The market currently sits at $45.6bn (the figure for 2015), says MarketsandMarkets, in its report 'Dairy Ingredients (Milk Powder, Whey Ingredients, MPC & MPI, Lactose & its Derivatives, Casein & Caseinates) Market Report 2015 - Global Trend & Forecast to 2020'.
MarketsandMarkets analyst Shobhana Sekaran told DairyReporter that milk powder has been the most dominant ingredient on the market, holding about 61% of the market share in 2014.
“Milk powders enable product developers in formulating a wide range of nutritional, functional, and economical bakery products,” Sekaran said. “Milk powders add flavor and functionality in biscuits, breads, cakes, cookies, and muffins. The flavor enhancement helps to bring a unique baked flavor at the time of baking and heating.”
The dairy ingredients market is currently being driven by a consumer focus on healthy diets, especially as the population starts to age and health issues increase.
“An aging population demands nutritional food instead of regular food, which drives the dairy ingredients market [in North America],” Sekaran said. “Along with this, consumer demands towards nutritional foods in sports is very high in North America, which also enhances the market for dairy ingredients.”
The aging population isn’t the lone issue; people across the world are now more focused than ever on healthy eating and demand diversified food. Dairy ingredients are being supported by this, as well as a growing need for convenience food and dairy beverages.
In addition to health, MarketsandMarkets believes growing levels of disposable income, particularly in the Asia-Pacific region, will help the market bloom over the coming five years.
“With the rising population and increasing incomes, dairy ingredients’ usage is set to increase due to the demand from consumers,” Sekaran said of this region. “Asia-Pacific is the fastest growing region for dairy ingredients owing to its increasing orientation towards western food.”
Other major drivers will include growth in application sectors, innovations and research and development. This will help expand the applicability of the ingredients market and accelerate its growth.
“Additionally, increase in sedentary lifestyles, along with a consumer preference for nutrient rich diets, are projected to augment the overall growth of the market,” the report found.
However, a challenge to the dairy ingredients market’s growth is the rise of dairy alternatives, according to MarketsandMarkets. Products, such as soy, are easily available and come at a lower cost than dairy. Other factors that could hold growth back include the rise of consumers affected by lactose intolerance and milk allergies.
Dominant companies looking to expand
A major development in the dairy industry has been the willingness to expand and invest by the industry’s big time players, which the report notes includes companies such as New Zealand’s Fonterra, Denmark’s Arla Foods and the US’ Dairy Farmers of America, among others.
With investment, manufacturers have been able to increase their dairy-based portfolio and increase their presence across the industry.
“Companies are also adopting other growth strategies such as new product launches, acquisitions, agreements, and joint ventures to cope with the increasing demand for dairy ingredients in key emerging markets,” the report said. “These strategies have helped companies to create a large customer and partner base in key markets.”
Sekaran noted a few of the bigger innovations of the last few years, including Glanbia Nutritionals’ April 2014 launch of New Whey Protein - Hydrovon 195, a post workout protein for accelerated muscle recovery and repair, as well as PRONATIV’s April 2013 launch of Lactalis, a heat stale weigh protein used in health applications.