Global Dairy Sector Market - 2024 - 2031

Report Overview

Global Dairy Sector Market reached US$ 926.2 billion in 2023 and is expected to reach US$ 1,336.4 billion by 2031, growing with a CAGR of 4.7% during the forecast period 2024-2031.

The global dairy sector is transforming significantly, driven by five key trends shaping market dynamics and growth opportunities. Cultured dairy products, such as yogurt, kefir and fermented milk drinks, are gaining traction due to their probiotic content and associated health benefits, particularly in enhancing gut health and boosting immunity. It has been amplified by a post-pandemic focus on wellness, underscoring the growing consumer preference for functional foods.

Also, the surge in plant-based dairy alternatives, including almond milk, soy yogurt and innovative options like oat and flaxseed milk, reflects a shift towards environmentally friendly and inclusive dietary choices. The segment is expanding rapidly as consumers seek sustainable and lactose-free options, driving substantial market growth. Moreover, the demand for weight-friendly dairy products is increasing as health-conscious consumers gravitate towards options with reduced fat and sugar content.

The market for healthier cheese selections is growing, with products incorporating probiotics, vitamin D and omega-3s to meet consumer demand for nutritious yet indulgent options. Lastly, high-protein dairy beverages, such as protein shakes and fortified milk, are experiencing robust growth. The products cater to fitness enthusiasts and busy consumers who seek convenient, on-the-go nutritional solutions, further driving the sector's expansion.

The rising global demand for high-protein foods has positioned dairy as a key player in consumer diets. As per Glanbia Nutritionals, a significant percentage of consumers across major markets including China (36%), India (34%), Japan (28%), US (27%), Canada (25%), Australia (22%) and the UK (17%)-prioritize high-protein products when shopping. The trend is particularly prominent among consumers aged 32-45.

Dairy protein is valued for its comprehensive nutritional benefits, including all nine essential amino acids, support for muscle growth and recovery and contributions to satiety and bone health. The increasing consumer interest in protein has led to innovative product offerings, such as protein-fortified snacks that shift the perception of traditional snacks towards a healthier image. New dairy protein products like Kudo Salty Sweet Kettle Korn Protein Popcorn and In Good Hands White Cheddar Protein Puffs exemplify this trend.

Market Dynamics

Rising innovation in dairy products

Innovation in lactose-free dairy is advancing, with new products emerging in subcategories like coffee creamers, children's ready-to-drink beverages, and yogurt. Lactose-free claims are notable, appearing in 15% of yogurt launches in Europe and 7% in North America. Over a third of dairy alternative consumers choose these products due to lactose intolerance, with lactose-free dairy meeting this demand while maintaining milk's protein, mineral, and bioactive benefits.

The production of lactose-free milk typically involves the addition of lactase or membrane filtration to remove lactose, catering to consumer preferences for sweeter and more digestible products. Examples include Abbott PediaSure Grow & Gain Chocolate Shake and Darigold Belle Sweet Cream Flavored Coffee Creamer.

Glanbia Nutritionals is a leader in innovative dairy solutions, offering clean-label functional dairy proteins such as OptiSol1005 and 1007, which improve product processing, flavor, and creaminess. Their UltraHi Protein Yogurt Technology allows brands to deliver up to 50 grams of protein per serving. Glanbia's diverse portfolio meets the increasing consumer demand for functional health benefits in dairy products.

Growing consumer awareness of the health benefits of dairy products

The rising consumer awareness regarding the health benefits of dairy products is a significant catalyst for the growth of the dairy sector. As consumers become increasingly health-conscious, their preferences shift towards dairy products offering superior nutritional value. Dairy items such as milk, yogurt and cheese, known for their high content of calcium, protein, vitamins and probiotics, are witnessing increased demand due to their recognized health benefits.

