Dairy Ingredients Market Trends

ID: MRFR/F-B & N/1276-CR

200 Pages

Snehal Singh

July 2025

Dairy Ingredients Market Research Report By Type (Milk Powder, Whey Protein, Cheese Powder, Casein, Cream), By Application (Food and Beverages, Nutritional Products, Confectionery, Bakery, Dairy Products), By Form (Liquid, Powder, Granular, Frozen), By End-use (Industrial, Retail, Food Service), and By Regional (North America, Europe, South America, Asia Pacific, Middle East and Africa) - Forec...

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Market Trends

Key Emerging Trends in the Dairy Ingredients Market

Shopper preferences, industry factors, and technical advances have shaped the dairy ingredients market in recent years. This trend reflects a growing desire for plant-based, low calorie cuisine and better, cheaper options. Another dairy ingredients industry trend is the rise of practical dairy products with medicinal benefits.

Due to changing consumer tastes and diets, the dairy ingredients business is growing and improving. Manufacturers are developing novel dairy ingredients, details, and product organizations to meet changing consumer tastes. From non-dairy cheeses and yogurts to lactose free milk and protein enhanced dairy products, consumer options are growing, fueling industry growth.

The dairy ingredients industry is also seeing demand for premium and specialized dairy products. This pattern reflects a larger premiumization trend and the desire for excellent, privately sourced, and ethically made dairy products.

Global food and beverage sector growth is opening new avenues for dairy ingredient makers. As comfort food, ready-to-drink drinks, and handy nibbles grow in popularity, dairy products are becoming significant components of many handled and packed food sources. Urbanization, changing lifestyles, and busy schedules of clients seeking healthy meals drive this tendency.

Mechanical advances in dairy ingredient production are also shaping the industry. To increase efficiency, quality, and customer requirements, manufacturers are investing in innovation. These mechanical advances are boosting the dairy ingredients sector with innovative handling and packaging ways.

Market Highlights

Author

Snehal Singh

Assistant Manager - Research

High acumen in analyzing complex macro & micro markets with more than 6 years of work experience in the field of market research. By implementing her analytical skills in forecasting and estimation into market research reports, she has expertise in Packaging, Construction, and Equipment domains. She handles a team size of 20-25 resources and ensures smooth running of the projects, associated marketing activities, and client servicing.

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FAQs

What was the market size of the Dairy Ingredients Market in 2024?

The market size of the Dairy Ingredients Market in 2024 was valued at 57.4 billion USD.

What is the projected value of the Dairy Ingredients Market by 2035?

By 2035, the Dairy Ingredients Market is projected to reach a value of 85.0 billion USD.

What is the expected CAGR for the Dairy Ingredients Market from 2025 to 2035?

The expected CAGR for the Dairy Ingredients Market from 2025 to 2035 is 3.63%.

Which region held the highest market share for the Dairy Ingredients Market in 2024?

North America held the highest market share, valued at 22.5 billion USD in 2024.

What will be the market size of Whey Protein in 2035?

The market size of Whey Protein is projected to reach 22.0 billion USD by 2035.

Who are some of the key players in the Dairy Ingredients Market?

Key players in the Dairy Ingredients Market include Nestle, Danone, Fonterra, and Arla Foods.

What was the valuation of Cheese Powder in the Dairy Ingredients Market for 2024?

The valuation of Cheese Powder in the Dairy Ingredients Market for 2024 was 8.0 billion USD.

What is the expected market size for Asia Pacific in 2035?

The expected market size for Asia Pacific in 2035 is projected at 12.0 billion USD.

How much was the market size of Casein expected to be in 2024?

The market size of Casein was valued at 5.0 billion USD in 2024.

What challenges are impacting the growth of the Dairy Ingredients Market?

The Dairy Ingredients Market faces challenges such as fluctuating raw material prices and changing consumer preferences.

1. Market Overview

2. Market Trends

3. Market Segment Insights

4. Key Players and Competitive Insights

5. Industry Developments

6. Market Segmentation

7. Report Scope

8. Market Highlights

9. FAQs

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Market Summary

As per MRFR analysis, the Dairy Ingredients Market was estimated at 57.4 USD Billion in 2024. The Dairy Ingredients industry is projected to grow from 59.48 USD Billion in 2025 to 84.97 USD Billion by 2035, exhibiting a compound annual growth rate (CAGR) of 3.63 during the forecast period 2025 - 2035.

