Dairy Ingredients Market Size to Expand from USD 83.39 Billion in 2025 to USD 150.75 Billion by 2034

According to Towards FnB, the global dairy ingredients market size is set to reach USD 150.75 billion by 2034, rising from USD 83.39 billion in 2025. The sector is forecasted to expand at a steady CAGR of 6.8% between 2025 and 2034, driven by increasing demand for protein-rich formulations across infant nutrition, sports supplements, bakery, and functional beverages.

Ottawa, Sept. 17, 2025 (GLOBE NEWSWIRE) -- The global dairy ingredients market size was valued at USD 78.08 billion in 2024 and is set to rise from USD 83.39 billion in 2025 to around USD 150.75 billion by 2034, growing at a CAGR of 6.8% during the forecast period from 2025 to 2034, according to study published by Towards FnB, a sister firm of Precedence Research.

The market is observing a spike due to high demand for protein-rich food items for the manufacturing of infant formula, bakery items, sports and nutrition, and other similar food items. Consumer preference for healthy and natural food items is also helping the growth of the market.

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Dairy Ingredients Market Overview

The dairy ingredients market is observing growth in recent times due to its high demand in multiple domains such as the food and beverage industry, pharmaceuticals, nutraceuticals, bakery and confectionery, and other similar domains. Such uses help the sector to grow in the foreseeable period. Ingredients processed from raw milk include protein, casein, whey protein, and milk derivatives, further fueling the growth of the market. Such ingredients also help in emulsification, thickening, gel formation, and enhancing the nutritional content of different types of food products as well.

High demand for plant protein options also helps the growth of the market. Consumer awareness for sustainability, animal welfare, and health benefits of plant protein are some of the major factors helpful for the development of the segment, further fueling the growth of the market. Hence, it further helps to enhance the demand for non-dairy alternative products such as plant-based dairy products.

Dairy vs Alternatives Box:

Where Dairy Wins: Superior functionality in emulsification, heat stability, texture, and cost-in-use (especially in bakery, RTD coffee, and cheese).
Where Alternatives Fit: Growing demand for lactose-free and vegan options, hybrid products in bars and beverages.
Market Implication: Coexistence of dairy and plant-based proteins will shape future innovation rather than replacement.

Key Highlights of the Dairy Ingredients Market

By region, Asia Pacific dominated the dairy ingredients market with highest share of 40% in 2024, whereas North America is expected to grow with the highest CAGR in the forecast period.
By ingredient, the milk powder segment led the dairy ingredients market in 2024, whereas the functional ingredients and dairy segment is expected to grow in the foreseen period.
By source type, the cow milk segment led the dairy ingredients market in 2024, whereas the buffalo milk segment is expected to grow in the foreseeable period.
By form, the powder segment led the dairy ingredients market in 2024, whereas the liquid segment is expected to grow in the expected timeframe.
By functionality, the emulsification segment dominated the dairy ingredients market in 2024, whereas the thickening and gelling segment is expected to grow in the foreseen period.
By application, the bakery and confectionery segment dominated the dairy ingredients market, whereas the dairy products segment is expected to grow in the foreseeable period.
By end-use, the food and beverage segment led the dairy ingredients market in 2024, whereas the nutraceuticals segment is expected to grow in the foreseeable period.

Most Popular Products in the Dairy Ingredients Market

Product Type	Key Features / Attributes	Benefits / Why It’s Important	Example Applications
Milk Powders (Whole / Skimmed / Fat-modified)	High shelf life, easy storage & transport, available in different fat levels	Provides a stable supply of milk solids, helps in regions with limited fresh milk, useful for fortification	Infant formula, bakery mixes, confectionery, powdered beverages
Whey Ingredients (Whey Protein Concentrate / Isolate / Hydrolysates)	High protein content, rapid digestibility, and various protein fractions	Supports demand for high-protein, functional, sport-nutrition, and health foods	Protein shakes, sports bars, nutrition supplements, enriched yogurts
Milk Protein Concentrates & Isolates	Higher protein purity, controlled casein vs whey ratio, good solubility	Allows food formulators to adjust texture and nutrition, important for specialized applications	Protein-fortified beverages, meal replacements, nutritional bars
Casein & Caseinates	Slow digestion, good emulsification & gelation, heat stability	Useful for texture, moisture retention, emulsifying fat, and improving mouthfeel	Cheese manufacture, imitation cheese, coffee creamers, and baked goods
Lactose & Derivatives	Sugar from milk, includes lactose powders and permeates, functional bulking agent	Valuable for texture, mouthfeel, browning, and cost-effective sweetness	Infant formula, bakery & confectionery, pharmaceuticals, dairy drinks
Milk Fat / Butter Milk Powder / Milk Permeates / Whey Permeates & Others	Supplies fat, flavor, and minerals; permeates are lower in protein but rich in lactose and minerals	Enhances creaminess, flavor, cost efficiency, and supports product innovation	Creamers, flavored milks, processed foods, snack formulations

