Segment Insights

By Type: Anhydrous Butter Oil (Largest) vs. Ghee (Fastest-Growing)

In the Anhydrous Milk Fat Butter Oil Market, the distribution of market share reveals that Anhydrous Butter Oil is the leading segment, commanding a substantial portion due to its extensive applications in the food industry. Butterfat also plays a significant role, being favored for its rich flavor and creamy texture, while Ghee is gaining traction as a preferred cooking medium, especially in health-conscious consumer segments.

Anhydrous Butter Oil (Dominant) vs. Ghee (Emerging)

Anhydrous Butter Oil, with its high concentration of milk fat and long shelf life, is a dominant player in the market, making it a preferred ingredient in various culinary applications including baking and cooking. This product is valued for its richness in flavor, which enhances the overall taste of dishes. On the other hand, Ghee is emerging rapidly in popularity, especially among health-conscious consumers. Known for its nutritional benefits, such as being lactose-free and rich in essential fatty acids, Ghee is increasingly being used both in traditional cuisines and modern cooking practices. As a result, it is witnessing significant growth, driven by rising consumer demand for healthier fat alternatives.

By Application: Bakery Confectionery (Largest) vs. Dairy Frozen Foods (Fastest-Growing)

The Anhydrous Milk Fat Butter Oil Market is characterized by diverse applications, with Bakery Confectionery holding the largest market share owing to its integral role in producing quality baked goods and indulgent confections. This segment benefits from rising consumer demand for premium products, contributing significantly to its dominance in the market. Dairy Frozen Foods follow closely, primarily due to the increasing popularity of frozen desserts and convenience foods, while Snacks Savory Products and Other applications also share a portion of the market but with comparatively smaller shares. Growth trends in the Anhydrous Milk Fat Butter Oil Market are propelled by innovation in product formulations and evolving consumer preferences. While Bakery Confectionery maintains its lead, Dairy Frozen Foods is emerging as the fastest-growing segment with the rising trend of lactose-free and healthier frozen options. Additionally, the overall demand for versatile cooking oils in Snacks Savory Products and other applications further fuels the growth of the market as companies develop products tailored to health-conscious consumers.

Bakery Confectionery (Dominant) vs. Dairy Frozen Foods (Emerging)

The Bakery Confectionery segment stands as the dominant force in the Anhydrous Milk Fat Butter Oil Market due to its extensive use in high-quality pastries, cakes, and chocolate products. This segment thrives on consumer preferences for rich flavors and creamy textures, driving manufacturers to utilize anhydrous milk fat in their recipes to enhance taste and quality. Conversely, Dairy Frozen Foods represents an emerging segment that is rapidly gaining momentum, particularly with the shift towards healthier, on-the-go dessert options. The innovation of lactose-free and low-calorie frozen products caters to a growing demographic of health-conscious consumers. Both segments demonstrate unique characteristics that adapt to consumer trends, with Bakery Confectionery focusing on luxury indulgence and Dairy Frozen Foods emphasizing convenience and health.

By Source: Cow Milk (Largest) vs. Buffalo Milk (Fastest-Growing)

In the Anhydrous Milk Fat Butter Oil Market, the source segment is prominently dominated by Cow Milk, which holds significant market share. This is largely due to the extensive dairy farming practices and consumer preferences for cow-derived products across various global regions. Buffalo Milk follows, showcasing a growing presence attributed to its rich nutritional profile, especially in Asian markets. Goat Milk and Other Sources hold smaller shares but contribute to diversification in product offerings.

Cow Milk (Dominant) vs. Buffalo Milk (Emerging)

Cow Milk remains the dominant source in the Anhydrous Milk Fat Butter Oil Market, valued for its creamy texture and widespread availability, making it a consumer favorite. In contrast, Buffalo Milk is emerging rapidly as an alternative, valued for its higher fat content and nutritional benefits. This shift is fueled by changing consumer preferences towards higher-fat dairy products and the proliferation of buffalo farming in specific regions. Goat Milk is recognized for its unique flavor and digestibility, appealing to niche markets. Other sources, while not leading, introduce innovation in product formulations and cater to diverse dietary needs.

By Packaging: Pouches (Largest) vs. Drums (Fastest-Growing)

In the Anhydrous Milk Fat Butter Oil Market, the packaging segment displays an intriguing distribution among its values. Pouches currently command a significant share, favored for their convenience and flexibility in use. Drums, while trailing in share, are experiencing rapid adoption among industrial users due to their larger capacity which suits bulk processing requirements. Cans and other packaging types contribute minimally to the overall market, underscoring the dominance of pouches and drums in this competitive landscape.

Pouches (Dominant) vs. Other Packaging Types (Emerging)

Pouches have established themselves as the dominant packaging choice in the Anhydrous Milk Fat Butter Oil Market due to their lightweight, resealable feature, and ability to retain freshness, leading to consumer preference for both retail and food service applications. In contrast, other packaging types, including drums and cans, are emerging as viable alternatives. These alternatives cater to specific needs, such as bulk transportation and storage, making them attractive to certain manufacturers. As the market evolves, the choice of packaging types will continue to reflect consumer demand for convenience, sustainability, and economic efficiency.

