The Indian dairy industry is poised for a monumental leap, fueled by a youthful population, increasing disposable incomes, and a surge in health consciousness. As the world’s largest producer of milk, India’s dairy sector is not only a cornerstone of its economy but also a hotbed of opportunity, with its market projected to skyrocket to US$ 290.8 billion by 2033.
With over half of its population under 30, the demand for nutritious and innovative dairy products is soaring. From cutting-edge processing technologies to a shift towards value-added products, the Indian dairy market is undergoing a transformative evolution. It is set to revolutionize global dairy dynamics, offering unparalleled growth potential and investment opportunities.
The global dairy market holds immense potential due to rising demand for nutritious and versatile dairy products. According to ‘Global Dairy Market Report 2024-2032’ by IMARC Group, the industry is expected to grow to US$1,459.3 billion by 2032, with a compound annual growth rate (CAGR) of 4.95% from 2024 to 2032.
Interestingly, the report identifies India as the largest regional market for dairy, with a large consumer base driven by its growing population (1.4 billion), and rising demand for essential nutrients found in dairy products. The sector has grown significantly, with milk production increasing from 187.30 million tonnes in 2018-19 to an expected to reach 236.35 million tonnes in 2023-24.
The Indian Dairy Market size is estimated at US$ 26.11 billion in 2024, and is expected to reach US$ 35.96 billion by 2029, growing at a CAGR of 6.61% during the forecast period (2024-2029).
India’s dairy sector is pivotal to its economy, contributing 5% to the national GDP and employing over 8 crore farmers. It leads globally in milk production, supplying about 25% of the world’s milk and supporting a vast livestock population of 536.76 million animals. India exports around 63,738.47 metric tonnes of dairy products in 2023-24, earning US$ 272.64 million, with key markets including the UAE, Saudi Arabia, the USA, Singapore, and Bhutan.
The country’s per capita milk availability is 459 grams per day, well above the global average. Uttar Pradesh is the top milk-producing state, followed by Rajasthan, Madhya Pradesh, Gujarat, and Andhra Pradesh.
In 2023, packaged milk emerged as the top segment, driven by its convenience, longer shelf life, and focus on hygiene. Flavored milk also saw notable growth due to rising consumer interest in value-added products and innovative flavors. In terms of distribution, organized retail, particularly supermarkets and hypermarkets, dominated the market by offering a broad range of dairy products under one roof. E-commerce platforms are expanding quickly, fueled by increasing internet usage and the convenience of home delivery.
The dairy industry in the country is continuously evolving, with a growing emphasis on boosting health benefits by incorporating high-quality proteins, probiotics, and prebiotics. These advancements allow dairy products to offer a wide range of benefits.
Probiotics and prebiotics, traditionally linked to digestive and immune health, are increasingly included in dairy products to support a balanced gut microbiome, which may also positively influence cognitive functions such as mood, stress management, and mental clarity.
Yogurt, known for its high global probiotic content, is expected to experience a 3.4% compound annual growth rate (CAGR) from 2023 to 2028.
However, liquid milk is set to remain the dominant segment due to its essential role in daily nutrition. A2 milk is emerging as the fastest-growing segment, fueled by consumer perceptions of its superior digestibility and potential health benefits over standard milk.
Rising Consumption: As the population expands, demand for dairy products grows, creating a large consumer base. Higher income enables more people to spend on nutritious foods, with dairy remaining a staple in Indian diets.
Growing health consciousness: Consumers are increasingly turning to dairy products for essential nutrients such as protein, vitamins, and minerals. This rising demand encompasses not only traditional dairy items but also value-added products like flavored yogurts, fortified milk, and probiotic drinks.
Evolving distribution network: New dairy startups are leveraging subscription models, home delivery, and digital supply chains to offer fresh, high-quality products and meet the growing consumer demand for convenience. These startups often focus on premium, organic, or specialized dairy products, setting themselves apart from traditional retail options.
By leveraging data analytics and consumer insights, they can provide personalized services. Country Delight, Milkbasket, Sid’s Farm, Stellapps, Matratva Dairy, Puresh Daily, Klimom, Whyte Farms, The Milk India Company, Milk Mantra, and Happy Milk are among such upcoming dairy startups in the country, unleashing a ‘modern White Revolution’.
New technologies in dairy processing: Technological advancements are transforming the Indian dairy industry across multiple areas, including farm management, milk processing, packaging, and supply chain logistics. Automation helps boost efficiency, enhance product quality, and ensure safety. These technologies also contribute to better farm management practices, resulting in increased productivity and sustainability. Cold chain technologies ensures that dairy products remain fresh and nutritionally intact during transportation and storage.
Focus on value-added dairy products: There is a notable shift towards value-added dairy products such as cheese, yogurt, flavored milk, and probiotic drinks. They not only offer higher profit margins but also align with changing consumer preferences for health, convenience, and variety.
For instance, in October 2023, Parag Milk Foods invested significantly in expanding its whey processing capabilities. Whey, a byproduct of cheese production, is a valuable source of protein and nutrients. In December 2023, Amul unveiled camel milk ice cream, a novel offering that supports camel milk producers and delivers a unique flavor experience.
The Indian dairy sector provides immense opportunity for further growth and investment. The rising consumer demand for high-quality fresh and organic milk, especially in urban areas, has led to a higher demand for D2C/A2 milk.
There are significant opportunities for investment in organized farms for quality heifer breeding, as well as in technologies like blockchain, RFID tags, IoT, sensor-enabled vehicles and packaging systems.
The Department of Animal Husbandry and Dairying is supporting dairy production by implementing various schemes and programs to increase milk production and bovine productivity. These initiatives aim to meet the rising demand for milk and make dairy farming more profitable for rural farmers throughout the country.
In India, 100% FDI is permitted through automatic route for animal husbandry. For trading in food products manufactured or produced in India, including e-commerce, 100% FDI is allowed through the government approval route. Additionally, 100% FDI is permitted through the automatic route in food processing. The dairy sector has attracted significant FDI, accounting for about 40% of the total FDI in India’s food sector.
The Indian dairy industry plays a significant role in the economy by providing significant employment and meeting high daily consumption demands. It is highly responsive to consumer behavior, and shifts in preferences are likely to lead to changes in regulatory policies, supply chains, storage, and customer acquisition strategies. Despite these changes, the Indian dairy Market is set to grow rapidly, creating opportunities for related businesses and partnerships.
The Indian dairy market presents substantial growth opportunities due to a large and youthful population, increasing disposable incomes, and rising health awareness. With over 50% of the population under 30, there is a growing demand for nutritious and protein-rich dairy products. Additionally, higher disposable incomes are driving consumption of diverse dairy products, including premium and functional items. Innovations in dairy processing and sustainable practices further enhance market potential by improving efficiency and environmental impact. As the middle class expands and dietary preferences evolve, the Indian dairy market is poised for significant growth, making it an attractive sector for investment and development.
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How will Indusfood support the growth and development of India’s dairy industry?
Indusfood, India’s premier food trade show, is instrumental in accelerating the growth of the Indian dairy industry. As the largest food and beverage event in India, Indusfood provides a vital platform for industry stakeholders to showcase innovations, explore new market opportunities, and connect with key players. By bringing together dairy producers, processors, and investors, Indusfood fosters collaborations that can drive advancements in dairy processing technologies and value-added products.
The event also highlights emerging trends, such as the growing demand for nutritious and functional dairy items, thus aligning with the sector’s evolving needs. For businesses seeking to expand their reach and tap into India’s booming dairy market, Indusfood offers unparalleled exposure and networking opportunities essential for capitalizing on this growth.
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