Impact of AI in the Dairy Ingredients Market

Artificial intelligence (AI) is having a profound impact on the dairy ingredients market by improving production efficiency, quality control, and product innovation. In manufacturing, AI-powered predictive analytics optimize processes such as pasteurization, filtration, and drying to maximize yield, reduce energy consumption, and minimize waste. Machine learning models also enhance the real-time monitoring of critical parameters, such as temperature, pH, and microbial activity, ensuring consistent product quality and compliance with stringent food safety standards. AI-enabled computer vision systems further support quality assurance by detecting impurities or inconsistencies in dairy powders, proteins, and other derivatives before they reach the market. In research and development, AI accelerates the creation of innovative dairy ingredients tailored to evolving consumer needs, such as lactose-free, low-fat, or protein-enriched formulations.

New Trends of the Dairy Ingredients Market

Increasing consumer awareness of the health benefits of dairy products is helping the growth of the dairy ingredients market.
Rising technological advancements are helpful to maintain the food stability, quality, and preserving it safely to maintain its shelf-life, also helping the growth of the dairy ingredients market.
High usage of e-commerce platforms to purchase dairy products and shop for different types of products further enhances the market’s growth. It helps to provide the ease of shopping at home and getting the required products in less time.

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Recent Developments in the Dairy Ingredients Market

In September 2025, Strauss Group, an Israeli food conglomerate, is about to launch a line of “animal-free” dairy products in its domestic market. Products, CowFree Symphony cream cheese and the Yotvata CowFree drink have been produced in collaboration with Imagindairy, an Israel-based animal-free protein start-up. (Source- https://www.just-food.com)
In August 2025, the Delhi Milk Scheme (DMS) launched new dairy products and distributed letters of booth allotment at a special event held at the NASC Complex, Pusa, New Delhi. (Source- https://ddnews.gov.in)

Market Dynamics

What Are the Growth Drivers of the Dairy Ingredients Market?

High demand for protein-rich food products and food options rich in essential vitamins, minerals, and other nutrients helps the growth of the market. High demand for dairy products, which are helpful to get easy protein and various other essential nutrients, also helps the growth of the market. High demand for functional, organic, fortified, and clean-label products also helps the growth of the market. Improved supply chain management, technological advancements, and improved cold storage facilities also support the development of the dairy ingredients market.

In addition, leading dairy processors are committing to reduce Scope 1 & 2 emissions by up to 30% by 2030 and investing in water efficiency programs across drying and whey processing facilities. These initiatives not only enhance brand positioning but also appeal to sustainability-conscious buyers.

Challenge

Milk Spoilage May Restrain the Growth of the Market

Milk spoilage and quality control may obstruct the growth of the dairy ingredients market. Microbial contamination, inadequate refrigeration, and poor storage conditions are some of the factors that spoil milk and lower the growth of the market. Lack of cold chain infrastructure is another major restraint in the growth of the market.

Opportunity

Integration of Advanced Technologies Is Helpful for the Growth of the Market

Integration of AI to boost productivity, improve efficiency, and ensure the security of dairy products provides an opportunity to allow the market to grow in the foreseeable period. Use of robotic analytics helps to identify cows and study their behavior pattern, and collect useful data for the growth of the market.

