The growth of this market can be attributed to several factors, including the growing adoption of dairy ingredients in the food industry, increasing health & wellness trends, improvements in supply chain management, rising consumer awareness regarding nutritional foods, and increasing milk production. However, the key factors that may restrain the growth of this market include the demand for plant-based dairy alternatives and the increasing incidence of lactose intolerance. Moreover, strong growth from emerging economies and technological advances in the dairy industry is expected to create growth opportunities for the stakeholders operating in this market. However, rising consumer awareness about the benefits of a vegan diet is a major challenge impacting the growth of the dairy ingredients market.
Key Players
The dairy ingredients market is characterized by a moderately competitive scenario due to the presence of many large- and small-sized global, regional, and local players. The key players operating in the dairy ingredients market are Lactalis Group (France), Dairy Farmers of America, Inc. (U.S.), Fonterra Co-Operative Group Limited (New Zealand), Arla Foods amba (Denmark), Saputo Inc. (Canada), Royal FrieslandCampina N.V. (Netherlands), Savencia SA (France), Sodiaal International (France), Glanbia PLC (Ireland), Agropur Cooperative (Canada), Schreiber Foods Inc. (U.S.), Morinaga Milk Industry Co., Ltd. (Japan), AMCO Proteins (U.S.), KOMOS GROUP LLC (Russia), and Prolactal GmbH (Austria).
Key Drivers of Dairy Ingredients Market Growth:
Several critical factors are fueling the notable growth of the dairy ingredients market. Foremost among these is the increasing integration of dairy ingredients across a wide spectrum of food industry applications. Their nutritional richness—providing high-quality proteins, essential amino acids, vitamins, and minerals—makes them indispensable for manufacturers intent on meeting the nutritional expectations of today’s consumers. There is an unmistakable trend toward health and wellness, with recent surveys indicating that over half of Americans were intentionally adopting health-conscious diets as of 2022. The main motivations are long-term health and weight management, both of which align closely with the attributes offered by dairy-derived products.
Supply chain optimization and rising milk production play pivotal roles in supporting market growth. According to OECD-FAO statistics, global milk output is projected to climb by over 1% annually through 2031, boosting the availability of raw materials needed for dairy ingredient extraction and further facilitating cost-effective production. These efficiencies don’t just benefit processors; they enable brands to diversify offerings, lower unit costs, and remain competitive in an increasingly crowded marketplace.
Impact of Plant-Based Alternatives on Dairy Ingredient Demand:
Despite the upward trajectory, the dairy ingredients market faces headwinds from the explosive growth of plant-based alternatives. Demand for these non-dairy options continues to increase, fueled by growing lactose intolerance globally and heightened consumer awareness about the perceived health and environmental benefits of plant-based diets. The surge in veganism and plant-based eating represents a genuine challenge, compelling traditional dairy manufacturers to invest in research and development to differentiate their offerings or innovate hybrid products.
Nevertheless, for now, dairy ingredients maintain a critical edge in unique nutritional and functional characteristics. They remain essential in applications where plant-based alternatives cannot fully replicate the sensory profile, texture, or nutritional completeness of conventional dairy-derived ingredients.
Most Popular Dairy Ingredients in Food Industry Applications:
Milk powder is the undisputed leader among dairy ingredient types, set to account for 65.5% of the global market in 2024. Its popularity is anchored in its long shelf life, superior transportability, breadth of use—spanning from bakery and confectionery to ready-to-eat meals and nutritional formulas—and rich nutritional profile. Whey protein and milk proteins are rapidly gaining ground, especially in the sports nutrition and dietary supplement categories due to their easily digestible, high-protein content and functional versatility.
Other driving ingredient categories include casein and caseinates, lactose and its derivatives, buttermilk powder, and advanced “third-generation” dairy ingredients—all of which are prized for their role in enhancing food texture, stability, and nutrition. These ingredients are widely integrated into functional foods and snacks, reflecting consumer demand for both health-positive and indulgent products.
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Key Questions Answered in the Report:
- What is the value of revenue generated by the dairy ingredients market?
- At what rate is the global demand for dairy ingredients projected to grow for the next 5-7 years?
- What is the historical market size and growth rate for the dairy ingredients market?
- What are the major factors impacting the growth of this market at global and regional levels?
- What are the major opportunities for existing players and new entrants in the market?
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