Dairy Ingredients Market Size – By Form, Product Type, Application Analysis, Share, Growth Forecast, 2025- 2034

Dairy Ingredients Market Size

The global dairy ingredients market size was valued at USD 63.5 billion in 2024 and is estimated to grow at a CAGR of over 6.3% from 2025 to 2034. This market includes a variety of milk-derived products, such as milk powder, whey protein, lactose, casein, and others. A primary driver of this market is the heightened awareness of the nutritional advantages of dairy ingredients, resulting in their increased use in numerous food and beverage items.
 

The industry's growth has been notably fueled by a surge in health-conscious consumers pursuing protein-rich and functional food choices. Furthermore, the global push for premiumization and innovation in the food sector has catalyzed the creation of new dairy ingredients, intensifying competition.
 

Dairy ingredients are widely utilized in food processing due to their functional properties, including emulsification, gelling, and texture enhancement. Additionally, the rising demand for lactose-free and plant-based alternatives has compelled traditional dairy ingredient producers to evolve and broaden their product lines.
 

Dairy Ingredients Market Trends

Driven by a heightened focus on wellness and nutritional value, health-conscious consumers are increasingly demanding functional dairy ingredients. These include probiotics, whey proteins, and lactose-free options. In response to the rising popularity of clean-label products, dairy ingredient manufacturers are emphasizing transparency, prioritizing minimal processing, and sourcing ingredients naturally. Meanwhile, plant-based alternatives are not only gaining popularity but are also challenging traditional dairy products. This trend is leading to a greater incorporation of plant-derived ingredients into dairy formulations, mirroring a broader shift towards flexitarian and plant-centric diets.
 

Moreover, sustainability has taken center stage, with consumers showing a heightened preference for environmentally friendly practices. In turn, the dairy industry is launching initiatives aimed at reducing carbon footprints, enhancing waste management, and bolstering sustainability throughout the supply chain. These efforts reflect the industry's commitment to meeting consumer demands while addressing environmental concerns.
 

Dairy Ingredients Market Analysis

The dairy ingredients industry grapples with intensifying competition from plant-based alternatives. Heightened consumer awareness regarding environmental sustainability, health issues, and ethical considerations has spurred demand for plant-based products, challenging the once-dominant stance of dairy ingredients.
 

Plant-based alternatives, such as soy, almond, and oat, have surged in popularity due to their perceived health benefits, lactose-free attributes, and a smaller environmental footprint compared to conventional dairy farming. This evolving consumer preference poses a significant threat to the market, particularly impacting segments such as whey protein and milk powders. As consumers increasingly prioritize these factors, the market must adapt to maintain its relevance and competitiveness.
 

Based on product type, the dairy ingredients market is segmented into milk powders, whey ingredients, lactose and derivatives, casein and caseinates and others. In 2024, the milk powders segment led the market with revenues nearing USD 23.7 billion. Valued for their versatility and long shelf life, milk powders have consistently held a prominent market position. They are widely utilized in the food industry, especially in crafting confectioneries, baked products, and dairy-centric beverages. The demand for milk powders is driven by their ease of storage and transportation, making them a preferred choice for manufacturers.
 

Additionally, milk powders are essential in regions with limited access to fresh milk, further boosting their market share. The segment's growth is expected to continue, supported by innovations in production techniques and increasing applications in various food products.
 

Based on form, the market is segmented into dry and liquid. In 2024, the dry form accounted for 59.3% of the dairy ingredients market share. 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.
 

Additionally, the global demand for convenience foods has driven the growth of this segment. This growth is attributed to the increasing consumption of processed foods and the rising awareness of the nutritional benefits of dairy products. The supply chain for dry dairy ingredients is also well-established, ensuring consistent availability and quality, which further supports their dominance in the market. Furthermore, advancements in drying technologies have enhanced the quality and functionality of these ingredients, making them even more attractive to manufacturers.
 

Based on application, the dairy ingredients market is segmented into bakery and confectionery, dairy products, infant milk formula, sports and clinical nutrition, and others. Dairy Products, which include cheese, yogurt, and ice cream, dominate this segment. Dairy ingredients play a crucial role in these products, influencing taste, consistency, and nutritional value, thus ensuring a robust market presence. The dairy products segment accounted for approximately 34.3% of the total market share in 2024.
 

This significant share is attributed to the rising consumer demand for high-protein and nutritious food options. Additionally, innovations in dairy processing and the introduction of fortified dairy products have further bolstered the segment's growth. The increasing popularity of dairy-based functional foods and beverages also contributes to the sustained demand. As a result, the dairy products segment is expected to continue its strong performance throughout the forecast period, driven by ongoing advancements and consumer preferences.
 

The U.S. dairy ingredients market generated USD 17.4 billion in revenue in 2024, due to the rising demand for high-protein foods, clean-label products, and functional nutrition in food and beverages. Ingredients like whey protein, milk protein concentrate, and lactose are commonly used in infant formula, sports nutrition, and bakery products.
 

More health-conscious consumers are pushing manufacturers to create fortified and functional dairy ingredients. Advances in dairy processing technologies are also helping improve ingredient quality and customization.
 

The North America dairy ingredient market includes the US and Canada, focusing on functional foods, beverages, and dietary supplements. Urbanization, the demand for convenience foods, and consumer awareness about nutrition drive market growth.
 

Whey and casein proteins are popular due to their use in health and wellness products. Sustainable production and clean-label trends are shaping market strategies. Canada’s focus on premium dairy products add to regional diversity. Export dynamics and trade agreements significantly impact market performance, along with advancements in ingredient extraction and processing.
 

Dairy Ingredients Market Share

These companies are expanding their market reach through strategic partnerships and the launch and commercialization of new products. They are also investing heavily in research to introduce innovative products and increase revenue.
 

 Lactalis, based in Laval, Mayenne, France, is a French multinational dairy company. The company produces a variety of dairy products, including milk, cheese, butter, yogurt, and cream. Lactalis has a strong presence in Europe and also operates in North America, South America, Asia, and Africa. The company's products are sold under brands like Lactel, Président, Bridel, Parmalat, and Galbani.
 

Dairy Ingredients Market Companies

Major players operating in the dairy ingredients industry are:

• Amco Proteins
• Arla Foods
• Dairy Farmers of America
• EPI Ingredients
• Fonterra
• FrieslandCampina
• Glanbia
• Ingredia
• Kerry Group
• Lactalis Group
• Saputo
• Sodiaal co-operative group
• Volac International    
   

Dairy Ingredients Industry News

• In July 2024, Nestlé revealed it had developed a new process to reduce fat in dairy ingredients like milk powder by up to 60%, preserving quality, taste, and texture. The method used protein aggregates to replicate fat droplets for creaminess.
   
• In November 2023, Nutri Whey ProHeat, a new offering from FrieslandCampina Ingredients, was 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 in-depth coverage of the industry, with estimates & forecast in terms of revenue (USD Billion) & volume (Kilo Tons) from 2021 to 2034, for the following segments:

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Market, By Form

• Dry
• Liquid

Market, By Product Type

• Milk powders
• Whey ingredients
• Lactose and derivatives
• Casein and caseinates
• Other

By Application

• Bakery and confectionery
• Dairy products
• Infant milk formula
• Sports and clinical nutrition
• Other

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia 
• Latin America
  • Brazil
  • Mexico
• MEA
  • UAE
  • Saudi Arabia
  • South Africa