Dairy Ingredients Market

The global dairy ingredients market size was valued at USD 88.03 billion in 2023 and is projected to reach USD 135.4 billion by 2032, growing at a compound annual growth rate (CAGR) of 4.9% from 2024 to 2032.

The dairy ingredients market encompasses a wide variety of products derived from milk, such as milk powders, whey protein, lactose, casein, and milk fat concentrates. These ingredients are used in a range of food and beverage applications, including dairy products, bakery items, and nutritional supplements.

Key drivers of growth in the dairy ingredients market include rising consumer awareness about health and nutrition, leading to increased demand for protein-enriched foods. The growing popularity of functional foods and sports nutrition products is also driving the demand for whey protein and other dairy-derived ingredients. Additionally, the expanding food processing industry and advancements in dairy technologies contribute to market growth.

The dairy ingredients market is poised for steady growth, supported by rising demand for protein supplements and clean-label ingredients. Growth opportunities are expected in developing regions like Asia-Pacific, where consumers are increasingly incorporating dairy ingredients into their diets. Sustainability concerns and innovations in dairy processing are also likely to shape the market in the coming years.

Product Insights

In 2023, the Milk Protein Concentrate (MPC) and Milk Protein Isolate (MPI) segment held a dominant revenue share of 20.1%. MPC and MPI are highly valued for their protein content, making them ideal for enhancing the nutritional value of food and beverage products, particularly in sports nutrition, infant formula, and dietary supplements. The increasing demand is driven by consumer preference for natural, clean-label products with high protein content for health benefits such as muscle building and weight management.

The Skimmed Milk Powder (SMP) segment also captured a significant market share in 2023 due to its long shelf life and adaptability in various food applications like bakery, confectionery, and ready-to-eat meals. SMP is low in fat but high in protein and essential minerals, making it a popular choice for health-conscious consumers and manufacturers looking for nutritious, shelf-stable ingredients for their products.

Application Insights

The dairy products segment accounted for the largest market share in 2023, driven by rising consumer demand for natural and healthy ingredients. Dairy ingredients such as milk powders, whey proteins, and lactose are integral to food processing, contributing to the nutritional value and functionality of various food and beverage products. The global trend toward convenience foods has also spurred demand for dairy ingredients in ready-to-eat meals, bakery products, and nutritional supplements.

The convenience foods segment is expected to witness the fastest growth over the forecast period. Dairy ingredients like cheese powders, yogurt powders, and milk powders help improve the taste, texture, and nutritional profile of convenience foods. This segment’s growth is supported by increasing urbanization, busy lifestyles, and rising disposable incomes, with more consumers seeking on-the-go snacks and quick meal solutions that meet their health and nutritional needs.

Regional Insights

The North American dairy ingredients market is recognized as a lucrative sector within the industry. The growing consumer preference for dairy-based products, driven by a demand for natural and nutritious food options, propels market growth. Dairy ingredients such as milk powders, cheese, and butter are vital components in a variety of food and beverage products, including baked goods, confections, and ready-to-eat meals. Additionally, the increasing interest in protein-rich diets boosts the demand for dairy ingredients. Technological advancements in dairy processing have also improved the functionality and versatility of these ingredients, enabling manufacturers to develop innovative products that align with changing consumer preferences. The rising popularity of convenience foods further influences the demand for dairy ingredients in North America.

U.S. Dairy Ingredients Market Insights

In 2023, the U.S. held a significant share of the North American dairy ingredients market. Growing awareness of the benefits of protein-rich foods, along with heightened health and wellness concerns, is driving market expansion. Dairy ingredients are integral to the production of various personal care products, including soaps, shampoos, conditioners, and moisturizers, contributing to increased demand in this sector. Furthermore, dairy ingredients enhance popular beverages like tea, coffee, and milkshakes by adding creaminess. Ingredients such as lactose, whey protein, and casein are also crucial in baby food formulations, ensuring proper nutritional support for infants.

Europe Dairy Ingredients Market Insights

The European dairy ingredients market is expected to grow at a substantial CAGR during the forecast period. A rising consumer preference for natural and healthy food options is significantly boosting the demand for dairy-based products in the region. The European dairy industry continuously innovates and diversifies its offerings to meet shifting consumer tastes and dietary trends, such as increased protein consumption. Additionally, the growth of the bakery and confectionery sectors in Europe has driven demand for dairy ingredients like milk powders, butter, and cream, which enhance flavor. An increasing focus on sustainable food production also encourages European consumers to favor locally sourced dairy ingredients, supporting regional farmers and producers.

