Dairy Ingredients Market Size - By Product Type (Milk Powders, Whey Ingredients, Lactose & Derivatives, Casein & Caseinates), Application (Bakery & Confectionery, Dairy Products, Infant Milk Formula, Sports & Clinical Nutrition), Form & Forecast, 2023 – 2032

Dairy Ingredients Market Size

Dairy Ingredients Market size was valued at USD 56.58 billion in 2022 and is estimated to witness 6.2% CAGR from 2023 to 2032. This market encompasses a diverse range of products derived from milk, including milk powder, whey protein, lactose, casein, and others. One key driver of this market is the growing awareness of the nutritional benefits associated with dairy ingredients, leading to an upsurge in their incorporation into various food and beverage products. The rise in health-conscious consumers seeking protein-rich and functional food options has significantly contributed to the industry expansion.
 

Furthermore, the global trend towards premiumization and innovation in the food industry has spurred the development of novel dairy ingredients, fostering a competitive landscape. The functional properties of dairy ingredients, such as emulsification, gelling, and texture enhancement, have led to their widespread use in the food processing sector. Additionally, the increasing prevalence of lactose-free and plant-based alternatives has prompted traditional dairy ingredient manufacturers to adapt and diversify their product offerings.
 

One significant challenge facing the dairy ingredients market is the escalating competition from plant-based alternatives. The rise in consumer awareness about environmental sustainability, health concerns, and ethical considerations has fueled the demand for plant-based products, challenging the traditionally dominant position of dairy ingredients. Plant-based alternatives, such as soy, almond, and oat, have gained popularity due to their perceived health benefits, lactose-free nature, and reduced environmental impact compared to traditional dairy farming. This shift in consumer preferences poses a threat to the market, impacting segments like whey protein and milk powders.
 

COVID-19 Impact

The initial disruption in supply chains, coupled with lockdowns and restrictions on movement, created logistical challenges for the dairy industry. Shutdowns of foodservice establishments and disruptions in transportation adversely affected the distribution channels for dairy ingredients, leading to a temporary decline in demand. Moreover, labor shortages and safety concerns within dairy processing facilities further contributed to operational challenges. On the demand side, consumer behavior underwent a shift during the pandemic. Panic buying and stockpiling initially boosted retail sales of dairy products, including ingredients, but as economic uncertainties persisted, some consumers became more price-conscious, impacting purchasing patterns.
 

Dairy Ingredients Market Trends

Health-conscious consumers are driving a surge in demand for functional dairy ingredients, such as probiotics, whey proteins, and lactose-free options, aligning with the growing focus on wellness and nutritional value. The rising popularity of clean-label products has prompted dairy ingredient manufacturers to prioritize transparency, emphasizing minimal processing and natural sourcing. Plant-based alternatives continue to gain traction, challenging traditional dairy products and influencing the incorporation of plant-derived ingredients into dairy formulations. This reflects a broader shift toward flexitarian and plant-centric diets.
 

Additionally, sustainability has emerged as a key trend, with consumers placing increased importance on environmentally friendly practices. The dairy industry is responding with initiatives to reduce carbon footprints, improve waste management, and enhance overall sustainability across the supply chain.
 

Dairy Ingredients Market Analysis

Based on product type, the milk powders segment dominated around USD 21.23 billion revenue in 2022. Milk powders have historically commanded a significant market share, valued for their versatility and extended shelf life. Milk powders find extensive use in the food industry, particularly in the production of confectionery, baked goods, and dairy-based beverages.
 

Based on form, the dry ingredients segment accounted for 59.55% of the dairy ingredients market share in 2022. The appeal of dry forms lies in their extended shelf life, ease of storage, and versatility in various food and beverage applications. Dry dairy ingredients are favored in the manufacturing of bakery goods, confectionery, and powdered beverage mixes, contributing significantly to their prevalence in the market.
 

Based on application, the market is segmented as Bakery and Confectionery, Dairy Products, Infant Milk Formula, Sports and Clinical Nutrition and Other. Dairy products represent a substantial portion of the segment, encompassing a variety of items such as cheese, yogurt, and ice cream. The use of dairy ingredients in these products is fundamental, impacting taste, consistency, and nutritional content, thereby maintaining a strong market presence.
 

North American dairy ingredients market size held over USD 18.38 billion in 2022, driven by a combination of factors, including the high consumption of dairy products, a well-established food and beverage industry, and a growing awareness of the nutritional benefits associated with dairy ingredients.
 

The United States, as a major player in North America, contributes substantially to the market share, with a well-developed dairy sector that spans the production of milk, cheese, and various dairy derivatives. The demand for dairy ingredients in North America is particularly prominent in applications such as bakery and confectionery, where the versatility of these ingredients enhances the quality and taste of a wide range of products.
 

Dairy Ingredients Market Share

Major companies operating in the dairy ingredients industry include:

• Lactalis Group
• FrieslandCampina
• Arla Foods
• Kerry Group PLC
• Saputo Inc.
• Dairy Farmers of America
• Glanbia PLC
• Volac International Ltd.
• EPI Ingredients
• Fonterra Co-operative Group
• Sodiaal co-operative group
• Ingredia SA
• Amco Proteins
• Kanegrade
• Batory Foods
   

These companies focus on strategic partnerships, new product launch & commercialization for market expansion. Furthermore, these companies are heavily investing in research that allows them to introduce innovative products and garner maximum revenue in the market.
 

Lactalis is a French multinational dairy products corporation headquartered in Laval, Mayenne, France. It is the world's largest dairy products company, with a turnover of €27.2 billion in 2023. The company produces a wide range of dairy products, including milk, cheese, butter, yogurt, and cream. Lactalis has a strong presence in Europe, but also operates in North America, South America, Asia, and Africa. The company's products are sold under a variety of brands, including Lactel, Président, Bridel, Parmalat, and Galbani.
 

Dairy Ingredients Industry News

• In 2023, Nutri Whey ProHeat, a new offering from FrieslandCampina Ingredients, has been introduced to the medical nutrition market. This heat-stable whey protein is specially formulated using microparticulation technology, a process involving thermal treatment that creates small aggregates. This unique formulation ensures the stability of whey proteins even under high-temperature treatment conditions.
   

The dairy ingredients market research report includes an in-depth coverage of the industry with estimates & forecast in terms of revenue in USD Million & Kilo Tons from 2018 to 2032, for the following segments:

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Market, By Product Type

• Milk Powders
• Whey Ingredients
• Lactose and Derivatives
• Casein and Caseinates
• Other

Market, By Form

• Dry
• Liquid

Market, By Application

• Bakery and Confectionery
• Dairy Products
• Infant Milk Formula
• Sports and Clinical Nutrition
• Other

The above information has been provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Spain
  • Italy
• Asia Pacific
  • China
  • Japan
  • India
  • Australia
  • South Korea
  • Indonesia
  • Malaysia 
• Latin America
  • Brazil
  • Mexico
  • Argentina 
• Middle East & Africa
  • South Africa
  • Saudi Arabia
  • UAE
  • Egypt