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Dairy Ingredients Market Regional Analysis

Asia Pacific Led the Dairy Ingredients Market in 2024

Asia Pacific led the dairy ingredients market in 2024 due to high demand for dairy products in the region, such as cheese, butter, milk, and yogurt, due to a growing population, aiding the growth of the market. Countries such as India, China, Japan, and South Korea have major contributions to the development of the market in the region. Growing population, rising innovation and technology, and rapid urbanization are also some of the factors helpful for the development of the market in the region.

North America Is Expected to Grow in the Forecast Period

North America is expected to grow in the foreseen period due to the high demand for dairy products, protein-rich food products, nutritious food options, and other similar food options, which are helpful for the growth of the dairy ingredients market. The US and Canada have a high contribution to the growth of the market in the region. Consumer preference for dairy products and their alternatives, along with high demand in the bakery and confectionery industry, is also leading to the growth of the dairy ingredients market in North America.

Dairy Ingredients Market Report Scope

Report Attribute	Key Statistics
Base Year	2024
Forecast Period	2025 to 2034
Growth Rate from 2025 to 2034	CAGR of 6.8%
Market Size in 2024	USD 78.08 Billion
Market Size in 2025	USD 83.39 Billion
Market Size by 2034	USD 150.75 Billion
Dominated Region	Asia Pacific
Fastest Growing Region	North America
Regions Covered	North America, Europe, Asia-Pacific, Latin America and Middle East & Africa

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Dairy Ingredients Market Segmental Analysis

Type of Ingredient Analysis

The milk powder segment led the dairy ingredients market in 2024 because of the multiple benefits of the product, aiding the growth of the market. Milk powder is an instant substitute for milk and hence is useful in household kitchens. It is also helpful for heart health, strong bones, and muscles. Milk powder also aids weight loss, hence it is also highly opted for by consumers with the intention of losing those extra kilos. Hence, the segment led the dairy ingredients market in 2024.

The functional dairy ingredients segment is expected to grow in the foreseeable period due to high demand for functional food and beverages. It also leads to high demand for clean-label products, organic food items, and nutritious products helpful for overall growth, further fueling the growth of the dairy ingredients market. Increasing demand for sports and fitness products is also helping the growth of the market in the foreseeable period.

Source Analysis

The cow milk segment dominated the dairy ingredients market in 2024 due to an array of its benefits, such as improved immunity, improved skin health, brain health, hydration, and multiple other benefits. It is also healthy for digestion, heart health, and aids in weight management as well. Cow milk is also essential for strong bones and muscles, and is ideal for muscle repair, essential for health-conscious consumers, further aiding the growth of the market.

The buffalo milk segment is expected to grow in the foreseeable period due to its high demand by health-conscious consumers. It is rich in protein and various other essential nutrients, making it essential for growing kids and people with immunity and bone issues. Buffalo milk is highly used for the preparation of multiple dairy products such as cheese, butter, and yoghurt, which are useful in the routine diet of a consumer. Improved technology and cold chain logistics, which help store the product safely, further enhance the growth of the market in the foreseeable period.

Form Analysis

The powder segment led the dairy ingredients market in 2024 due to its high usage in the dairy and bakery industries. The segment also observed growth due to multiple other benefits, such as ease of handling, ease of use, cost-effectiveness, uses in multiple domains, and industrial preference, further fueling the growth of the market.

The liquid segment is expected to grow in the foreseen period due to high demand for the segment, as the dairy industry deals with different forms of liquid products. Different types of dairy-related products, such as frozen or chilled dough, different types of premixes and batters, packaged dairy products, and other similar products, also help in the growth of the market in the foreseen period. Growing disposable income, high demand for clean-label products, and other similar factors also aid the growth of the market.

Functionality Analysis

The emulsification segment dominated the dairy ingredients market in 2024 due to high demand for clean-label products, organic food items, fortified foods, and other similar products. Dairy emulsification is essential for making dairy-related food items such as soft serve, ice cream, and coffee whiteners. The procedure helps to hold water, maintain texture, stability, and fat dispersion, which is helpful for the growth of the market.

The thickening and gelling segment is observed to grow in the foreseen period due to its multiple uses in different domains, especially in dairy beverages. The thickening agents have a huge and vital role in the growth of the dairy industry as they help to thicken the dairy products and enhance their looks and taste as well. The thickening agents also provide a stabilizing effect, interact well with milk proteins and emulsifiers, and are also helpful to increase the viscosity, further fueling the growth of the market.