By Distribution Channel: Direct Sales (Largest) vs. Online Marketplaces (Fastest-Growing)

In the Anhydrous Milk Fat Butter Oil Market, the distribution channels showcase a diverse landscape, with Direct Sales leading the market significantly. This method allows manufacturers to directly connect with consumers and bypass intermediaries, resulting in higher profit margins and better customer relationships. Retail stores and Food Service Distributors follow, contributing to substantial shares but not matching the dominance of Direct Sales. Online Marketplaces, while currently smaller, are gaining traction due to changing consumer behaviors favoring online shopping, particularly accelerated by recent global trends.

Direct Sales (Dominant) vs. Online Marketplaces (Emerging)

Direct Sales in the Anhydrous Milk Fat Butter Oil Market has established itself as a dominant channel due to its efficiency and profitability. Manufacturers prioritize this channel for its ability to foster direct customer relationships and ensure premium pricing through personalized marketing efforts. In contrast, Online Marketplaces are emerging as a vital distribution channel, driven by the convenience of e-commerce and increasing consumer preference for online purchasing. The growing reliance on technology and digital platforms has enabled food brands to resonate with a broader audience, expanding market reach. As online shopping continues to grow, brands must adapt their strategies to meet evolving consumer expectations.

Get more detailed insights about Anhydrous Milk Fat Butter Oil Market

Regional Insights

North America : Market Leader in Dairy Products

North America is the largest market for Anhydrous Milk Fat Butter Oil Market, holding approximately 40% of the global market share. The region's growth is driven by increasing consumer demand for dairy products, health trends favoring natural ingredients, and regulatory support for dairy farming practices. The U.S. and Canada are the primary contributors, with a robust infrastructure for dairy production and distribution. The competitive landscape in North America features key players like Dairy Farmers of America and Saputo, which dominate the market. The presence of established brands and a growing trend towards premium dairy products further enhance market dynamics. Additionally, innovations in processing technologies and sustainability practices are shaping the future of the industry, ensuring a steady supply of high-quality butter oil products.

Europe : Diverse Market with Growth Potential

Europe is the second-largest market for Anhydrous Milk Fat Butter Oil Market, accounting for around 30% of the global market share. The region's growth is fueled by increasing health consciousness among consumers, a shift towards natural and organic products, and supportive regulations from the European Union promoting dairy farming. Countries like Germany and France are leading the market, with a strong emphasis on quality and sustainability. The competitive landscape in Europe is characterized by major players such as Arla Foods and FrieslandCampina, which are well-established in the dairy sector. The market is also witnessing a rise in artisanal and specialty butter oil products, catering to niche consumer segments. The presence of stringent quality standards and certifications further enhances the market's credibility and consumer trust.

Asia-Pacific : Emerging Market with High Demand

Asia-Pacific is witnessing rapid growth in the Anhydrous Milk Fat Butter Oil Market, driven by increasing urbanization, rising disposable incomes, and changing dietary preferences. The region holds approximately 20% of the global market share, with countries like China and India leading the demand. The growing popularity of Western cuisine and dairy-based products is further propelling market growth, supported by favorable government policies promoting dairy farming. The competitive landscape in Asia-Pacific is evolving, with both local and international players vying for market share. Companies like Fonterra and Olam International are expanding their presence in the region, focusing on product innovation and distribution networks. The increasing awareness of health benefits associated with dairy consumption is also contributing to the market's expansion, making it a key area for future investment.

Middle East and Africa : Untapped Market with Opportunities

The Middle East and Africa region presents significant opportunities for the Anhydrous Milk Fat Butter Oil Market, holding about 10% of the global market share. The growth is driven by increasing population, urbanization, and a rising middle class with a growing appetite for dairy products. Countries like South Africa and the UAE are at the forefront, with government initiatives aimed at boosting local dairy production and reducing imports. The competitive landscape is still developing, with local players and international companies exploring market entry strategies. The presence of key players like Lactalis and Murray Goulburn is notable, as they seek to establish a foothold in this emerging market. The region's diverse culinary traditions and increasing demand for high-quality dairy products present a unique opportunity for growth and innovation in the butter oil segment.

Anhydrous Milk Fat Butter Oil Market Regional Image

Key Players and Competitive Insights

Anhydrous Milk Fat Butter Oil Market is assembled with an assortment of big and mid-level and small-scale industries and many other institutions. Regular new product developments have increased the competition in the United States. With the new product development, the United States Anhydrous Milk Fat Butter Oil industry also increases country fragmentation. With the increased demand for dairy products and increasing health awareness of using anhydrous milk fat the United States Anhydrous Milk Fat Butter Oil Market is likely to experience a significant growth rate in the near future.

