Whole Milk Powder Market Analysis

Whole Milk Powder (Global, 2024)

Introduction

The whole milk powder market is set for major developments and is likely to play a significant role in the global dairy industry. Whole milk powder, a product obtained by spray drying, is a versatile product that is used in many food products, including infant formula, bakery products and confectionery. Whole milk powder has become increasingly popular among consumers who are increasingly demanding shelf-stable dairy products that are convenient to use. Moreover, the expansion of e-commerce platforms and the rising trend for shopping for groceries on the Internet are reshaping the distribution channels for whole milk powder, enabling it to reach a wider audience. In the meantime, manufacturers are working on innovations to improve the quality of whole milk powder and to meet consumers’ diverse needs. This is causing the whole milk powder market to grow, presenting opportunities and challenges to the dairy industry.

PESTLE Analysis

Political

In 2024, the world trade of milk is largely influenced by the regulations of the World Trade Organization, which stipulates that members of the WTO must abide by certain tariffs. In many countries, the average tariff on dairy products, including milk powder, is about twenty per cent. This has a major effect on international trade. Also, the European Union has recently tightened its import regulations, which may have an effect on the supply chain and the marketing of milk powder.

Economic

The whole-milk powder market is subject to the influence of the fluctuating prices of agricultural products. The price of whole milk powder will average around 3,000 yuan per tonne in 2024, based on changes in production costs and the demand for the product. In addition, the International Monetary Fund projects that the world economy will grow by 3.5% in 2024, which will increase the purchasing power of consumers, and thus affect the whole-milk powder market.

Social

A shift is taking place in the preferences of consumers, towards healthier and more sustainable foods. Surveys show that in 2024 65% of consumers are prepared to pay a premium for dairy products that are certified organic or produced in a sustainable manner. Whole milk powder producers will have to adjust their sourcing and production practices to meet these changing consumer demands. Also, the rise of plant-based alternatives has resulted in a ten-percent increase in the level of awareness of the origins and health benefits of dairy products.

Technological

Advances in milk processing technology have had a significant influence on the whole milk powder market. In 2024, the widespread use of spray drying has increased the efficiency of production. According to producers, the new method uses 15% less energy than traditional methods. Also, new packaging technology, such as vacuum-sealed pouches, have lengthened the shelf life of milk powder and reduced the risk of spoilage. These are essential improvements for a product destined for international markets.

Legal

Regulations relating to food safety and labelling are becoming more and more stringent. In the United States, for example, the Food and Drug Administration (FDA) has issued new labelling requirements for all dairy products, including milk powder. These requirements require a greater degree of nutritional labelling and the disclosure of the origin of the milk. Fines of up to $20,000 per contravention of the regulations have been imposed, which makes it essential for manufacturers to ensure compliance with the regulations to avoid legal consequences.

Environmental

It is a fact that the environment is a subject of study, and the dairy industry is under the microscope, with a view to reducing its carbon footprint and water consumption. In 2024, the dairy industry will face the challenge of reducing its greenhouse gas emissions by 30 per cent by the year 2030, as set out in the international climate agreements. The water footprint of a kilogram of whole milk powder is about 1,000 liters. To meet the expectations of consumers and to reduce the water footprint, producers are adopting more sustainable practices.

Porter's Five Forces

Threat of New Entrants

Whole milk powder is a moderately high-risk business, with high entry barriers, including the need for a large capital investment in equipment and the need to meet food safety standards. The market is also very profitable, so there is a moderate threat of new entrants.

Bargaining Power of Suppliers

“The suppliers of the raw materials for the production of milk powder, the milk producers, have limited bargaining power due to the large number of dairy farms and the competitive nature of the agricultural sector. The manufacturers, on the other hand, are in a favourable position because they can obtain milk from several producers, which results in a low bargaining power of the suppliers.

Bargaining Power of Buyers

The market for whole milk powder is characterized by a high degree of buyer power. The buyers, who are the food manufacturers and the retail dealers, have considerable bargaining power because of the availability of substitute products and suppliers. The presence of many competitors enables them to demand better prices and terms of trade, thus resulting in a high degree of buyer power.

Threat of Substitutes

The substitutes for whole milk powder, such as skimmed milk powder and plant-based milk substitutes, are not as plentiful as those for skimmed milk. The unique properties and uses of whole milk powder in various food products, however, limit the threat of substitution. The increasing popularity of vegetarian diets may pose a moderate threat in the long run.

Competitive Rivalry

The market for whole milk powder is characterised by intense competition between established players and new entrants. Companies compete on the basis of price, quality and brand reputation, and the level of competition is high. Brand proliferation and the low degree of differentiation between products also intensify competition.

SWOT Analysis

Strengths

• High nutritional value and versatility in food applications.
• Long shelf life, making it suitable for storage and transportation.
• Growing demand in emerging markets due to increasing dairy consumption.

Weaknesses

• Price volatility due to fluctuations in raw milk prices.
• Limited awareness and preference for whole milk powder over liquid milk.
• Potential quality issues related to storage and handling.

Opportunities

• Expansion into new markets with rising disposable incomes.
• Increasing use in the food processing industry for convenience products.
• Potential for product innovation, such as organic and fortified options.

Threats

• Intense competition from alternative dairy products and plant-based options.
• Regulatory challenges and changing food safety standards.
• Economic downturns affecting consumer spending on premium dairy products.

Summary

In 2024 the whole milk powder market will be characterized by its high nutritional value and long shelf life, which will be of great importance in the expanding global market. However, challenges such as price volatility and competition from alternative products will lead to risks. Opportunities will arise in emerging markets and through product innovation. However, regulatory restrictions and macroeconomic factors may affect the market. Strategic focus on quality, consumer education and market expansion will be important to seize the opportunities and minimize the risks.