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Market Overview

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The Dairy Ingredients Market is projected to experience substantial growth over the forecast period from 2023 to 2028. With an estimated market size of USD 60,064 million in 2023, it is expected to reach a value of USD 73,288 million by 2028, growing at a compounded annual growth rate (CAGR) of 4.06%.

Dairy ingredients, including milk powder, milk protein concentrate, whey protein, and casein, are recognized for their essential nutrient content, such as proteins, amino acids, carbohydrates, minerals, and probiotics. These ingredients find wide applications in the food and beverage industries, spanning bakery products, confectionery, sports nutrition, and infant formulas.

The popularity of dairy ingredients in the food industry can be attributed to their functional and nutritional properties. For instance, milk proteins like casein and whey protein are frequently utilized as functional ingredients in food products due to their emulsifying, foaming, and gelling properties.

Dairy ingredients also boast high levels of vital nutrients such as calcium, vitamin D, and vitamin B12, which are crucial for bone health, immune function, and energy metabolism. By fortifying foods with dairy ingredients, manufacturers can provide consumers with a convenient and accessible means of obtaining these important nutrients. Furthermore, dairy ingredients contribute to the taste, texture, and appearance of food products, thereby enhancing their appeal to consumers. Butter, cream, and cheese, for example, are commonly employed in baked goods, sauces, and dips to impart richness and flavor.

Overall, the increasing demand for functional and fortified foods has fueled the use of dairy ingredients by manufacturers seeking to create nutritious and enticing products. Ingredients like milk powder have found applications in infant formulas and sports drinks. As the millennial population in the Asia-Pacific region grows, so does the demand for food and beverages. The global trend of high-protein food and drinks has gained rapid popularity, prompting manufacturers to include protein claims in their product launches to cater to health-conscious consumers.

In recent years, the number of high-protein food and drink launches has witnessed significant growth, making it one of the fastest-growing claims in the market. This trend stems from the growing awareness of protein’s health benefits, including its ability to promote satiety, build and repair muscles, and support overall well-being.

European consumers are actively seeking higher milk protein content in their meals, beverages, and snacks. The aging population in Germany, with 22.09% of the population aged 65 and above in 2021 according to the Organization for Economic Co-operation and Development (OECD), has led to increased demand for medical and nutritional products that aid in maintaining bone and muscle health among the elderly. Dairy ingredients, enriched with essential minerals like calcium and phosphorus crucial for bone health, have seen rising demand as a reliable source of these nutrients.

Furthermore, dairy ingredients serve as an excellent protein source, which is crucial for preserving muscle mass and strength. Manufacturers of sports nutrition products prefer functional dairy ingredients like whey protein due to its wide availability, strong amino acid profile, and easy digestibility. The consumption of sports nutrition has also risen among fitness enthusiasts and individuals leading active lifestyles, as it helps with energy gain, muscle development, and weight management. Consequently, the increasing demand for whey-based sports nutritional supplements drives the growth of the dairy ingredients market.

Moreover, consumers and athletes now seek natural and minimally processed nutritional solutions with proven benefits. Many dairy ingredient manufacturers have responded by launching new nutritional solutions to support sports nutrition manufacturers. For example, in December 2021, Lactalis Ingredients introduced high-protein concepts featuring two native protein sources, namely Ponativ’s Native Micellar Casein and Pronativ’s Native Whey Protein, targeting the sports nutrition and healthy aging sectors.

In the United States, consumer demand has prompted food and beverage manufacturers to incorporate functional whey protein into packaged food products. This not only helps replace high-fat ingredients but also maintains similar flavor and texture as the original formulations. Consequently, the growing consumer demand for whey protein in packed food products further propels the growth of dairy protein in the market.

Consumers are increasingly becoming aware of the benefits of dairy protein in maintaining a healthy lifestyle. Dairy proteins are renowned for their superior amino acid content and rich protein composition. Ingredients like whey protein, milk protein, and casein are also recognized for their anti-aging properties. In addition to supporting overall health, consuming dairy proteins can help reduce stress, improve immunity, and play a vital role in child growth. As a result, the global demand for dairy ingredients has witnessed substantial growth.

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Market Segmentation

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The market is segmented based on various factors, including type, application, and geography.

Segmentation by Type
Milk Powders – Skimmed Milk Powders, Whole Milk Powders
Milk Protein Concentrates and Milk Protein Isolates
Whey Ingredients – Whey Protein Concentrate (WPC), Whey Protein Isolate (WPI), Hydrolyzed Whey Protein (HWP)
Lactose and Derivatives
Casein and Caseinates
Other Types

Segmentation by Application
Bakery and Confectionery
Dairy Products
Infant Milk Formula
Sports and Clinical Nutrition
Other Applications

Segmentation by Geography
North America – United States, Canada, Mexico, and Rest of North America
Europe – United Kingdom, Germany, France, Italy, Spain, Russia, and Rest of Europe
Asia-Pacific – China, Japan, India, Australia, and Rest of Asia-Pacific
Latin America – Brazil, Argentina, and Rest of Latin America
Middle East and Africa – South Africa, United Arab Emirates, and Rest of Middle East and Africa

The increasing demand for functional food and beverage products, driven by consumer interest in health and wellness, has led to a rise in the utilization of milk protein in the market. According to the Food and Agriculture Organization Corporate Statistical Database (FAOSTAT), India is the world’s largest milk producer, with an output of over 209.6 million tons of cow’s milk in 2021. Other major milk producers include the United States, with almost 102.62 million metric tons, and Pakistan, with around 60.8 million tons. The active milk production in the Asia-Pacific region has supported the growth of derivatives such as milk protein concentrates, milk powder, and whey protein ingredients. Among these derivatives, milk protein isolates are the most commonly used ingredient by infant food manufacturers in products like baby cereals and bottled baby food due to their digestibility properties.

