A2 Milk Market

Market Overview

The global A2 milk market size was valued at USD 1,533 million in 2021, expected to reach USD 5,068 million growing at a CAGR of 16.12% during the forecast period.

A2 milk is a form of cow's milk that does not contain the A1 beta-casein protein and instead predominately consists of only the A2 beta-casein protein. A2 milk is a replacement for regular cow's milk. It is obtained from specific breeds of cows, such as Guernsey, Jersey, Holstein, and Brown Swiss. There is an upsurge in the desire for functional beverages that offer digestive benefits due to the general public's growing awareness of the importance of health and wellness. The formation of A2 protein is more similar to human breast milk, goat, sheep, and buffalo milk. In addition, factors such as increased consumer spending and increased product awareness and knowledge as a result of advertising have significantly impacted the demand for A2 milk. 

In addition, consumers have a growing preference for beverages obtained in a sustainable manner, such as those with simplified labels, no additives/preservatives, non-GMO ingredients, and recognizable ingredient lists. This is another vital aspect driving A2 milk demand. Similarly, the variety of applications for A2 milk powder as an ingredient has increasingly gained traction. Since its compositional attributes make it easier to digest than conventional/A1 milk, global brands continuously improve and release infant formulas made with A2 milk as an ingredient. However, A2 milk is more expensive than conventional milk, which inhibits the A2 milk market expansion.

Market Dynamics

Global A2 Milk Market Drivers

The Growth in Consumer Demand for Health and Wellness Products and the Prevalence of Lactose Intolerance

And with more information becoming readily available to consumers, they are developing a heightened awareness of the importance of meeting their nutritional requirements. The vast majority of customers place a high priority on healthiness when making decisions about food and drink. For this reason, consumers are shifting their consumption pattern toward healthy beverages, including beverages such as a2 milk. In addition, a rise in demand for beverage products that are considered "clean," "free from," and "natural" is attributed to the evolution of healthy eating habits. Labels that are uncluttered and easy to read are increasingly coming to be seen as conforming to the new global standards. These indicate brands that adhere to specific dynamics, such as simplified labels, absence of additives and preservatives, non-genetically modified organism status, country of origin, absence of anything artificial, and recognizable ingredient list, amongst other dynamics. This is yet another significant factor contributing to the expansion of the a2 milk market share.

Lactose intolerance is one of the primary considerations when switching to a2 milk due to the increase in lactose intolerance cases. Approximately 75% of the adult population of the world is lactose intolerant. Because of this, a1 beta casein-free milk has become extremely popular among consumers. In addition, consumers choose a2 milk over traditional dairy for various reasons, including nutritional value, curative health properties, the ability to treat irritable bowel syndrome, and digestibility, as well as personal preference. Consequently, the increase in lactose intolerance among consumers worldwide is one of the most important factors influencing the rising popularity of a2 milk.

Global A2 Milk Market Restraints

Expensive as compared to Conventional Milk May Impede Growth

A2 milk is priced around 50% higher than other standard non-a2 milk products in retail stores. This is because it can take farmers up to two years of constant testing to breed a herd with 100% a2 genetics to produce a2 quality milk. Additionally, farmers must devote more time to testing the genetics of each cow. This makes the beginning stages of the supply chain tedious. Consequently, this impacts the cost of a2 milk relative to regular milk. In developing economies, the high price of a2 milk combined with the availability of vegan and less expensive substitutes can pose a challenge. Consequently, these unfavorable factors can be considered obstacles to expanding the a2 milk market share.

Global A2 Milk Market Opportunities

Diversity in A2 Milk Products to Spur Market Opportunities

The natural nutrition of A2 milk is attractive to a wide range of consumers. It is a versatile and adaptable beverage, according to market trends. Consumers have transitioned toward a high-protein diet, particularly in the United States. Demand for functional beverages with potential attributes like low-fat and low cholesterol has contributed primarily to expanding food products such as a2 milk. In addition, a2 milk's palatable texture and healthful properties make it an ideal vehicle for delivering functional benefits. This emerging trend has increased demand for a2 milk as a beverage and a component in infant formulas. In addition, millennials, health-conscious consumers, and those who exercise regularly are primarily responsible for the increase in sales of low-fat a2 milk in the market while also creating opportunities for market expansion.

Regional Analysis

The region-wise segmentation of the global A2 milk market includes North America, Europe, Asia-Pacific, and LAMEA.

