India Dairy Market Outlook to 2028

India Dairy Market Overview

The dairy market in India is valued at approximately $125 billion in 2023, fuelled by increasing urbanization, demand for value-added dairy products, and technological advancements in dairy farming and processing.

According to the National Dairy Development Board (NDDB), India is the world's largest producer and consumer of milk, accounting for over 20% of global milk production. The increasing demand for dairy products such as milk, butter, cheese, and yogurt, along with the expanding middle class, has significantly contributed to the market's growth.

The market is fragmented with key players in the Indian dairy market include Amul, Mother Dairy, Nestle, Britannia Industries, Parag Milk Foods, and Kwality Ltd., among others.

In 2023, Amul announced a significant investment of USD 500 million to expand its processing capacity and enhance its product portfolio. This investment aims to cater to the increasing demand for value-added dairy products such as cheese, butter, and flavored milk.

India Dairy Current Market Analysis

Liquid milk remains the most consumed dairy product in India, accounting for approximately 50% of total dairy consumption, followed by yogurt, cheese, and butter in 2023.

Amul's packaged milk is one of the bestselling dairy products in India, known for its quality, availability, and competitive pricing.

Government initiatives such as the National Dairy Plan (NDP) aim to increase milk production and improve dairy infrastructure. According to the Ministry of Agriculture, these programs have led to a 6% annual growth in milk production over the past decade.

The dairy sector supports the livelihoods of over 70 million rural households, primarily small and marginal farmers. According to the National Sample Survey Office (NSSO), the dairy industry provides direct and indirect employment to millions of people, promoting economic stability and growth in rural areas

The northern region of India, particularly Uttar Pradesh, Punjab, and Haryana, dominates the dairy market. This dominance is attributed to favorable climatic conditions, advanced dairy farming practices, and a high density of dairy cooperatives. According to the Ministry of Animal Husbandry, Dairying and Fisheries, Uttar Pradesh alone accounts for over 17% of the country’s total milk production, making it the leading state in dairy production.

India Dairy Market Segmentation

The Indian dairy market can be segmented based on various factors. Here are three key segmentation types with their sub-segments and estimated market share ranges:

By Product Type: The Indian dairy market is segmented by product type into Liquid Milk, Yogurt, Cheese, Butter and Ghee and Others. In 2023, liquid milk dominated India's dairy market due to its nutritional importance in daily diets, cultural and traditional significance, widespread use in tea and coffee, and government support initiatives. India's high population and increasing health awareness further drive the demand for milk, solidifying its market dominance.

By Distribution Channel: The Indian dairy market is segmented by Retail Stores, Online Platforms, Direct Sales and Institutional Sales. In 2023, retail stores dominated the Indian dairy market due to their widespread presence, accessibility, and ability to offer a diverse range of fresh dairy products. Consumers prefer the convenience of purchasing dairy items from local stores, which are well-integrated into daily shopping habits.

By Region: The India Dairy Food market is segmented by region into North, East, South and West. In 2023, the northern region dominated the Indian dairy market due to its high milk production, robust dairy farming infrastructure, and strong consumer demand. States like Punjab, Haryana, and Uttar Pradesh are major milk producers, contributing significantly to the region's market share.

India Dairy Market Competitive Landscape

Player

Establishment Year

Headquarters

Amul (GCMMF)

1946

Anand, Gujarat

Mother Dairy

1974

Delhi

Parag Milk Foods

1992

Pune, Maharashtra

Nestle India

1961

Gurgaon, Haryana

Hatsun Agro Product Ltd.

1970

Chennai, Tamil Nadu

Announcements for dairy Expansion: Nestle India launched a new range of organic dairy products in 2022, catering to the growing demand for health-conscious and environmentally sustainable options. These products include organic milk, curd, and ghee, which are sourced from certified organic farms.

Mother Dairy: A subsidiary of the National Dairy Development Board (NDDB), Mother Dairy is renowned for its quality milk and milk products. It has a strong presence in urban markets, particularly in Delhi-NCR.

Parag Milk Foods: Known for its premium dairy brands such as Gowardhan, Go, and Topp Up, Parag Milk Foods focuses on high-quality dairy products. The company has a diverse product portfolio, including milk, cheese, ghee, and yogurt.

