India Dairy Market

Unlocking Growth in the India Dairy Market: Trends, Opportunities, and Future Outlook

The India dairy market, valued at approximately INR 9,918.0 billion in 2023, has proven to be a significant segment within the country's agricultural sector. Driven by both domestic consumption and growing demand for dairy products, the market is projected to grow at a compound annual growth rate (CAGR) of 14.0% between 2024 and 2032, potentially reaching around INR 32,081.40 billion by 2032. This blog will delve into the market's key trends, growth drivers, competitive landscape, and more, providing a comprehensive overview of India's dairy industry.

India Dairy Market Overview

India is the world's largest producer and consumer of dairy products, with a deep-rooted culture of milk consumption. Dairy forms an essential part of the Indian diet, with products like milk, curd, paneer, and ghee being staples in households across the country. The market is highly fragmented, consisting of both organized and unorganized sectors, with dairy cooperatives playing a dominant role in the rural areas. The rise in disposable income, changing consumer preferences, and an increasing inclination towards healthy, protein-rich foods are some of the factors propelling the market's growth.

India Dairy Market Size

As of 2023, the India dairy market is valued at nearly INR 9,918.0 billion. The market's immense size is a reflection of India's large-scale milk production, which is primarily driven by small-scale farmers and local cooperatives. The growing demand for value-added dairy products, such as flavoured milk, yogurt, cheese, and ice cream, further boosts the market’s value. With the increase in disposable income and an expanding middle-class population, the consumption of dairy products is expected to rise significantly in the coming years.

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Indian Dairy Market Trends

Several key trends are shaping the future of the Indian dairy market:

Shift Towards Healthy Dairy Products: Consumers are increasingly looking for healthier, low-fat, low-sugar, and organic dairy options.

E-commerce and Online Sales: The online sales channel for dairy products has seen a rapid rise, driven by consumer convenience.

Premiumization: There is a growing demand for premium dairy products, including organic milk, gourmet cheese, and dairy-based snacks.

Plant-Based Alternatives: The rise of veganism and plant-based diets has led to a growing market for non-dairy alternatives like almond milk, soy milk, and oat milk.

Technological Advancements: Automation and AI in dairy farming are improving milk quality and increasing operational efficiency.

India Dairy Market Segmentation

Product

• Liquid Milk: The largest category, accounting for the majority of dairy consumption in India. It includes fresh and packaged milk sold in various forms (full cream, toned, etc.).

• UHT Milk: Ultra-high temperature (UHT) processed milk, known for its longer shelf life. Gaining popularity in urban areas where convenience is key.

• A2 Milk: Milk produced from cows that only produce A2 beta-casein protein. Rising in demand due to perceived health benefits.

• Organic Milk: Grown without the use of synthetic pesticides or fertilizers. This premium product is becoming popular among health-conscious consumers.

• Flavoured Milk: Milk enhanced with flavours like chocolate, strawberry, and mango, particularly popular with children and urban consumers.

• Curd: A staple in Indian households, used in cooking and as a side dish. Growing in demand with the rise in yogurt-based snacks.

• Lassi: A traditional yogurt-based drink, either sweet or salty, enjoying growing popularity as a refreshing, probiotic beverage.

• Butter Milk (Chach): A low-fat, protein-rich dairy beverage made from curd, especially consumed in hot climates for its cooling properties.

• Flavoured and Frozen Yoghurts: Gaining traction as a healthy snack, especially in urban areas with growing interest in probiotics.

• Cheese: Includes varieties like mozzarella, cheddar, and paneer, with increasing demand in both traditional and international cuisines.

• Probiotic Dairy Products: Products like probiotic yogurt and kefir are gaining popularity for their digestive health benefits.

• Butter: Used widely in cooking and as a spread, butter remains an essential dairy product in Indian kitchens.

• Ghee: A traditional clarified butter used in cooking and rituals. High demand due to its cultural significance and health benefits.

• Paneer: A soft cheese used in a variety of Indian dishes. Increasing demand as a vegetarian protein source.

• Khoya: A dairy product used in sweets, it plays an important role in Indian confectioneries.

• Dairy Whitener: A powdered form of milk used as a milk substitute or for adding creaminess to beverages like tea and coffee.

• Skimmed Milk Powder: Used for making low-fat dairy products, it is widely consumed in powdered form as an affordable milk alternative.