Key Market Trends & Highlights

The Dairy Ingredients Market is experiencing a dynamic shift towards health-conscious and sustainable products.

The market is increasingly driven by a health and wellness focus, with consumers seeking nutritious dairy options.
Sustainability initiatives are gaining traction, influencing production practices across the industry.
Innovation in product development is evident, particularly in the expansion of plant-based alternatives and functional foods.
Rising demand for nutritional products and clean label preferences are key drivers propelling growth in North America and Asia-Pacific, particularly in the milk powder and nutritional products segments.

Dairy Ingredients Market

CAGR

3.63%

Market Size & Forecast

2024 Market Size	57.4 (USD Billion)
2035 Market Size	84.97 (USD Billion)
CAGR (2025 - 2035)	3.63%
Largest Regional Market Share in 2024	North America

Major Players

Nestle (CH), Danone (FR), Lactalis (FR), Fonterra (NZ), FrieslandCampina (NL), Saputo (CA), Arla Foods (DK), Dairy Farmers of America (US), Agropur (CA)

Market Trends

The Dairy Ingredients Market is currently experiencing a dynamic evolution, driven by shifting consumer preferences and increasing demand for health-oriented products. As consumers become more health-conscious, there is a noticeable inclination towards dairy ingredients that offer nutritional benefits, such as probiotics and high protein content. This trend is further fueled by the growing popularity of functional foods, which incorporate dairy ingredients to enhance their health attributes. Additionally, the rise of plant-based alternatives has prompted traditional dairy producers to innovate and diversify their offerings, ensuring they remain competitive in a rapidly changing landscape. Moreover, sustainability has emerged as a pivotal factor influencing the Dairy Ingredients Market. Consumers are increasingly aware of the environmental impact of their food choices, leading to a demand for sustainably sourced dairy products. This shift is prompting manufacturers to adopt eco-friendly practices and invest in sustainable sourcing methods. As a result, the market is likely to witness a surge in products that not only meet nutritional needs but also align with consumers' values regarding environmental stewardship. Overall, the Dairy Ingredients Market appears poised for continued growth, characterized by innovation and a focus on health and sustainability.

Health and Wellness Focus

There is a growing emphasis on health and wellness among consumers, leading to increased demand for dairy ingredients that provide nutritional benefits. Products enriched with probiotics, vitamins, and minerals are gaining traction as consumers seek to enhance their diets with functional foods.

Sustainability Initiatives

Sustainability is becoming a crucial consideration in the Dairy Ingredients Market. Manufacturers are increasingly adopting eco-friendly practices and sourcing methods to meet consumer demand for products that are not only nutritious but also environmentally responsible.

Innovation in Product Development

The Dairy Ingredients Market is witnessing a wave of innovation as companies strive to diversify their product offerings. This includes the development of new dairy-based ingredients that cater to evolving consumer preferences, such as lactose-free options and fortified products.

Dairy Ingredients Market Market Drivers

Expansion of Plant-Based Alternatives

The Dairy Ingredients Market is witnessing a significant shift towards plant-based alternatives, which, while seemingly contradictory, is influencing the dairy sector. As consumers explore non-dairy options, traditional dairy ingredients are adapting to incorporate plant-based components, creating hybrid products that appeal to a broader audience. This trend is underscored by the fact that the plant-based dairy market is expected to grow at a compound annual growth rate of over 11% through 2027. Consequently, dairy ingredient manufacturers are innovating to develop products that cater to both dairy and non-dairy consumers, thereby expanding their market reach and enhancing competitiveness in a rapidly evolving landscape.

Growing Popularity of Functional Foods

The Dairy Ingredients Market is benefiting from the growing popularity of functional foods, which are designed to provide health benefits beyond basic nutrition. Dairy ingredients such as probiotics and fortified dairy products are increasingly recognized for their potential health benefits, including improved gut health and enhanced immune function. Market data suggests that the functional food sector is projected to reach over 275 billion USD by 2025, indicating a substantial opportunity for dairy ingredient manufacturers. As consumers become more health-conscious, the demand for functional dairy products is likely to rise, prompting manufacturers to innovate and expand their offerings in this segment.