The growing focus on health is driving both an increase in overall dairy consumption and a preference for premium dairy products, including organic and fortified options. The impact on the dairy market is profound, with the demand for health-oriented dairy products contributing to substantial market growth. Products like lactose-free milk, A2 milk and dairy items enriched with additional nutrients are gaining traction, reflecting a broader trend toward health-driven consumption.

Companies are developing new products that cater to specific health needs, such as high-protein yogurts and low-fat cheeses, while also focusing on educating consumers about the nutritional benefits of their offerings. Additionally, partnerships with health organizations and a commitment to sustainable and ethical production practices are becoming integral to brand strategies, helping to build consumer trust and differentiate products in a competitive market.

Fluctuating Raw Material Costs

In recent years, the dairy sector has been significantly impacted by volatile raw material costs, which have disrupted market stability and influenced production dynamics. Feed costs, constituting 40-60% of total milk production expenses, saw an extraordinary surge of 86% from mid-2020 to mid-2022, driven by increased demand and supply chain disruptions linked to geopolitical events such as Russia's invasion of Ukraine.

Despite a subsequent reduction of 34% from peak levels, feed costs remain elevated compared to pre-pandemic figures, continuing to strain dairy farm profitability. Similarly, fertilizer costs, crucial for pasture-based systems in countries like New Zealand, rose by 174% during the same period due to fears of supply interruptions from key exporters. Although fertilizer prices have since decreased by 41%, they remain significantly higher than historical norms, impacting overall production costs.

The rising costs of replacement cows and energy also contribute to the sector's financial pressures. In US, the cost of replacement cows has been climbing since early 2019, with potential record highs expected in 2024. This trend necessitates strategic adjustments such as reduced heifer rearing and increased calf sales to beef operations.

In the EU, energy prices surged in 2022 due to reduced natural gas supplies from Russia. Although energy costs have somewhat eased, they remain well above pre-war levels, further burdening dairy processors and farmers. Additionally, interest rates have nearly tripled since the pandemic, particularly affecting New Zealand, where they represent 13-20% of production costs. This increased financial burden exacerbates operational challenges for dairy farmers.

Market Segment Analysis

The global dairy sector market is segmented based on product, end-user, distribution channel and region.

The Surging Demand for Milk and Milk-Based Products

The global dairy sector is experiencing robust growth, driven by an unprecedented surge in demand for milk and milk-based products. The increased demand is primarily attributed to the increasing global population, urbanization and rising disposable incomes. As urban areas expand and economic conditions improve, there is a noticeable shift towards higher consumption of dairy products, including milk, cheese and yogurt.

Additionally, growing awareness of the nutritional benefits of dairy, such as high-quality protein and essential vitamins, is further propelling consumer preference for these products. In response to this rising demand, the dairy sector has significantly expanded its production capabilities. Over the past three decades, global milk production has surged by over 77%, from 524 million tonnes in 1992 to 930 million tonnes in 2022.

Key regions, particularly South Asia, are at the forefront of this growth. India, the world's largest milk producer, accounts for approximately 22% of global production. South Asia's expansion has been marked by increased dairy herd sizes and the adoption of advanced farming technologies. Investments in feed quality, animal health and breeding practices are enhancing productivity and efficiency within the sector.

Market Geographical Share

Rising Demand for Dairy Sector in Asia Pacific

The dairy industry in Asia-Pacific has witnessed significant recent developments, paving the way for an exciting market potential. With a growing population, increasing disposable income and changing consumer preferences, the demand for dairy products in the region has soared. The surge in demand has led to advancements in production techniques, distribution strategies and product innovation.

The dairy industry in Southeast Asia is set for substantial growth, with major players expanding their offerings and distribution channels to meet shifting consumer preferences. Mother Dairy plans a significant summer expansion, introducing 30 new products, mainly in ice cream and yogurt, driven by an expected 25-30% increase in consumer demand due to high temperature forecasts. To support this demand surge, the company has allocated INR 50 crore towards upgrading its production capabilities.