In the U.K., consumer awareness regarding the health benefits of dairy protein is fueling market growth. Dairy products, rich in protein and amino acids, are recognized for their anti-aging properties. Consuming dairy proteins is associated with reduced stress and improved immunity. Furthermore, dairy ingredients are essential in infant milk formulas, playing a critical role in infant nutrition.

Germany’s dairy ingredients market is witnessing growth in 2023, driven by consumer demand for healthier and more natural food options. Products like yogurt, cheese, and milk-based beverages are increasingly popular for their protein content and probiotic benefits, aligning with health-conscious trends. The surge in demand for convenience foods that incorporate dairy ingredients, such as ready-to-eat meals and snacks, further enhances market growth.

Asia Pacific Dairy Ingredients Market Insights

The Asia Pacific region accounted for 42.3% of the dairy ingredients market in 2023, driven by rapid population growth and urbanization. As individuals seek products that fulfill their nutritional needs, demand for dairy ingredients rises. Innovations in dairy products, including new flavors and improved packaging, offer consumers a broader range of choices. The growing demand for bakery products is also a key factor. The region’s expanding food and hospitality industry drives the need for dairy products such as cheese, butter, yogurt, and buttermilk. The influence of Western food culture, with increasing consumption of items like pizza and burgers, further fuels demand for dairy ingredients.

In India, the dairy ingredients market is thriving in 2023, propelled by a rapidly growing population and increasing disposable incomes. This demographic shift boosts consumption across various segments, including bakery, confectionery, and dairy product manufacturing. The cultural significance of dairy in Indian cuisine ensures consistent consumption throughout the year. Additionally, the nutritional benefits of dairy ingredients like milk powders, butter, and ghee are vital in meeting dietary needs, especially in a predominantly vegetarian society.

In China, the shift toward Western-style diets has spurred growth in the dairy ingredients market. Influenced by globalization and urbanization, consumers increasingly seek dairy-based foods and beverages, including milk powders, cheese, and butter. Rising disposable incomes and improved living standards among China’s middle class have heightened demand for higher-quality food products, including those made with premium dairy ingredients that offer enhanced nutritional value and safety.

Latin America Dairy Ingredients Market Insights

Latin America is poised for significant growth in the dairy ingredients market, driven by increasing consumer interest in dairy products due to their nutritional benefits and versatility in cooking. As diets evolve, there is a growing trend of incorporating dairy ingredients into everyday meals and snacks. Economic improvements in various Latin American countries have led to higher disposable incomes, enabling consumers to purchase more dairy products. This economic growth also fuels urbanization and lifestyle changes, where convenience and nutrition play critical roles in food selection.

Key Dairy Ingredients Companies:

1. Fonterra Co-Operative Group Limited
2. FrieslandCampina
3. Arla Food Ingredients
4. Glanbia PLC
5. Sodiaal Group
6. Dairy Farmers of America Inc.
7. Saputo, Inc.
8. Schreiber Foods Inc.
9. Lactalis American Group, Inc.
10. EPI Ingredients

Recent Developments

• In May 2024, Epi Ingredients launched a new additive-free butter powder to meet the rising demand for clean-label and natural ingredients. This product innovation addresses the need for versatile butter alternatives in food manufacturing.
• In May 2024, Saputo’s Frigo Cheese Heads introduced a new whole milk string cheese product. This addition appeals to consumers seeking higher-fat dairy snacks, expanding their existing line of string cheese products.

Global Dairy Ingredients Market Report Segmentation

Product Outlook (Revenue, USD Million, Volume Kilotons, 2018 – 2032):

1. Skimmed Milk Powder (SMP)
2. Whole Milk Powder (WMP)
3. Buttermilk Powder
4. Cream Powder
5. Blenders & Replacers
6. Rolled Dried Powder
7. Fat-filled Powder
8. Permeate Powder
9. Lactose & Derivatives
10. Casein & Caseinate
11. MPC & MPI
12. Whey Ingredients

Application Outlook (Revenue, USD Million, Volume Kilotons, 2018 – 2032):

1. Bakery & Confectionary
   • Chocolates
   • Ice creams
   • Others
2. Dairy Products
   • Recombinant Milk
   • Others
3. Convenience Foods
4. Infant Milk Formula
5. Sports & Clinical Nutrition
6. Others

Regional Outlook (Revenue, USD Million, Volume Kilotons, 2018 – 2032):

1. North America: U.S., Canada, Mexico
2. Europe: Germany, U.K., France, Italy, Spain, Russia, Denmark, Sweden, Norway
3. Asia Pacific: China, Japan, India, South Korea, Australia, Thailand, Singapore
4. Latin America: Brazil
5. Middle East and Africa (MEA): South Africa, Saudi Arabia, UAE, Kuwait