Rising Demand for Nutritional Products

The Dairy Ingredients Market is experiencing a notable increase in demand for nutritional products, driven by a growing awareness of health and wellness among consumers. This trend is reflected in the rising consumption of dairy ingredients such as whey protein and casein, which are integral to sports nutrition and dietary supplements. According to recent data, The Dairy Ingredients is projected to reach approximately 10 billion USD by 2026, indicating a robust growth trajectory. As consumers increasingly seek high-protein diets, dairy ingredients are positioned to meet these needs, thereby enhancing their market presence. This shift towards nutritional products is likely to continue, as more individuals prioritize health-conscious choices in their diets.

Increased Focus on Clean Label Products

The Dairy Ingredients Market is experiencing a heightened focus on clean label products, as consumers demand transparency and simplicity in food ingredients. This trend is prompting manufacturers to reformulate their products, reducing the number of additives and artificial ingredients. As a result, dairy ingredients that are perceived as natural and minimally processed are gaining traction. Market Research Future indicates that the clean label trend is influencing purchasing decisions, with a significant percentage of consumers willing to pay a premium for products that meet these criteria. This shift towards clean label dairy ingredients is likely to continue, as consumer preferences evolve towards healthier and more transparent food options.

Technological Advancements in Processing

Technological advancements in processing techniques are playing a pivotal role in the Dairy Ingredients Market. Innovations such as microfiltration and ultrafiltration are enhancing the quality and functionality of dairy ingredients, allowing for the production of higher-value products. These technologies not only improve the nutritional profile of dairy ingredients but also extend their shelf life, making them more appealing to manufacturers and consumers alike. The implementation of these advanced processing methods is expected to drive market growth, as they enable the creation of specialized dairy ingredients that meet diverse consumer needs. As a result, the industry is likely to see an increase in the availability of premium dairy products, further stimulating demand.

Market Segment Insights

By Type: Milk Powder (Largest) vs. Whey Protein (Fastest-Growing)

The Dairy Ingredients Market is primarily segmented into five main types: Milk Powder, Whey Protein, Cheese Powder, Casein, and Cream. Milk Powder holds the largest share in this segment, dominating the market due to its extensive usage in various food products and nutritional formulations. Meanwhile, Whey Protein is gaining rapid traction, driven by its growing popularity in health foods and sports nutrition products, making it a significant player in the market dynamics.

Milk Powder (Dominant) vs. Whey Protein (Emerging)

Milk Powder is recognized as the dominant segment in the Dairy Ingredients Market, primarily due to its versatility and extensive applications across different industries, including food and beverage, pharmaceuticals, and infant nutrition. It is favored for its long shelf life, nutritional benefits, and cost-effectiveness. In contrast, Whey Protein is classified as an emerging segment owing to the rising health consciousness among consumers and the growing trend of protein supplementation, especially among athletes and fitness enthusiasts. Its nutritional profile, coupled with applications in functional foods and supplements, positions it as a critical component of the market, with potential for significant growth in the coming years.

By Application: Food and Beverages (Largest) vs. Nutritional Products (Fastest-Growing)

The Dairy Ingredients Market exhibits a diverse application landscape, with the Food and Beverages segment commanding the largest share. This sector encompasses a wide array of products, including cheese, yogurt, and milk, making it a pivotal player in the market dynamics. On the other hand, the Nutritional Products segment is gaining momentum, driven by increasing health consciousness among consumers, which is shifting preferences towards fortified and functional foods. As the Dairy Ingredients Market evolves, growth trends reveal that the Nutritional Products segment is rising rapidly, supported by innovations in product formulations and the expansion of health-focused offerings. Consumers are seeking nutritious alternatives, propelling the demand for dairy-based nutritional supplements and functional dairy products. Additionally, awareness of the health benefits associated with dairy ingredients is contributing to this segment's growth.

Food and Beverages (Dominant) vs. Nutritional Products (Emerging)

The Food and Beverages segment remains a dominant force within the Dairy Ingredients Market, characterized by traditional dairy products such as milk, cheese, and yogurt, which are staples in many households. This segment benefits from established consumer habits and culinary traditions that incorporate dairy, thus ensuring its continual demand. Conversely, the Nutritional Products segment is emerging rapidly, focusing on products that cater to health-driven consumers. This includes protein powders, fortified yogurts, and functional dairy items that offer specific health benefits such as improved gut health or enhanced nutrition. As society becomes more health-conscious, the Nutritional Products segment is expected to witness accelerated growth, attracting investments and innovations aimed at meeting evolving consumer needs.

