Dairy Industry in India

Market Overview:

The dairy industry in India size reached INR 16,792.1 Billion in 2023. Looking forward, IMARC Group expects the market to reach INR 49,953.5 Billion by 2032, exhibiting a growth rate (CAGR) of 13% during 2024-2032. The industry is experiencing robust growth, propelled by technological innovation, enhanced retail and e-commerce platforms, and improved cold chain infrastructure, meeting rising consumer demand with a diversified and quality-focused product range.

Dairy Industry in India Snapshot:

• Liquid milk dominates the market as the primary product segment. This is attributed to its essential role in everyday consumption, nutritional importance as a staple food, and its universal cultural acceptance.
• A2 milk represents the fastest-growing segment in the dairy market. Its growth is driven by increasing consumer beliefs regarding its enhanced digestibility and potential health benefits compared to standard milk.
• In terms of regional markets, Uttar Pradesh is the largest. This prominence is due to its position as the most populous state and a strong agricultural economy where dairy farming is a major livelihood source.
• Delhi is identified as the most rapidly expanding regional market. This growth is linked to its growing population, higher income levels, and a cosmopolitan culture that increases the demand for diverse dairy products.
   

Dairy Industry in India Drivers: Rising Health Awareness Fueling Growth

Escalating Consumption Driving the Industry

One of the primary factors propelling the Indian dairy industry is the increasing consumption due to population growth and rising income levels. With the continual expansion of the population, the demand for dairy products is surging, providing a substantial consumer base for the industry. Increased affluence has enabled a larger segment of the population to spend more on nutritious food items, with dairy products being a traditional staple in Indian diets. This combination of demographic expansion and enhanced purchasing power has compelled dairy producers to scale up operations and innovate, ensuring steady market growth.

Growing Health Awareness Among Indian Consumers

The Indian dairy industry is also driven by growing health consciousness among consumers. There is an escalating preference for dairy products as a source of essential nutrients like proteins, vitamins, and minerals. This demand extends beyond conventional dairy items to value-added products such as flavored yogurts, fortified milk, and probiotic drinks. Dairy companies are capitalizing on this trend by launching a range of health-centric products, effectively tapping into consumers' desire for wellness through diet.

Impact of Pandemic on Consumer Behavior and Dairy Industry

The pandemic has led to a significant shift in consumer behavior, with a growing preference for milk and dairy products as nutritional supplements. This change from procurement centers to retail outlets initially overwhelmed distribution logistics. However, the Indian dairy industry adapted by implementing operational flexibility in business models and supply chain simplification. This resilience and adaptability have been crucial in maintaining the industry's integrity during challenging times.

Dairy Industry in India Trends: Technology Integrations Reshaping the Indian Dairy Landscape

Changing Distribution Channels and Emergence of B2C Startups

A significant trend reshaping the Indian dairy industry is the evolution of distribution channels, particularly with the emergence of Business-to-Consumer (B2C) startups. These startups often leverage digital platforms for direct delivery. With the rise of e-commerce and online grocery shopping, many new-age dairy startups are offering subscription-based models, home delivery services, and digitally enabled supply chains. This approach not only ensures freshness and quality but also caters to the convenience sought by modern consumers. These startups often focus on premium, organic, or specialized dairy products, differentiating themselves from traditional retail channels. By using data analytics and consumer insights, these B2C startups are able to understand consumer preferences and offer personalized services. This shift is not only changing consumer buying habits but also forcing traditional players to rethink their distribution strategies, leading to a more consumer-centric dairy market in India.

Technological Advancements in Dairy Processing

Technological innovations are playing a crucial role in transforming the dairy industry. This includes advancements in dairy farm management, milk processing, packaging, and supply chain logistics. Technologies like automation, Internet of Things (IoT), and artificial intelligence (AI) are being employed to enhance efficiency, improve product quality, and ensure safety. These technologies also aid in better farm management practices, allowing for higher productivity and sustainability. Additionally, the adoption of cold chain technologies ensures that dairy products retain their freshness and nutritional value during transportation and storage.

Shift Towards Value-Added Dairy Products

There is a significant shift towards value-added dairy products like cheese, yogurt, flavored milk, and probiotic drinks. These products offer greater margins and cater to the evolving consumer preferences for health, convenience, and variety. The demand for these products is being driven by increasing health awareness, the rising middle class, and changing dietary habits. Dairy companies are investing in new product development and marketing strategies to capture this growing segment, diversifying beyond traditional milk products.

Dairy Industry in India Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the market, along with forecasts at the regional and country levels for 2024-2032. Our report has categorized the market based on segment.

Breakup by Segment:

• Liquid Milk
• UHT Milk
• A2 Milk
• Organic Milk
• Flavored Milk
• Curd
• Lassi
• Butter Milk (Chach)
• Flavored and Frozen Yoghurts
• Cheese
• Probiotic Dairy Products
• Table Butter
• Ghee
• Paneer
• Khoya
• Dairy Whitener
• Skimmed Milk Powder
• Ice Cream
• Dairy Sweets
• Cream
• Whey
• Milk Shake
• Sweet Condensed Milk
   

Liquid milk accounts for the majority of the market share

The report has provided a detailed breakup and analysis of the market based on the sub segment. This includes liquid milk, UHT milk, A2 milk, organic milk, flavored milk, curd, lassi, butter milk (chach), flavored and frozen yoghurts, cheese, probiotic dairy products, table butter, ghee, paneer, khoya, dairy whitener, skimmed milk powder, ice cream, dairy sweets, cream, whey, milk shake, and sweet condensed milk. According to the report, liquid milk represented the largest segment.

