Global Dairy Ingredients Market Grows Steadily at a CAGR of 5.05%

Introduction

A major factor propelling the growth of the global dairy ingredients market is the increasing demand for protein-enriched and functional food products. With a heightened focus on health, fitness, and nutrition, consumers are gravitating towards milk-derived proteins such as whey and casein, particularly in sports nutrition, weight control, and meal replacement categories. Urbanization and evolving eating habits, particularly in emerging economies, are also fueling the demand for processed and ready-to-eat foods that incorporate dairy powders, creamers, and emulsifiers.

Furthermore, the clean-label movement has intensified interest in organic and natural ingredients, prompting manufacturers to develop non-GMO and additive-free options. Dairy ingredients are also becoming more prominent in infant formulas and elderly nutrition due to their high bioavailability and rich nutrient profile. Together, these trends are driving the widespread adoption and integration of dairy-based ingredients across a broad spectrum of the global food and beverage sector.

Market Dynamics

Globalization of dairy trade drives the global market

The globalization of the dairy trade has greatly fostered the growth of the global market by enabling the smooth flow of supply and demand across international borders. Major dairy-producing regions such as New Zealand, the United States, and the European Union are actively exporting products like milk powders, whey proteins, and casein to high-demand regions including Asia-Pacific, the Middle East, and Africa.

• For example, the Dairy Companies Association of New Zealand (DCANZ) states that more than 95% of the country’s milk production is exported, with China being its primary destination. Similarly, the U.S. Dairy Export Council reported record-breaking dairy exports in 2023, surpassing 2 million metric tons.

These trends support a steady supply chain, offer competitive pricing, and boost dairy market penetration in emerging regions, thereby driving the global industry's expansion.

Government initiatives and subsidies create tremendous opportunities

Government subsidies and supportive policy frameworks play a pivotal role in augmenting the growth, innovation, and global reach of the dairy ingredients sector. Nations across North America, Europe, and the Asia-Pacific region are actively strengthening their domestic dairy industries to bolster food security and international competitiveness.

• For example, the USDA’s Dairy Business Innovation Initiatives (DBI) has earmarked $11.04 million in FY2025 to help regional dairy businesses upgrade processing equipment, explore innovative product lines like lactose-free powders, and invest in R&D for value-added dairy ingredients.

Likewise, India’s Animal Husbandry Infrastructure Development Fund (AHIDF) focuses on improving milk productivity, enhancing processing infrastructure, and creating employment in rural areas. These government-led initiatives provide long-term growth avenues for manufacturers by fostering infrastructure development and encouraging innovation in the dairy sector.

Regional Analysis

The Asia Pacific region holds a dominant position in the global dairy ingredients market, driven by rising health consciousness, growing middle-class income, and increasing demand for protein-rich diets. Countries like China and India are experiencing a surge in consumption of whey proteins and milk powders due to their use in infant formula, sports nutrition, and bakery applications.

According to the China Dairy Industry Association, China’s dairy imports rose by 10.1% in 2023, indicating a growing reliance on high-quality international ingredients. Meanwhile, India’s government-backed initiatives, such as the “National Programme for Dairy Development,” aim to modernize dairy infrastructure, enhancing the production and export of milk powders and casein. Southeast Asian nations like Vietnam and Indonesia are also seeing growth in processed dairy foods, which is propelling demand for dairy ingredients tailored for functional foods, beverages, and fortified snacks across the region.

Key Highlights

• The global dairy ingredients market size was valued at USD 83.34 billion in 2024 and is projected to grow from USD 87.55 billion in 2025 to reach USD 129.84 billion by 2033, growing at a CAGR of 5.05% during the forecast period (2025–2033).
• By product, the global dairy ingredients market is segmented into milk powder, whey ingredients, casein and caseinates, lactose and derivatives, milk protein concentrates (MPC) & milk protein isolates (MPI), permeates, and others.
• By form, the market is categorized into powder and liquid. The powder segment dominated the market.
• By application, the market includes bakery & confectionary, dairy products, convenience foods, infant milk formula, sports & clinical nutrition, and others. The dairy products segment contributed the largest market share.
• By distribution channel, the market is segmented into direct/B2B sales, distributors/wholesalers, online channels, and others.
• Asia-Pacific is the highest shareholder in the global market.

Competitive Players

1. Arla Foods
2. Fonterra Co-operative Group Limited
3. FrieslandCampina
4. Saputo Inc.
5. Kerry Group plc
6. Glanbia plc
7. Lactalis Ingredients
8. Agropur Cooperative
9. Hilmar Cheese Company, Inc.
10. Nestlé S.A.
11. Royal DSM
12. Ingredia SA

Recent Developments

• In June 2025, Bel UK launched The Laughing Cow Spicy Chilli, the UK’s first chilli‑flavoured cheese spread portion, arriving in stores from July 2025 at approximately £1.90 per pack. Each 31‑calorie wedge combines creamy texture with mild chilli heat, with no artificial colours or flavours. It targets younger, adventurous shoppers and reinforces Laughing Cow’s category leadership.

Segmentation

1. By Product
   1. Milk Powder
   2. Whey Ingredients
   3. Casein and Caseinates
   4. Lactose and Derivatives
   5. Milk Protein Concentrates (MPC) & Milk Protein Isolates (MPI)
   6. Permeates
   7. Others
2. By Form
   1. Powder
   2. Liquid
3. By Application
   1. Bakery & Confectionary
      1. Chocolates
      2. Ice creams
      3. Others
   2. Dairy Products
      1. Recombinant Milk
      2. Others
   3. Convenience Foods
   4. Infant Milk formula
   5. Sports & Clinical Nutrition
   6. Others
4. By Distribution Channel
   1. Direct/B2B Sales
   2. Distributors/Wholesalers
   3. Online Channels
   4. Others
5. By Regions
   1. North America
   2. Europe
   3. Asia-Pacific
   4. Latin America
   5. The Middle East and Africa