By Form: Liquid (Largest) vs. Powder (Fastest-Growing)

In the Dairy Ingredients Market, the distribution among the 'Form' segments shows that liquid dairy ingredients command the largest market share, largely due to their extensive application in various food and beverage products. Powdered dairy ingredients, while slightly lower in share, have been experiencing significant growth, driven by the increasing preference for convenience products and longer shelf life. The demand for powdered forms is prominent in the production of infant formulas, bakery products, and dietary supplements.

Liquid (Dominant) vs. Powder (Emerging)

Liquid dairy ingredients are recognized for their versatility and immediate use in a wide array of applications, making them a dominant choice among manufacturers. They are frequently utilized in fluid dairy products, cheese production, and beverage formulations, offering freshness and taste. In contrast, powdered dairy ingredients represent an emerging trend as they cater to the growing desire for convenience and portability. They are favored for their stability and ease of transportation, with applications in snacks, ready-to-eat meals, and health products, thus positioning themselves as a valuable alternative in the market.

By End-use: Industrial (Largest) vs. Retail (Fastest-Growing)

The Dairy Ingredients Market is segmented into Industrial, Retail, and Food Service, with the Industrial segment holding the largest market share. This segment caters primarily to manufacturers producing dairy products on a large scale, which drives substantial demand. In contrast, the Retail segment is carving out a significant portion of the market as consumer preferences shift towards convenient, ready-to-use dairy products, showcasing the growing importance of packaging that appeals to end-users directly. Growth within these segments is influenced by changing consumer lifestyles and an increasing trend towards health-conscious eating. The Industrial segment benefits from advancements in processing technology, allowing manufacturers to meet rising demand efficiently. Meanwhile, the Retail segment is experiencing rapid growth, fueled by the rising popularity of dairy-based snacks and ready-to-eat meals that cater to busy consumers seeking convenience without sacrificing health.

Retail (Dominant) vs. Food Service (Emerging)

The Retail segment of the Dairy Ingredients Market is currently dominant, driven by a robust increase in consumer demand for high-quality dairy products available in supermarkets and convenience stores. This segment includes products that cater directly to consumers, such as cheese, yogurt, and milk alternatives. Accessibility and branding play significant roles in this domain; retailers are investing in innovative packaging and marketing strategies to attract health-conscious shoppers. On the other hand, the Food Service segment is emerging as a pivotal area of growth as restaurants and catering services expand their offerings. This segment, while smaller in comparison, is capitalizing on trends such as gourmet dining experiences and the rising use of dairy ingredients in meal preparation, which appeals to a diverse range of clientele.

Get more detailed insights about Dairy Ingredients Market Research Report - Forecast till 2035

Regional Insights

North America led significantly with a valuation of 22.5 USD Billion, driven by high dairy consumption and demand for processed dairy products, indicating its majority holding in the industry. Europe followed closely, valued at 18.0 USD Billion, benefitting from a strong tradition of cheese production and a growing trend towards healthy dairy alternatives.

Meanwhile, Asia Pacific, worth 8.0 USD Billion, showed considerable potential due to rising urbanization and increasing consumer awareness regarding health and nutrition. South America and the Middle East and Africa were valued at 4.5 USD Billion and 4.4 USD Billion respectively in 2024, with these regions working to improve dairy production and distribution efficiency.

The anticipated growth in these regions is expected to enhance the overall Dairy Ingredients Market revenue, catering to the evolving dietary preferences and wellness trends among consumers globally. Market growth is catalyzed by innovations in dairy processing techniques and the expansion of product offerings to meet diverse consumer needs.

Dairy Ingredients Market Regional Insights

Source: Primary Research, Secondary Research, Market Research Future Database and Analyst Review

Key Players and Competitive Insights

The Dairy Ingredients Market has witnessed substantial growth attributed to the rising consumer demand for dairy products and the varying applications of dairy ingredients across multiple sectors including food and beverage, pharmaceuticals, and nutrition.This market is characterized by a competitive landscape where several players are engaged in strategies such as product innovation, expansion into emerging markets, and mergers and acquisitions to enhance their market presence.

Competitive insights in this sector reveal that significant trends include the increasing preference for high-protein dairy ingredients, the shift towards organic and natural products, and the growing focus on sustainability among producers. These insights highlight how companies are positioning themselves to meet both consumer preferences and regulatory demands while vying for market share.