Leading United States Anhydrous Milk Fat Butter Oil Market players are adopting various growth strategies such as new product launches, acquisitions, mergers, and collaboration, as well as expanding their existing production facilities in manufacturing plants and investing in R to fulfill the needs of end-users in the coming years. Leading United States Anhydrous Milk Fat Butter Oil Industry players have also included efficient strategies such as product launches, agreements, acquisitions, and mergers to solidify their position in the United States Anhydrous Milk Fat Butter Oil Market. Arla Foods is a Danish multinational dairy company.

Arla Foods is one of the largest dairy companies across the globe. The Company operates in the production and sale of milk, cream, butter, buttermilk, cheese, and other dairy items. Arla Dairy Products has a branched range of products like Lurpak, Anchor Butter, and many more. The Company also manufactures and trades powdered milk products like whey, lactose, and fruit drinks. Arla Foods has a presence in 30 countries across Europe, the Middle East, Asia, Africa, and the United States. The company is headquartered in Viby, Aarhus, Denmark.

Fonterra Co-op is a multinational dairy Whole Company. It is one of the largest dairy products companies across the globe and has major production units in New Zealand. The company has its operation in the manufacturing of various dairy products like, milk powder, cheeses, casein, whey protein, lactose, and proteins. Fonterra Co-op also sells its vicarious ingredients used throughout the life spray. Hokitika Cheese, Picaray, Taraua Cheese, and Waitoa Cheese are the brands under which the company carries out its products.

Fonterra is a multinational dairy company that serves its products in Asia, the Middle East, Europe, North America, South America, Africa, and Australia. The company has an employee capacity of more than 21,000 employees. The main Fonterra office is in Auckland, New Zealand. It is a dairy Co-op and leading a dairy nutrition company.

Key Companies in the Anhydrous Milk Fat Butter Oil Market market include

Industry Developments

The Anhydrous Milk Fat Butter Oil Market is projected to grow from USD 29.19 billion in 2023 to USD 41.7 billion by 2032, exhibiting a CAGR of 4.05% during the forecast period. Increasing demand for butter oil in the food and beverage industry, rising disposable income, and growing health consciousness among consumers are the key factors driving market growth.

Recent developments in the market include the launch of new products, such as low-fat and organic butter oil, and the expansion of production capacities by major players. For instance, in 2023, Arla Foods Ingredients announced plans to invest USD 50 million in its butter oil production facility in Denmark.

Key market players include Fonterra Co-operative Group, Lactalis Group, Arla Foods Ingredients Group P/S, and Milk Specialties Global. These players are focusing on strategic collaborations, mergers and acquisitions, and product innovation to maintain their market positions.

Future Outlook

Anhydrous Milk Fat Butter Oil Market Future Outlook

The Anhydrous Milk Fat Butter Oil Market is projected to grow at 4.05% CAGR from 2024 to 2035, driven by rising demand for dairy products and health-conscious consumer trends.

New opportunities lie in:

  • Expansion into plant-based dairy alternatives
  • Development of premium, organic butter oil products
  • Investment in advanced processing technologies for efficiency

By 2035, the market is expected to achieve robust growth, reflecting evolving consumer preferences and innovation.

Market Segmentation

Anhydrous Milk Fat Butter Oil Market Type Outlook

  • Anhydrous Butter Oil
  • Butterfat
  • Ghee

Anhydrous Milk Fat Butter Oil Market Source Outlook

  • Cow Milk
  • Buffalo Milk
  • Goat Milk
  • Other sources

Anhydrous Milk Fat Butter Oil Market Packaging Outlook

  • Pouches
  • Drums
  • Cans
  • Other packaging types

Anhydrous Milk Fat Butter Oil Market Application Outlook

  • Bakery Confectionery
  • Dairy Frozen Foods
  • Snacks Savory Products
  • Other applications

Anhydrous Milk Fat Butter Oil Market Distribution Channel Outlook

  • Direct Sales
  • Retail Stores
  • Online Marketplaces
  • Food Service Distributors

Report Scope

MARKET SIZE 202431.6(USD Billion)
MARKET SIZE 202532.88(USD Billion)
MARKET SIZE 203548.91(USD Billion)
COMPOUND ANNUAL GROWTH RATE (CAGR)4.05% (2024 - 2035)
REPORT COVERAGERevenue Forecast, Competitive Landscape, Growth Factors, and Trends
BASE YEAR2024
Market Forecast Period2025 - 2035
Historical Data2019 - 2024
Market Forecast UnitsUSD Billion
Key Companies ProfiledMarket analysis in progress
Segments CoveredMarket segmentation analysis in progress
Key Market OpportunitiesGrowing demand for clean label products drives innovation in the Anhydrous Milk Fat Butter Oil Market.
Key Market DynamicsRising demand for clean-label products drives innovation and competition in the Anhydrous Milk Fat Butter Oil market.
Countries CoveredNorth America, Europe, APAC, South America, MEA

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What is the projected market valuation for the Anhydrous Milk Fat Butter Oil Market in 2035?

The projected market valuation for the Anhydrous Milk Fat Butter Oil Market in 2035 is 48.91 USD Billion.

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