• Ice Cream: A growing segment with a rising demand for diverse flavours and healthier options like low-sugar or dairy-free ice creams.

• Dairy Sweets: Includes popular sweets like rasgulla, peda, and burfi, all made from dairy ingredients.

• Cream: Used for cooking, baking, and as a topping, cream is a staple in both traditional and modern recipes.

• Milk Shake: A growing category with various flavours and often marketed as a healthy, on-the-go snack.

• Sweet Condensed Milk: Widely used in Indian desserts, it’s a key ingredient in sweets like kulfi, kheer, and mithai.

• Others: This category includes niche dairy products such as dairy-based snacks, nutritional drinks, and protein supplements.

Sales Channel

• Direct Selling: Traditional method where dairy products are sold directly by farmers or cooperatives, usually in rural areas.

• Convenience Stores: Increasingly popular in urban areas, offering consumers quick access to dairy products on-the-go.

• Supermarkets and Hypermarkets: These large retail chains are a key sales channel, offering a wide range of dairy products with better packaging and shelf life.

• Online: E-commerce platforms are gaining traction, allowing consumers to conveniently purchase dairy products, often with home delivery options.

Region

The Indian dairy market is geographically diverse, with consumption varying across regions. Some key trends:

• North India: A major producer and consumer of dairy products, especially in states like Punjab, Haryana, and Uttar Pradesh. Popular for products like paneer, curd, and lassi.

• South India: Known for its high consumption of milk-based products like curd, buttermilk, and traditional sweets like peda and rasgulla.

• West India: Gujarat, Maharashtra, and Rajasthan are major producers of dairy products, including milk, butter, and ghee. Gujarat, with its Amul cooperative, dominates the market here.

• East India: Growing demand for milk and dairy products, with increasing consumption of packaged and processed dairy in states like West Bengal and Odisha.

India Dairy Market Growth

Increasing Domestic Consumption: Rising incomes and a growing middle class are driving higher consumption of dairy products, particularly in urban areas.

Government Support and Initiatives: Government programs such as the National Dairy Development Board (NDDB) and PM-AASHA are supporting dairy farmers and boosting production through subsidies and infrastructure improvements.

Shift Towards Healthier Dairy Products: Growing health consciousness among consumers is increasing demand for low-fat, organic, and probiotic dairy products.

Expansion of Dairy Cooperatives: Dairy cooperatives are expanding their reach, particularly in rural areas, which will increase milk production and consumption in underserved regions.

Indian Dairy Market Forecast

The Indian dairy market is projected to grow at a CAGR of 14.0% between 2024 and 2032. With increasing urbanization and changing dietary habits, the demand for packaged dairy products will continue to grow. Additionally, the government's initiatives to boost dairy production and improve infrastructure will play a pivotal role in sustaining market growth.

Competitor Analysis

Dairy Cooperatives

Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF): Known for its brand Amul, GCMMF is one of the largest dairy cooperatives in India. It offers a wide range of dairy products, including milk, cheese, butter, and ice cream.

Maharashtra Rajya Sahakari Dudh Mahasangh Maraydit: A major player in Maharashtra, it operates several dairy plants and is known for its high-quality milk and milk products.

Punjab State Cooperative Milk Producers Federation Limited: With its strong presence in Punjab, this cooperative is known for offering a range of dairy products under the "Verka" brand.

Others: Other prominent dairy cooperatives across India include those in Tamil Nadu, Uttar Pradesh, and Rajasthan.

Private Companies

Mother Dairy Fruits & Vegetables Pvt Limited: A subsidiary of the National Dairy Development Board (NDDB), Mother Dairy is a leading player in the Indian dairy market, offering a wide range of dairy products.

Britannia Industries Ltd.: Known for its dairy-based products like cheese and yogurts, Britannia is a key player in the Indian dairy sector.

Nestle India Limited: With its wide range of dairy products such as Nescafé and Nestlé Milk, Nestlé India remains one of the top private dairy companies in India.

Parag Milk Foods Limited: Known for its popular brands like Gowardhan and Topp Up, Parag Milk Foods is a key competitor in the Indian dairy market.

Others: Other private players include Amul, Danone, and Hatsun Agro Products, which have been growing rapidly due to their diverse product offerings.