Application Analysis

The bakery and confectionery segment dominated the dairy ingredients market in 2024 due to high demand for dairy and sweet food products such as cakes, pastries, and other baked food items. The high demand for such bakery food items is observed due to occasions such as birthdays, parties, and other similar get-togethers. Such food products are highly demanded by consumers from different age groups, ranging from small children to the elderly. Hence, the segment aided the growth of the market in 2024.

The dairy products segment is expected to grow in the foreseeable period due to its high demand and its multiple health benefits. The growing countries are emerging with high production of milk and other dairy products. High demand for protein-rich foods and foods enriched with other nutrients also helps the growth of the dairy ingredients market in the foreseeable period.

End-User Analysis

The food and beverage segment led the dairy ingredients market in 2024 due to high demand for food and beverage options that are rich in nutrition, protein, and other essential health benefits. The growing population globally also helps the growth of the food and beverage industry, further fueling the growth of the market. Clean-label products, organic products, and food items to improve gut health and provide nutrition also help the growth of the market. Functional food items and fermented food options also aid in the growth of the market due to their high demand.

The nutraceuticals segment is expected to grow with the highest CAGR in the foreseen period due to its multiple benefits. Nutraceuticals are essential for improved immunity, reproductive health, psychological health, lower inflammation, improved gut health, and preventing various chronic diseases as well. The nutraceuticals segment also helps to slow aging and improve athletic performance.

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Additional Topics Worth Exploring:

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Compound Feed Market: The global compound feed market size is expected to grow from USD 614.57 billion in 2025 to USD 986.58 billion by 2034, at a CAGR of 5.4% over the forecast period from 2025 to 2034.
Bakery Premixes Market: The global bakery premixes market size is forecasted to expand from USD 456.8 million in 2025 to USD 763.2 million by 2034, growing at a CAGR of 5.96% during the forecast period from 2025 to 2034.
Sweeteners Market: The global sweeteners market size is forecasted to expand from USD 113.17 billion in 2025 to USD 156.26 billion by 2034, growing at a CAGR of 3.65% during the forecast period from 2025 to 2034.
Functional Food Ingredients Market: The global functional food ingredients market size is forecasted to expand from USD 127.48 billion in 2025 to USD 232.40 billion by 2034, growing at a CAGR of 6.9% during the forecast period from 2025 to 2034.

Top Companies in the Dairy Ingredients Market:

Arla Foods Ingredients Group P/S (Denmark) – Specializes in whey proteins, lactose, and functional dairy ingredients for infant nutrition, sports, and medical applications.
Fonterra Co-operative Group Limited (New Zealand) – One of the world’s largest dairy exporters, producing milk powders, whey, casein, and specialty dairy proteins.
FrieslandCampina Ingredients (Netherlands) – Provides dairy-based nutritional and functional ingredients, with a strong focus on infant formula and adult nutrition.
Lactalis Ingredients (France) – Offers a broad range of dairy powders, whey proteins, and milk derivatives for the food and nutrition industries.
Saputo Inc. (Canada) – Produces milk powders, whey products, and specialty dairy ingredients, alongside being a global cheese manufacturer.
Glanbia plc (Ireland) – A leading player in performance nutrition, supplying whey protein isolates, concentrates, and dairy derivatives.
Kerry Group (Ireland) – Provides value-added dairy and nutrition solutions, including proteins, flavors, and functional dairy systems.
Agropur Dairy Cooperative (Canada) – Manufactures dairy powders, proteins, and ingredients used in sports, infant, and functional nutrition.
Hilmar Cheese Company (USA) – Known for cheese production and high-quality whey protein concentrates, isolates, and lactose.
DMK Group (Germany) – Germany’s largest dairy cooperative, producing milk powders, whey derivatives, and cheese ingredients.
Devondale Murray Goulburn (Australia) – Supplies milk powders, whey products, and dairy ingredients for food and beverage markets.
Milk Specialties Global (USA) – Focuses on whey protein, milk protein, and functional dairy ingredients for sports and health nutrition.
Ingredia SA (France) – Develops dairy proteins, bioactive ingredients, and milk powders with applications in nutrition and functional foods.
Valio Ltd. (Finland) – Offers lactose-free milk powders, whey products, and functional dairy ingredients with strong innovation in health-focused solutions.
Armor Proteines (France) – Produces milk proteins, caseins, and nutritional dairy ingredients for food and health industries.
Synlait Milk Ltd. (New Zealand) – Specializes in infant formula base powders, milk powders, and nutritional dairy products.
MEGGLE GmbH & Co. KG (Germany) – Supplies lactose, whey derivatives, and dairy powders for pharmaceuticals, food, and nutrition markets.
Tatura Milk Industries Ltd. (Australia) – Produces milk powders, whey proteins, and infant nutrition dairy bases.
MILEI GmbH (Germany) – Focuses on whey protein isolates, lactose, and dairy derivatives for infant formula and clinical nutrition.
Westland Milk Products (New Zealand) – Provides butter, anhydrous milk fat, milk powders, and specialty dairy ingredients for global markets.