In response to increasing demand from various end-user industries looking to formulate organic food products, manufacturers like Lactalis launched organic whole milk powder ingredients in 2021 with applications across different industries such as confectionery and bakery. Additionally, dried milk protein concentrate is produced from skim milk using processes like ultrafiltration (UF), evaporation or nanofiltration, and spray drying. The demand for milk protein concentrates is supported by steady growth in skimmed milk powder production, with the United States showing an increasing production of skimmed milk powders during the study period. Government initiatives to support the dairy industry have also played a significant role in increased production. For example, the National Programme for Dairy Development (NPDD) in India aims to strengthen the infrastructure for the production of high-quality milk and its products.

Europe dominates the dairy ingredients market, with countries like the United Kingdom, Germany, and France utilizing high-concentrate dairy ingredients such as whey proteins and milk protein isolates. The demand for dairy ingredients in supplements is driven by the increasing interest in health and wellness among consumers, particularly in the sports industry. Key players in the industry are focusing on developing new products to cater to evolving consumer requirements. For example, Euroserum launched SICAPRO 35, a 35% serum protein concentrate suitable for the formulation of infant formulas in December 2021. Germany and France have a significant demand for dairy proteins in infant nutrition or baby formula, and the strong coffee culture in the region contributes to the high demand for dairy ingredients in creamers and whiteners for the food and beverage industry.

The trend of organic food consumption has also led to new product developments. Lactalis Ingredients, for instance, launched organic whole milk powder in France in 2021, sourced exclusively from French dairy farms adhering to organic farming specifications. Organic standards ensure products free from additives such as neutralizing agents, antibiotics, and preservatives. Moreover, the growing consumer interest in high-protein snacking has created opportunities in the dairy ingredients market. In March 2022, Mondelēz International acquired a significant majority interest in Grenade, a leading UK performance nutrition pioneer specializing in high-protein bars and confectionery. This acquisition is expected to further drive growth in the dairy ingredients market, especially in the high-protein bar segment.

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Competitive Landscape

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The dairy ingredients market is characterized by intense competition, as it encompasses a multitude of participants. Leading companies such as Arla Food amba, Fonterra Co-Operative Group Limited, Saputo Inc., Dairy Farmers of America, and Groupe Lactalis play a significant role in this competitive landscape. These industry leaders are dedicated to continuous innovation and expanding their product portfolios in order to fortify their market presence.

An illustrative example is Saputo Inc., which, in February 2022, unveiled a noteworthy series of capital investments and consolidation initiatives. These endeavors were undertaken to optimize and enhance the company’s manufacturing footprint across its US Sector and International sectors. This strategic decision aligns with Saputo’s global plan, aiming to enhance operational efficiency and streamline business processes. Overall, the dairy ingredients market exhibits remarkable dynamism, compelling companies to consistently adapt to evolving market conditions to maintain their competitive edge.

Key companies profiled in this report include Arla Foods amba, Dairy Farmers of America, Euroserum, Fonterra Co-Operative Group Limited, Royal Friesland Campina, Kanegrade Ltd, Saputo Inc., Groupe Lactalis, Hoogwegt International BV, Volac International Ltd, Kerry Group PLC, Prolactal GmbH.

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Recent Industry Developments

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In July 2022, NZMP, Fonterra’s global ingredient business, formed a joint venture with Tillamook County Creamery Association (TCAA) and Three Mile Canyon Farms in the United States. The purpose of this collaboration was to introduce Pro-OptimaTM, a grade A functional whey protein concentrate (fWPC), into the market.

In May 2022, Arla officially inaugurated a new production plant at Pronsfeld Dairy in Germany. This expansion represents Arla’s largest dairy investment and serves as a crucial driver in meeting the increasing international demand for sustainable, affordable, and nutritious dairy products. To address this demand, Arla invested EUR 190 million in expanding its dairy facility in Pronsfeld, Germany, primarily to enhance milk powder production.

Also in May 2022, Fonterra launched a new online dairy platform called myNZMP. This platform aims to simplify the purchasing process for ingredient customers, offering a range of products from milk powder to specialty dairy proteins. The introduction of myNZMP was prompted by customer feedback, which expressed a desire for increased convenience, flexibility, and information when ordering ingredients.

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Key Questions Answered

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What is the timeframe of the study for the Dairy Ingredients Market?
The study for the Dairy Ingredients Market covers the period from 2018 to 2028.

What is the growth rate of the Dairy Ingredients Market?
The Dairy Ingredients Market is experiencing a compound annual growth rate (CAGR) of 4.06% over the next five years.

What is the size of the Dairy Ingredients Market?
In 2023, the Dairy Ingredients Market is projected to reach USD 60,064 million and is expected to grow at a CAGR of 4.06% to reach USD 73,288 million by 2028.

Which region has the highest growth rate in the Dairy Ingredients Market?
The Asia-Pacific region is exhibiting the highest CAGR from 2018 to 2028 in the Dairy Ingredients Market.

Which region has the largest share in the Dairy Ingredients Market?
As of 2022, Europe holds the highest share in the Dairy Ingredients Market.

Who are the key players in the Dairy Ingredients Market?
The major companies operating in the Dairy Ingredients Market include Arla Foods amba, Dairy Farmers of America, Fonterra Co-Operative Group Limited, Saputo Inc., and Groupe Lactalis.