Horizon Organic has established itself as a key player in the Dairy Ingredients Market, notably in the organic dairy segment. The company’s strengths lie in its commitment to delivering high-quality organic products that cater to health-conscious consumers.They have a diversified product portfolio that includes organic milk, cheese, butter, and yogurt, allowing them to target various consumer needs effectively. Horizon Organic's strong brand reputation and extensive distribution networks enhance its market presence, while its focus on sustainable farming practices resonates well with the growing trend of conscious consumerism.

The company’s dedication to innovation in product offerings has been instrumental in maintaining a competitive edge in a rapidly evolving industry landscape.On the other hand, Arla Foods is another formidable entity within the Dairy Ingredients Market, known for its wide array of dairy products including milk, cheese, butter, and various dairy-based ingredients that are crucial for food manufacturers.The company boasts an extensive global presence due to its cooperative model, which allows for strong farmer relationships and better control over the supply chain. Arla Foods emphasizes sustainability and has made significant investments in eco-friendly practices.

Additionally, the company has been involved in strategic mergers and acquisitions to amplify its market share and broaden its product lines, further solidifying its position. The innovative aspects of Arla’s offerings, combined with a strong focus on quality and customer satisfaction, reinforce its status as a leader in the competitive dairy ingredients sector, facilitating its growth on a global scale.

Key Companies in the Dairy Ingredients Market market include

Industry Developments

Stretchy, cow-free cheese and yogurt products are now possible thanks to DairyX's June 2025 announcement of the successful production of precision-fermented casein proteins using modified yeast. According to the business, this approach may cut greenhouse gas emissions by up to 90% when compared to traditional dairy, and it anticipates regulatory clearance by 2027.

Business Insider reported a rebound in the dairy industry in June 2025, pointing out that the organic dairy market expanded by almost 10% in 2024 and that consumers' desire for high-protein, gut-healthy products like probiotic ice cream, kefir, and functional butters had surged, with companies like Fairlife reporting notable sales growth.

Major players in the dairy blends market, including Fonterra, Arla, Danone, Nestlé, Kerry, and Lactalis, are introducing clean-label, functional dairy blends, according to a report published in April 2025 by Research & Markets.Examples of these include Kerry's oat-dairy blend line in March 2024 and Danone's 60/40 dairy-plant infant formula, which was introduced in June 2022. ADM and Valio, two major ingredient suppliers, also took action.

In December 2023, ADM bought Revela Foods to expand its dairy flavor line, while in November 2023, Valio introduced their MPC-65 milk protein concentrate to satisfy the growing demand for high-protein dairy products. These advancements include innovative product creation, sustainable mixes, advanced fermentation, and calculated growth in the Dairy Ingredients Market.

Future Outlook

Dairy Ingredients Market Future Outlook

The Dairy Ingredients Market is projected to grow at a 3.63% CAGR from 2024 to 2035, driven by rising health consciousness, innovative product development, and increasing demand for dairy alternatives.

New opportunities lie in:

Expansion into plant-based dairy alternatives
Development of high-protein dairy snacks
Investment in sustainable dairy processing technologies

By 2035, the Dairy Ingredients Market is expected to achieve robust growth, reflecting evolving consumer preferences and innovation.

Market Segmentation

Dairy Ingredients Market Form Outlook

Liquid
Powder
Granular
Frozen

Dairy Ingredients Market Type Outlook

Milk Powder
Whey Protein
Cheese Powder
Casein
Cream

Dairy Ingredients Market End-use Outlook

Industrial
Retail
Food Service

Dairy Ingredients Market Application Outlook

Food and Beverages
Nutritional Products
Confectionery
Bakery
Dairy Products

Report Scope

MARKET SIZE 2024	57.4(USD Billion)
MARKET SIZE 2025	59.48(USD Billion)
MARKET SIZE 2035	84.97(USD Billion)
COMPOUND ANNUAL GROWTH RATE (CAGR)	3.63% (2024 - 2035)
REPORT COVERAGE	Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
BASE YEAR	2024
Market Forecast Period	2025 - 2035
Historical Data	2019 - 2024
Market Forecast Units	USD Billion
Key Companies Profiled	Market analysis in progress
Segments Covered	Market segmentation analysis in progress
Key Market Opportunities	Growing demand for plant-based dairy alternatives drives innovation in the Dairy Ingredients Market.
Key Market Dynamics	Rising demand for clean-label dairy ingredients drives innovation and competition among manufacturers in the market.
Countries Covered	North America, Europe, APAC, South America, MEA