Segments Covered in the Report

By Type of Ingredient

Milk Powders
- Skimmed Milk Powder (SMP)
- Whole Milk Powder (WMP)
Whey Ingredients
- Whey Protein Concentrate (WPC)
- Whey Protein Isolate (WPI)
Casein & Caseinates
- Rennet Casein
- Caseinates
Lactose & Derivatives
- Edible Lactose
- Lactulose
Milk Protein Concentrates (MPCs)
- MPC 70
- Micellar Casein
Functional Dairy Ingredients
- Dairy-based Probiotics
Immunoglobulins
Permeates
- Whey Permeate
- Milk Permeate

By Source

Cow Milk
- Conventional Cow Milk
- Organic Cow Milk
Buffalo Milk
Goat Milk
Sheep Milk

By Form

Powder
- Spray-Dried
- Freeze-Dried
Liquid
- Concentrates
- UHT-based Liquids

By Functionality

Emulsification
- Casein
- Clean Label Dairy Emulsifiers
Thickening & Gelling
- Whey Protein
- Dairy Hydrocolloids
Nutritional Enrichment
- Whey Isolates
- Lactoferrin, Immunoglobulins
Water Binding
- Milk Proteins
- Casein Hydrolysates
Texture Enhancement
- Casein & WPC Blends
- MPC + Fat Combinations
Flavor Development
- Milk Fats
- Butter Derivatives

By Application

Bakery & Confectionery
- Cakes, Baked Goods
- Protein-Enriched Baked Items
Infant Formula
- Stage 1 (0–6 months)
- Organic & Follow-on Formulas
Sports Nutrition
- RTD Protein Drinks
- Micellar Casein Powders
Dairy Products
- Yogurt
- Functional Dairy Beverages
Prepared Meals
- Soups & Sauces
- High-Protein Ready Meals
Pharmaceuticals
- Capsule Excipients
- Nutraceutical Actives (Lactoferrin)
Foodservice / HoReCa
- Cheese Ingredients
- Liquid Dairy for Beverages

By End-User Industry

Food & Beverage
- Processed Food Companies
- Sports & Nutrition Companies
Nutraceuticals - Fastest
- Supplement Manufacturers
- Medical Nutrition Firms
Pharmaceuticals
- Drug Formulators
- Immuno-Nutrition Solutions
Cosmetics & Personal Care
- Skincare
- Baby Care
Animal Feed
- Calf Milk Replacers
- Dairy Protein-Enriched Pet Food

By Region

North America

U.S.
Canada

Asia Pacific

China
Japan
India
South Korea
Thailand

Europe

Germany
UK
France
Italy
Spain
Sweden
Denmark
Norway

Latin America

Brazil
Mexico
Argentina

Middle East and Africa (MEA)

South Africa
UAE
Saudi Arabia
Kuwait

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About Us

Towards FnB is a global consulting firm specializing in the food and beverage industry, providing innovative solutions and expert guidance to elevate businesses. With an in-depth understanding of the dynamic F&B sector, we deliver customized market analysis and strategic insights. Our team of seasoned professionals is committed to empowering clients with the knowledge needed to make informed decisions, ensuring they stay ahead of market trends. Partner with us as we redefine success in the rapidly evolving food and beverage landscape, and together, we’ll navigate this transformative journey.

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