Dairy Ingredients Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type, By Source, By Application, By Region & Competition, 2021-2031F

The Global Dairy Ingredients Market is projected to expand from USD 87.35 Billion in 2025 to USD 125.46 Billion by 2031, registering a CAGR of 6.22%. These ingredients, which encompass concentrated milk components like milk powders, whey proteins, lactose, and caseinates, are essential for improving the nutritional content and functional attributes of various food and beverage items. The market's growth is primarily fueled by rising global demand for protein-enriched nutrition, especially within the infant formula and sports nutrition segments, as well as the indispensable role these ingredients serve in enhancing the texture, stability, and shelf-life of processed foods like bakery and confectionery products.

However, the industry encounters significant hurdles related to supply chain instability and the inconsistent availability of raw milk, factors that can unpredictably affect pricing and delivery schedules. Furthermore, geopolitical trade conflicts and evolving import regulations create risks regarding the steady cross-border movement of these commodities. Despite these logistical and production challenges, the market demonstrates economic resilience; for instance, the U.S. Dairy Export Council reported that the total value of United States dairy exports increased by 2% to reach $8.297 billion in 2024.

Market Driver

The Global Dairy Ingredients Market is being significantly transformed by the expansion of the specialized sports and performance nutrition sector, where manufacturers are increasingly focusing on advanced formulations for athletes and active consumers. This trend generates substantial demand for specialized whey protein isolates, hydrolysates, and bioactive components favored for their rapid absorption and muscle-recovery properties, prompting major suppliers to pivot from commoditized powders toward high-value performance solutions. This shift is validated by financial results, such as Glanbia plc's February 2025 report, which noted a 14.0% revenue increase for Glanbia Nutritionals in 2024, driven largely by strong volume growth in its protein solutions business.

Furthermore, increasing global demand for high-protein and functional food formulations is accelerating market development, encouraging producers to innovate beyond conventional applications. This drive supports the production of sophisticated milk protein concentrates (MPCs) and functional caseins used in medical nutrition, fortified beverages, and clean-label products. Evidence of this momentum is seen in Fonterra Co-operative Group's September 2024 results, which showed a 26% rise in sales of high-protein milk protein concentrate, and Arla Foods' 2025 report, where its ingredients division revenue grew by 5.4% to EUR 1,015 million in 2024, confirming the continued commercial expansion of value-added dairy solutions.

Market Challenge

Supply chain volatility and the fluctuating availability of raw milk represent formidable obstacles to the growth of the global dairy ingredients sector. Producers of concentrated derivatives, such as whey protein and caseinates, depend heavily on a steady supply of raw milk to maintain operational efficiency and satisfy the high volume demands of major infant formula and sports nutrition companies. When raw material inputs become unpredictable due to climatic variations or logistical interruptions, processors face rising production costs and difficulties in meeting long-term contracts, causing end-users to delay expansion or seek non-dairy alternatives, which directly stifles market growth.

This issue is particularly severe when key export regions suffer production shortfalls, causing supply insecurity throughout the global value chain. For example, Dairy Australia forecast in 2024 that the national milk pool would drop to 8.3 billion liters owing to ongoing weather and economic constraints. Such variations in primary feedstock availability inevitably result in price instability for processed ingredients, discouraging the sustained industrial application necessary for the market's long-term economic progression.

Market Trends

The adoption of regenerative agriculture and low-carbon ingredient claims is emerging as a critical competitive differentiator, evolving from a corporate responsibility measure into a core value proposition for suppliers. This trend involves implementing data-driven farming practices aimed at quantifying and lowering carbon intensity per production unit, thereby directly supporting the Scope 3 decarbonization goals of major food companies. Suppliers use these verified metrics to secure long-term agreements with sustainability-focused brands; for instance, Synlait Milk reported in September 2024 that its Scope 3 on-farm emissions per kilogram of milk solids were 9.2% lower in FY24 compared to the FY20 baseline, showcasing the commercial and environmental benefits of these upstream efforts.

Concurrently, the commercialization of precision fermentation and animal-free dairy proteins is revolutionizing the sector by decoupling the availability of high-value bioactives from traditional milk volume limitations. This technological shift addresses chronic supply-demand imbalances for specialized proteins like lactoferrin, providing a scalable alternative to bovine extraction that remains unaffected by climatic or herd-related disruptions. As noted by Dairy Business Middle East & Africa in March 2024, FrieslandCampina Ingredients formed a strategic partnership with Triplebar to expand supply capacities through fermentation, targeting a global lactoferrin market expected to surpass $1.2 billion by 2030, marking a transition toward hybrid sourcing models for high-margin ingredients.

Key Market Players

• Arla Foods amba
• Dairy Farmers of America
• Sodiaal Co-operative Group
• Fonterra Co-Operative Group Limited
• Royal Friesland Campina
• Kerry Group PLC
• Kanegrade Ltd
• Volac International Ltd
• Hoogwegt International BV
• Saputo Inc.

Report Scope

In this report, the Global Dairy Ingredients Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

Dairy Ingredients Market, By Type

• Milk Powder
• Whey Ingredients
• Milk Protein Concentrates
• Milk Protein Isolates
• Others

Dairy Ingredients Market, By Source

• Milk
• Whey

Dairy Ingredients Market, By Application

• Bakery & Confectionery
• Dairy Products
• Convenience Food
• Others

Dairy Ingredients Market, By Region

• North America
  • United States
  • Canada
  • Mexico
• Europe
  • France
  • United Kingdom
  • Italy
  • Germany
  • Spain
• Asia Pacific
  • China
  • India
  • Japan
  • Australia
  • South Korea
• South America
  • Brazil
  • Argentina
  • Colombia
• Middle East & Africa
  • South Africa
  • Saudi Arabia
  • UAE

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Dairy Ingredients Market.

Available Customizations:

Global Dairy Ingredients Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).