Nestle India: Nestle is a global food and beverage leader with a strong presence in the Indian dairy market. Its popular dairy products include Nestle Milkmaid, Nestle a+ milk, and Nestle Everyday dairy whitener.

India Dairy Industry Analysis

India Dairy Market Growth Drivers:

Organic and A2 Milk: Increasing demand for organic and A2 milk due to perceived health benefits. The market for organic milk is expected to grow by 20% annually, driven by consumers seeking chemical-free and healthier alternatives. A2 milk, believed to be easier to digest, is gaining popularity among health-conscious consumers.

Growing Health Awareness: The growing awareness of the health benefits associated with dairy consumption is driving the demand for milk and milk-based products. According to the National Institute of Nutrition, the average per capita consumption of milk in India increased by 15% between 2018 and 2023.

Advancement in technology: Innovations in dairy processing and cold chain logistics are enhancing the quality and shelf life of dairy products. According to the Indian Council of Agricultural Research (ICAR), the adoption of advanced dairy technologies has increased milk production efficiency by 20% by 2028.

Functional Dairy Products: Rising popularity of functional dairy products fortified with vitamins and minerals. Functional dairy products, such as fortified milk and probiotic yogurts, are experiencing a surge in demand due to their amazing health benefits.

India Dairy Market Challenges

High Production Costs: The high cost of dairy production, including feed, labor, and energy, poses a significant challenge to the market. According to the National Dairy Development Board (NDDB), the cost of feed accounts for 60% of the total production cost. Fluctuations in feed prices and labor shortages further exacerbate the issue, impacting the profitability of dairy farmers.

Lack of Cold Chain Infrastructure: Inadequate cold chain infrastructure leads to significant post-harvest losses in the dairy supply chain. According to a report by the National Centre for Cold-chain Development (NCCD), India loses about 10-15% of its total milk production due to spoilage. The lack of proper refrigeration and storage facilities affects the quality and safety of dairy products, limiting market growth.

Fragmented Supply Chain: The highly fragmented nature of the dairy supply chain, with numerous small-scale producers, creates challenges in ensuring consistent quality and supply. According to the Food and Agriculture Organization (FAO), around 80% of dairy farmers in India own fewer than five cows. This fragmentation leads to inefficiencies in milk collection, processing, and distribution, impacting the overall productivity of the sector.

India Dairy Market Recent Developments

Amul’s Investment (2023): In 2023, Amul announced a significant investment of USD 500 million to expand its processing capacity and enhance its product portfolio. This investment aims to cater to the increasing demand for value-added dairy products such as cheese, butter, and flavored milk.

Nestle’s Organic Dairy Range (2022): Nestle India launched a new range of organic dairy products in 2022, catering to the growing demand for health-conscious and environmentally sustainable options. These products include organic milk, curd, and ghee, which are sourced from certified organic farms.

Mother Dairy’s Expansion: Mother Dairy announced the expansion of its distribution network in 2023, adding 1,000 new retail outlets across India. This move aims to increase the availability of quality dairy products and strengthen its market presence.

Parag Milk Foods’ New Product Launches: In 2022, Parag Milk Foods launched a range of functional dairy products, including protein-enriched milk and lactose-free milk, targeting health-conscious consumers. These products cater to the growing demand for specialized dairy items that offer additional health benefits.

India Dairy Market Future Outlook

The India dairy market is expected to grow steadily, driven by increasing population, rising disposable incomes, and advancements in dairy farming techniques. The continuous efforts to raise awareness about the health benefits of dairy consumption and the expansion of dairy infrastructure will further support market growth.

Future Market Trends

Rise of Functional Dairy Products: The growing consumer interest in health and wellness is driving the demand for functional dairy products such as protein-enriched milk, lactose-free milk, and probiotic yogurt. These products offer additional health benefits, catering to the needs of health-conscious consumers.

Growth of Organic Dairy Products: The increasing preference for natural and chemical-free food items is boosting the demand for organic dairy products. Organic milk, curd, and ghee are gaining popularity among consumers who prioritize environmental sustainability and health.

Expansion of E-Commerce Platforms: The expansion of e-commerce platforms is transforming the dairy market, providing consumers with easy access to a wide range of dairy products. The convenience of online shopping, coupled with competitive pricing and home delivery services, is boosting the adoption of dairy products through online channels
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