Dairy Ingredients Market Growth – Reinforcing Dairy Protein Consumption

Dairy is present in all kinds of edibles and drinkables either as an end product or as an ingredient. Dairy ingredients have been integral to the formulation of a variety of food products. The factor that is at the core that is expected to drive the dairy ingredient market during the next few years is the fact that it is naturally derived and the communication of the same on packaged food. It extends a myriad of functionalities and attributes to end product food which includes delivery of key nutrients, emulsification capability, fat-holding capacity, foam generation, gel formation, viscosity creation, water management, enhancement of flavors and textures, among others.

Consumption trends that are evidenced by the growing preference for functional food and beverage as well as fast food and convenience snacking are expected to partly drive the dairy ingredient market, in the next few years. Further, the growing market opportunities for nutraceutical beverages which are driven by the growing awareness of a healthy lifestyle are expected to augment the market growth. An additional factor of an expanding pool of geriatric population has driven the demand for a range of nutritionally enriched dietetic drinks that employs the use of dairy ingredients. Further, the increasing birthrate and growing pool of working mothers are jointly responsible for increasing the market share of infant milk formula supported by various strategies adhered by the players operating in that space which is inclusive of but not limited to intelligent packaging, among others. However, the increased preference for consuming protein from plant sources, plant-based meat, and dairy alternatives and strict adherence to specific diet patterns will hinder the growth of the market to a certain extend.

 

The Expanding Dairy Production and Trade Have Been One of the Prime Factors Sustaining the Dairy Ingredient Market

According to FAO, the global milk production registered a growth of 1.3% in 2019 to about 852 Mt.  Production in India increased by 4.2% to 192 Mt with an unremarkable impact on the global trade because the country has always engaged in marginal quantities of milk and dairy products trade. The three main exporters of dairy which are the European Union, New Zealand, and the United States experienced a slight increase in dairy production. Further with an unfluctuating domestic demand in these regions, there was a reported increase in exports of dairy products and processed products the same year. Moreover, the world’s largest dairy product importer China reportedly registered an increased milk production that grew by 3.6% the very same year. Further, due to an increased demand registered in 2019, the import of dairy products, especially those of skim milk powder (SMP) and whole milk powder (WMP) increased. Moreover, by FAO estimates the world milk production is projected to grow at 1.6% per annum which is forecasted to reach 997 Mt by 2029. The projected growth of cowherds is 0.8% per annum with India and Pakistan reportedly expected to contribute more than half of the growth in world milk production over the next ten years and will account for more than 30% of world production in 2029. From a trade perspective, import demand for dairy products is expected to increase in many Asia countries due to economic and population growth, and a shift toward higher-value foods and livestock products.

ASIA, Total Population at Mid-Year Estimates

Total population (thousands)

Source: UN

By Geography, the Apac Is Expected to Hold a Major Share of the Market During the Forecast Period

The APAC region is more diverse when compared to other regions constituting more than half of the world’s population that numbers to 4.1 billion. Moreover, the region is experiencing rapid urbanization with an estimated rise to 54% by 2029 by FAO. The region’s rapidly growing areas are the developing countries with average per capita incomes in the region anticipated to grow at almost 5% p.a. over the next decade, China, India, and Viet Nam are projected to grow 5-6% p.a., and Thailand and Indonesia at around 3% p.a. Rapid economic growth has also reduced the share of food in household expenditures to around 15% in 2017-19, implying an increased proclivity towards consumption of RTD beverages and RTE food products which is expected to hold a significant share due to rising health awareness.

Key market developments:

March 2020 – Product Launch

NZMP, the global ingredients business of Fonterra, reportedly introduced three new protein bar ingredients as an addition to its sports and active lifestyle category. They are namely: SureProtein Optibar 892 whey protein isolate, SureProtein ShortBar 825 lactalbumin, and SureProtein SoftBar 1000 milk protein. These new additions are intended to facilitate energy, healthy indulgence, muscle recovery, and weight loss.

August 2020 Product Launch

An organic micellar casein isolate, which is essentially a new ingredient with native milk proteins was reportedly launched by Arla Foods Ingredients. The protein is derived from milk using processing without the addition of acids. With the ability to retain its chemical properties, the protein can maintain its chemical structure that enables the creation of products that are derived naturally. Named, MicelPure, it is appropriate for food applications such as cooking-stable cheeses, ice cream, puddings, yogurts, among others as well as for health and performance applications, like ready-to-drink high protein beverages and powder shakes.

COVID-19

Restriction on movement and disruption of trade led to a downward-draft of the market. Further due to the reduced processing capacity brought about by lockdown measures hindered the labor-intensive dairy industry. However, the reorientation of retailing towards online platforms led to an increased process of packaged product consumption, which occupies a healthy share of the dairy ingredients market. Nevertheless, as the global market readjusts to the new normal the trend of the dairy ingredient market is expected to be reinvigorated by higher demands.