The Asia Pacific and Europe Will Dominate the Regional Market

The Asia Pacific will likely hold the most significant market proportion growing at a CAGR of 15.51% during the forecast period. The dominance of Asia Pacific in the A2 market can be attributed to the increased demand for dairy products such as yogurt, milk powder, cheese, and butter. In addition, countries in the Asia Pacific are home to a significant population of cows of the breed that produce a2 milk. In addition, an increase in consumer awareness regarding health issues and a growing trend among consumers to alter their dietary habits in the region are likely to drive growth in the market for a2 milk. In addition, there is a demand from customers for transparent ingredients that come from reputable sources and manufacturing processes of a high standard. Also, countries such as China, India, and Australia are becoming some of the largest consumers and producers of a2 milk and milk products due to their growing populations, increasing levels of consumer spending, and expanding avenues for catering to more prominent people. Due to these factors, Asia-Pacific will hold the largest market share for a2 milk.

Europe will hold a share of USD 1,629 million, growing at a CAGR of 15.83% during the forecast period. This region is among the most prominent manufacturers and consumers of a2 milk due to the surge in demand for healthier dairy options and the availability of cow breeds essential for producing a2 milk. The growing demand for a2 milk is making it possible to open up new markets for a2 milk products with high levels of innovation and an increase in premiumization in some of the larger markets, including Germany and the United Kingdom. Owing to the pervasiveness of lactose intolerance in European nations, the dairy-alternative industry accounts for a disproportionately large portion of total revenue. In addition, this presents an opportunity for expanding the market for a2 milk as a substitute for conventional milk and other dairy products, including plant-based milk products.

Segmental Analysis

The global A2 milk market is classified based on form, packaging, distribution channel, and region.

By Form Analysis

Segmentation based on the form includes liquid and powder.

The liquid segment is estimated to advance at a CAGR of 16.0% and hold the largest share during the forecast period. The liquid form of a2 milk provides consumers with increased protein requirements and an intensive protein source. Milk comes in various forms: whole, low-fat, skim, and flavored. During the forecast period, demand for skimmed a2 milk is estimated to grow due to increases in consumer health consciousness. Additionally, as a functional beverage, the need for flavored a2 milk for direct consumption is expected to increase. In recent years, consumer preference for flavored drinks has increased, which is anticipated to continue in the a2 milk market growth.

The powder segment will hold the second-largest share. Milk powder is a suitable alternative for consumers without direct access to quality refrigeration methods and dairy products. To produce A2 milk powder, milk is evaporated to dryness. It is available in numerous varieties, such as whole milk powder and skims milk powder. It is an ideal food ingredient due to its ability to bind water, thicken, and emulsify and foaming properties.

By Packaging Analysis

Segmentation based on packaging form includes cartons, bottles, and others.

The carton segment is expected to hold the largest share during the forecast period and grow at a CAGR of 16.35%. A carton is a box or container that is composed of paperboard primarily. Wax- or plastic-coated paperboard cartons are the most prevalent types of milk packaging. Additionally, milk and juices are packaged in cartons with a tabletop. Consumers, particularly in urban areas, have gradually embraced a2 milk in cartons made of aseptic packaging technology, which the consumers also call as Tetra Pak, which helps preserve plant-based milk for a more extended time. In addition, modern a2 milk labels with enticing scripts and images that appeal to a wide range of consumers have made it possible to attract consumers' attention.

The other segment will hold the second-largest share. The liquid form of A2 milk is packaged in milk pouches, while instant milk powder is sold in flexible plastic bags/pouches. Flexible plastic bags are commonly used in the packaging of milk powder. Milk packaged in pouches or bags is more economical and considered environmentally friendly. The availability of A2 milk powder in airtight, resealable pouches makes it an ideal choice for a pantry, hotel industry, and outdoor use.

By Distribution Channel Analysis

Segmentation based on distribution channel includes supermarkets & hypermarkets, grocery/convenience stores, online retails, and others.

The supermarkets & hypermarkets segment will likely hold the largest share during the forecast period and grow at a CAGR of 16.25%. It is anticipated that a2 milk sales will increase due to the visibility and allure of supermarket dairy products. In addition, a shift in lifestyle and a rise in wealth in emerging economies has increased the percentage of supermarket chains, further elevating the market's expansion. The development of the supermarkets & hypermarkets sector in the a2 milk market can also be attributed to a rise in supermarket & hypermarket penetration in both mature and emerging markets.

The grocery/convenience stores segment will hold the second-largest share. Personalized services and convenience stores' proximity to diverse residential areas make it simple for manufacturers to reach consumers. Due to rapid urbanization, the percentage of grocery stores in developing nations is growing. As A2 milk is a staple in the diets of many consumers, it is anticipated that demand from grocery stores will increase.

Recent Developments

• In 2022, Provilac Dairy Farms Pvt. Ltd. announced the launch of lactose-free cow milk.