Northbrook, IL -- (SBWIRE) -- 03/25/2022 -- 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.

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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.

Restraints : Growing demand for alternatives, such as plant protein

The most popular alternatives for dairy are plant-based beverages, which are gaining popularity as substitutes for milk and milk products. Consumers are adopting a dairy-free diet due to the increasing incidences of lactose intolerance, allergies from milk or milk-based products, and a shift toward vegan diets and healthy lifestyles. The growing demand for dairy alternatives is posing a challenge for the growth of the dairy ingredients market.

Peas, beans, nuts, soy, seeds, and lentils are rich sources of plant proteins. Hence, plant protein is an active substitute for dairy ingredients, leading to competition in different segments, such as snack bars and beverages. Soy is being increasingly used in baked goods, beverages, and dairy products. The markets for products containing soy protein and various ingredients are primarily driven by natural health benefits. The growth in the demand for plant protein is because consumers perceive plant protein as an economical source of protein compared to dairy ingredients. Plant proteins also help manufacturers in controlling costs, thereby increasing profitability. For instance, soy protein can easily be incorporated into various foodstuffs without changing taste and quality.

Opportunities : Emerging markets in Asia Pacific and South America: New growth frontiers

The changing consumption patterns due to the influence of westernized lifestyles in developing economies have led to the demand for whey proteins and milk powders by various consumers. Developing countries, such as China, India, Brazil, and countries in the Middle East & Africa, in the coming years, will experience a strong surge in demand for various dairy ingredients. This demand may be driven by increased production of processed foods and innovation in segments, such as infant formula, processed meat products, dairy, bakery products, and functional food & beverages. These regions provide a cost advantage in terms of production and processing. High demand, coupled with a low cost of production, is a key feature that is expected to aid dairy ingredient suppliers.

Challenges : High capital investment in manufacturing dairy ingredients

Dairy ingredient manufacturers require high capital investments to install processing equipment. This processing equipment has high installation costs and requires timely maintenance, which is a costly addition affecting the operating margins of dairy ingredient processors. Hence, high capital investment challenges market growth.

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Globally, the Asia Pacific market for dairy ingredients accounted for the largest share of nearly 32.84% in 2020.

The Asia Pacific region is projected to witness the highest growth during the forecast period. A large amount of milk is produced in the country, which gives the dairy ingredients market the potential to grow in the coming years. Owing to this large production, the region has immense potential for exports of dairy ingredients. Rapid urbanization, changing lifestyles, and the inclination of consumers toward nutritious food and beverages also contribute to the growth of the dairy ingredients market. Owing to the increasing consumer demands for convenience food and dairy products in the region, many major players are entering the market.

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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