Dairy Ingredients Market Size, Industry Overview, Trends, Growth Opportunities, and Leading Players
The dairy ingredients market size was estimated to account for a value of USD 63.6 billion in 2021 and is projected to grow at a CAGR of 7.2% from 2021, to reach a value of USD 89.9 billion by 2026. The growth of this market can be attributed to the growing protein demand from consumers, they prefer products with dairy ingredients as a source of protein. The market growth in APAC can be attributed to the increasing awareness of health and wellness among the consumers. The continual investment in technological advancement is influencing growth, thereby increasing the sales of dairy ingredients in the near future.
Dairy Ingredients Industry Overview
The dairy ingredient industry plays a crucial role in the global food and beverage sector, providing essential components for a wide range of products. These ingredients are derived from milk and are used in various forms, including powders, liquids, and concentrates. The industry encompasses a diverse array of products, serving both the food manufacturing and foodservice sectors.
Key Components of the Dairy Ingredients Industry:
1. Milk Powder: One of the primary dairy ingredients, milk powder is produced by removing the moisture from liquid milk. It comes in various forms such as skimmed milk powder, whole milk powder, and buttermilk powder. Milk powder is a versatile ingredient used in the production of bakery goods, confectionery, infant formula, and nutritional supplements.
2. Whey Products: Whey, a byproduct of cheese production, is processed into various forms such as whey protein concentrate (WPC), whey protein isolate (WPI), and whey permeate. These products find applications in sports nutrition, functional foods, and beverages due to their high protein content and nutritional benefits.
3. Lactose: Lactose is a natural sugar found in milk and is widely used in the food industry as a sweetener and for its functional properties. It is a key ingredient in the production of dairy products, pharmaceuticals, and infant formula.
4. Butter and Ghee: These dairy fats are essential ingredients in the culinary world, adding flavor and texture to a variety of dishes. While butter is widely used in baking and cooking, ghee, clarified butter, is a common ingredient in certain cuisines.
5. Cheese Ingredients: The dairy ingredients industry includes components used in cheese production, such as rennet, cultures, and enzymes. These ingredients play a crucial role in determining the texture, flavor, and characteristics of the final cheese product.
Dairy Ingredients Market Trends
1. Rising Demand for Functional Dairy Ingredients: Consumers have shown an increased interest in dairy products with added health benefits. This has driven the demand for functional ingredients like probiotics, omega-3 fatty acids, and bioactive peptides.
2. Plant-Based Alternatives: The growing popularity of plant-based diets has led to an increased demand for dairy alternatives. As a response, some companies are developing dairy-like ingredients derived from plants, such as almond milk, soy milk, and oat milk.
3. Clean Label and Natural Ingredients: Consumers are becoming more conscious of the ingredients in their food. There is a trend towards clean label products with natural and easily recognizable ingredients. This has prompted the dairy industry to focus on natural and minimally processed ingredients.
4. Sustainable and Ethical Sourcing: Sustainability has become a key concern for consumers. There is an increasing demand for dairy products that are sourced ethically and produced sustainably. This trend has led to initiatives for responsible sourcing of milk and adoption of eco-friendly practices.
5. Innovation in Dairy Processing: Advancements in processing technologies have allowed for the creation of innovative dairy ingredients. For instance, there has been progress in developing ingredients with improved functionalities, extended shelf life, and enhanced nutritional profiles.
6. Global Expansion and Market Consolidation: Many dairy ingredient manufacturers are expanding their global presence through mergers, acquisitions, and partnerships. This helps in diversifying product portfolios and accessing new markets.
7. Health and Wellness Trends: Health and wellness continue to be significant drivers in the dairy industry. There is a focus on developing ingredients that support health trends, such as those promoting gut health, immune support, and weight management.
Dairy Ingredients Market Driver: Increasing awareness about health and wellness
Consumer preferences are gradually shifting from junk and fast food to nutritional diets. This shift to healthy diets is being witnessed due to the increasing aging population, coupled with the rising health issues. This has led to increased demand for protein-based ingredients, such as dairy ingredients, for use in nutritional foods. This health and wellness trend will act as a key driving factor, which is set to fuel the consumption of dairy ingredients.
Owing to the growing consumer awareness toward health gain, the demand for protein in the daily diet is increasing, which has exponentially propelled the market for dairy proteins. In 2019, the International Food Information Council Foundation (IFICF) conducted a consumer survey in North America about diet preferences. About 48% of consumers said that they often include dairy products in their daily meals as a source of protein. The below diagram depicts the share of each category in the daily meals of North American consumers.
The milk powder segment is estimated to see the largest growth in the dairy ingredients market, in terms of value, in 2021.
Milk powder, proteins, milk fat concentrates, lactose & its derivatives, and other types (milk and whey peptides, dairy protein fractions, other proteins, and colostrum) are some of the most common types of dairy ingredients. Among these types, the milk powder segment typically accounts for the largest share in the market. Milk powder is a direct substitute for fluid milk and is used in a variety of applications, including bakery, dairy, and infant nutrition. Skimmed milk powder forms the core of the Hotel Restaurant Catering (HoReCa) industry. Due to the COVID-19 pandemic, the dairy industry has seen a decline in sales and an accumulation of unsold milk powder as a result of lockdowns and changes in consumer behavior.
The increasing demand for dairy ingredients in Asia Pacific is driving the growth of the dairy ingredients market.
The global dairy ingredients market is dominated by Asia Pacific, which accounted for the largest share. Nowadays, a sedentary lifestyle and a hectic daily routine run parallel to the consumer focus on health, resulting in an extreme workout and heightened dependence on protein supplements. Dairy protein ingredients are being consumed for weight loss and muscle gain and provide maximum nutrition and nourishment. Veganism has captured a large section of the market in Europe and the US; however, dairy being a staple in India, retains its position as the major protein supplement. Globally, whey is being incorporated in the regular diet as natural bioactive substances have a positive influence on an individual’s health.
Dairy Ingredients Market Share
The key players in this market include FrieslandCampina (Netherlands), Groupe Lactalis (France), Arla Foods (Denmark), Saputo (Canada), Fonterra Co-operative Group (New Zealand), Dairy Farmers of America (US), Kerry Group (Ireland), Ornua (Ireland), AMCO Proteins (US), Prolactal (Austria), Valio (Finland), Glanbia (Ireland), Hoogwegt Group (Netherlands), Batory Foods (US), Ingredia SA (France), Agropur (Quebec), and Euroserum (France). Major players in this market are focusing on increasing their presence through new product launches, expansions & investments, mergers & acquisitions, partnerships, collaborations, and agreements. These companies have a strong presence in North America and Europe. They also have manufacturing facilities along with strong distribution networks across these regions.
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