Mother Dairy is investing INR 750 crore in growth initiatives, which include constructing a new dairy plant in Nagpur with a daily processing capacity of 600,000 liters and a fruit processing facility in Karnataka under the Safal brand. An additional INR 100 crore will be allocated to scaling up existing facilities. The expansion reflects the sector's positive growth trajectory and intensified competition, driven by substantial investments in new product development and capacity enhancement, aligning with evolving consumer preferences in the region.

Russia-Ukraine War Impact Analysis

The Russia-Ukraine conflict has markedly disrupted Ukraine's dairy industry, leading to a substantial contraction in the cattle sector. The decline reflects the broader impact of the war on agricultural productivity, especially in the dairy segment. Despite these challenges, there has been a measured improvement in dairy production efficiency. The industry has managed to stabilize cow inventory to some extent, thanks to enhancements in operational practices and resilience measures.

However, the sector's dependency on imported dairy products has intensified. Poland has emerged as the primary supplier, commanding a dominant share of the Ukrainian dairy import market, with Polish products accounting for significant portions of milk, yogurt, cheese and whey powder imports.

On the export front, Ukraine's dairy sector has demonstrated some recovery, with exports of dairy products showing a notable uptick. According to bne IntelliNews, in October 2023, Ukraine exported 8,790 tons of dairy products worth US$ 18.15 million, marking a 20% increase from the previous month. The growth in exports is a positive sign amidst the ongoing challenges, highlighting the sector's potential for recovery and adaptation.

By Product

Milk

Full Cream Milk

Skimmed Milk

Flavored Milk

Powdered and Condensed Milk

Cheese

Soft Cheese

Hard Cheese

Processed Cheese

Butter

Salted Butter

Unsalted Butter

Yogurt

Flavored Yogurt

Greek Yogurt

Drinkable Yogurt

Plant-Based Yogurt

Cream

Whipping Cream

Fresh Cream

Sour Cream

Dairy Desserts

Others

By End-User

Household

Food Service Industry

Industrial

By Distribution Channel

Supermarkets and Hypermarkets

Specialty Stores

Direct Sales

Convenience Stores

E-Commerce

Others

By Region

North America

US

Canada

Mexico

Europe

Germany

UK

France

Italy

Spain

Rest of Europe

South America

Brazil

Argentina

Rest of South America

Asia-Pacific

China

India

Japan

Australia

Rest of Asia-Pacific

Middle East and Africa

Key Developments

In May 2024, Creamline Dairy Products (CDPL), a subsidiary of Godrej Agrovet (GAVL), unveiled Godrej My Farm Milk in Hyderabad. The premium milk is sourced directly from Godrej's farm and is processed with advanced technology to maintain its natural flavor and nutritional integrity. The product benefits from a fully automated, zero-human-touch supply chain, encompassing every step from milking to delivery.

In March 2024, For the first time, Amul is expanding its product offerings beyond India with the introduction of fresh milk in US market. The Gujarat Cooperative Milk Marketing Federation (GCMMF) will launch four variants of Amul fresh milk within the next week, targeting the Indian diaspora and broader Asian communities in US.

Market Competitive Landscape

The major global players in the market include Danone, Arla Foods amba, Nestle, Fonterra Co-operative Group Limited, LACTALIS, Dairy Farmers of America, Inc., Meiji Holdings Co., Ltd., FrieslandCampina, Schreiber Foods and Gujarat Cooperative Milk Marketing Federation Limited.

Why Purchase the Report?

To visualize the global dairy sector market segmentation based on product, end-user, distribution channel and region as well as understand key commercial assets and players.

Identify commercial opportunities by analyzing trends and co-development.

Excel data sheet with numerous data points of the dairy sector market-level with all segments.

PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.

Product mapping available as Excel consisting of key products of all the major players.

The global dairy sector market report would provide approximately 62 tables, 60 figures and 219 pages.

Target Audience 2024

Manufacturers/ Buyers

Industry Investors/Investment Bankers

Research Professionals

Emerging Companies