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American Dairy Ingredients Market

The exports from the US increased from 1.5 million metric tons in 2005 to 1.9 million metric tons in 2012 —a growth rate of 24.0% (According to the US Dairy Export Council) – key export destinations being South East Asian countries, South Korea and Japan

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Definition / Scope

Dairy ingredients can be defined as ingredients derived from milk. These ingredients are multifunctional with high nutritional content and can be used in a variety of applications in the food and beverage industry.

The dairy ingredient types for the purpose of this report are 

  • Whey Ingredients (WPC 34, WPC 80, WPH and WPI) 
  • Low concentrate whey protein concentrates, such as WPC 34 and WPC 80, which have high lactose content and low levels of fat and cholesterol, making it the perfect choice for energy bars, snacks, and dairy applications such as low fat yoghurt.
  • Higher concentrate whey ingredients, such as WPH and whey protein isolates (WPI > 90% concentration), which are increasingly used in clinical nutrition and infant formula applications.
  • Milk Protein Concentrates (MPC 42, MPC 50, MPC 70 and MPC>80).
  • Lower concentrate variants, such as MPC 42 and 50, which are almost obsolete in the market, considering its inability to offer high nutritional value.
  • Higher concentrate MPCs, which are not only used in food and beverage applications for their protein content, but also used for structural benefits. They offer excellent solubility, gelling abilities, foaming, emulsification, and heat stability.
  • Casein and Caseinates
  • Certain applications like coffee creamers, which heavily depend on casein and caseinates for its texturizing and emulsifying properties.
  • Caseinate’s superior digestive properties and high protein content, which has promising potential as a milk replacement.
  • Lactose and Lactulose (Galactofructose)
  • Primary use in infant formula to balance the protein and carbohydrate content similar to that of breast milk
  • Used in pharma applications as a filling agent, in confectionery applications to retain the moisture and improve the texture and shelf life of the products, and used in dairy applications, such as yoghurt, to minimize moisture loss and help prolong shelf life
  • Others

Market Overview

Whey proteins continue to dominate the dairy ingredient space. Whey Protein concentrate (WPC 90) and whey protein isolates (WPI) are in high demand in the United States due its higher protein concentration and the range of its applications.

Factors such as volatility in milk prices, favourable weather, and lower feed costs affect milk production and are directly related to the dairy ingredients market

Plant proteins such as soy, canola, and rapeseed compete fiercely with the dairy ingredients and are expected to remain a serious threat to dairy ingredient manufacturers in segments such as snack bars and beverages due to their cost-efficiency

Clinical nutrition, infant formula, and sports and fitness nutrition remain to be the largest end applications for dairy proteins

The industry is dominated by large companies, with most of the top competitors having a direct sales approach.

Key Metrics

Metrics Value Explanation
Base Year 2017 Researched through internet


Market Drivers

Ageing population, health related disorders, sedentary lifestyle, increasing healthcare costs are all spurring the growth of functional foods - consumers want food with health ingredients to avoid health related incidences. Whey ingredients enhance immune defense system, are antimicrobial, and reduce the incidence of cardiovascular disorders and cancer.

The exports from the US increased from 1.5 million metric tons in 2005 to 1.9 million metric tons in 2012 —a growth rate of 24.0% (According to the US Dairy Export Council) , with the key export destinations being South East Asian countries, South Korea and Japan.

Dairy ingredients face mounting competition from Plant proteins, most specifically soy proteins. Their similar nutritional profile and lower costs, in addition to consumer inclination towards vegetarianism, is pushing growth in the plant proteins and plant derived ingredients.

Price volatility of milk supply creates demand supply imbalances, making volume and prices of all the dairy ingredients unpredictable.

The market in the US is mature and may be growing at 1.5% - 2.5% per annum, mainly propelled by product differentiation and the range of new applications, such as clinical nutrition and infant formula, where dairy ingredients are increasingly used

The prices of higher concentrate ingredients, such as WPC 80, WPI, WPH, MPC 80, and higher concentrations, caseinates are expected to increase in the future considering its demand in the clinical nutrition and sports and fitness markets

Market Size and Forecast

The market for dairy ingredients in the US may be between $4.0 - $4.5 Billion in 2014, growing at approximately 3.0% - 4.0% a year given maturity having set into the market.

According to Fonterra Global Dairy Industry Estimates[1], global trade for dairy ingredients is 8% of the total production, totalling to an approximate of 13 Mil Tonnes in 2014. About 40% of this is attributed to the US, i.e., between 5.0-5.5 Mil Tonnes.

Whey Ingredients is the largest segment. Approximately 40% of the total market, followed by Casein and Caseinates at 30%. Milk Proteins is about 20% and the rest is Lactose and Lactulose.

The prices of higher concentrate ingredients, such as WPC 80, WPI, WPH, MPC 80, and higher concentrations, caseinates are expected to increase in the future considering their demand in the clinical nutrition and sports and fitness markets.

Globally, this market is dominated by a few players such as Fonterra (URL), Friesland Campina (URL), Arla Foods (URL), Glanbia Nutritionals (URL) and Lactalis – these key players may hold approximately 70% of the global market share between them. Other global notable participants include Kerry Ingredients, Armor Protines, and Havero Hoogwedt. 

The US is the largest producer and consumer of whey ingredients globally. Whey ingredients have been well recognized for their functional benefits

MPCs are increasingly substituting Casein and Caseinates based on their lower prices in the US and globally. However, the use of casein and caseinates as a milk substitute and in coffee creamer applications is very high

Market Outlook

The US market is expected to show a steady growth trend, owing mainly to the functional foods markets and high penetration levels of dairy ingredients-based supplements

References

  1. http://www.fonterra.com/nz/en/Financial/Global+Dairy+Industry


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