Liquid milk is the most prominent product in India's dairy industry, primarily due to its critical role in daily consumption and high nutritional value as a staple food. Its consistent demand is further fueled by its integration into numerous traditional Indian recipes and daily diets. Additionally, government support through subsidies and the development of cooperative dairy models have enhanced its accessibility and affordability across diverse regions. The country, being the largest milk producer globally, sees a substantial portion of its dairy sector focused on liquid milk production. The significant contribution of private dairy enterprises, which constitute around 60% of the dairy processing capacity in India, have further cemented liquid milk's position as the dominant product in the market.

On the other hand, A2 milk is rapidly emerging as the fastest growing segment in the dairy industry, primarily driven by consumer beliefs about its health advantages over conventional milk. This type of milk, sourced from cows producing the A2 beta-casein protein, is purported to be easier to digest and less likely to cause inflammation, contrasting with the A1 protein common in regular milk. Despite a lack of definitive scientific backing, A2 milk is being marketed as a healthier, more natural alternative, resonating with health-conscious consumers. Its market growth is further fueled by rising income levels and increased awareness of its nutritional benefits, leading to a significant demand spike, and enabling it to command premium prices in the market.

Breakup by Region:

• Karnataka
• Maharashtra
• Tamil Nadu
• Delhi
• Gujarat
• Andhra Pradesh and Telangana
• Uttar Pradesh
• West Bengal
• Kerala
• Haryana
• Punjab
• Rajasthan
• Madhya Pradesh
• Bihar
• Orissa
   

Uttar Pradesh leads the market, accounting for the largest market share

The report has also provided a comprehensive analysis of all the major regional markets, which include Karnataka, Maharashtra, Tamil Nadu, Delhi, Gujarat, Andhra Pradesh and Telangana, Uttar Pradesh, West Bengal, Kerala, Haryana, Punjab, Rajasthan, Madhya Pradesh, Bihar, and Orissa. According to the report, Uttar Pradesh was the largest market for dairy in the country.

As the most populous state with a robust agrarian economy, Uttar Pradesh is home to the largest number of dairy animals in the country, significantly contributing to India's overall milk production. The dairy sector in the state thrives due to government initiatives, a strong network of milk cooperatives, and effective procurement and distribution systems. The high demand for dairy products in the state is met by the rising investments in milk processing plants. A large part of this industry is sustained by small and marginal dairy farmers. Additionally, the growing population and increasing disposable incomes in the state have led to a higher expenditure on milk and milk products. The market is further bolstered by the rising popularity of value-added dairy products, known for their health benefits.

Delhi is rapidly advancing as the leading regional market in India's dairy sector, propelled by the city's expanding population. Coupled with high income levels and a cosmopolitan lifestyle, the rising number of consumers is significantly driving the demand for a diverse range of dairy products. Urbanization in Delhi has led to a preference for convenience foods and value-added dairy products like cheese, yogurt, and flavored milk. Robust distribution networks and a growing retail infrastructure are key contributors to its high dairy consumption rates. Additionally, the presence of health-conscious consumers in Delhi is boosting the demand for premium segments, such as organic and fortified dairy products. Delhi's status as India's capital and a political hub attracts considerable foreign and domestic investment. Its strategic location and strong infrastructure, combined with a substantial consumer base and high disposable income, render it an attractive market for businesses. The city's economy is experiencing rapid growth, reflecting its dynamic development and economic expansion.

Competitive Landscape:

The key players are actively implementing strategic initiatives to solidify and enhance their market presence. They are concentrating on diversifying their product ranges to incorporate options that are both health-centric and convenience-oriented, such as probiotic drinks, high-protein yogurts, and lactose-free products. These players are utilizing advanced technologies to boost production efficiency and optimize supply chains, thereby not only elevating product quality but also aligning their offerings with changing consumer preferences and international food safety norms. These efforts are part of a broader strategy to expand their market reach through strategic partnerships, appointments, and collaborations, underpinning the growth and dynamism of the dairy industry in India.

The market research report has also provided a comprehensive analysis of the competitive landscape. Competitive analysis such as market structure, key player positioning, top winning strategies, competitive dashboard, and company evaluation quadrant has been covered in the report. Also, detailed profiles of all major companies have been provided. Some of the key players include:

Dairy Cooperatives:

• Gujarat Co-operative Milk Marketing Federation Ltd
• Mother Dairy Fruits & Vegetables Pvt Limited
• Karnataka Co-operative Milk Producers Federation Limited
• Rajasthan Cooperative Dairy Federation Ltd (RCDF)
• TamilNadu Cooperative Milk Producers Federation Ltd (TCMPF)
• Punjab State Cooperative Milk Producers Federation Ltd (MILKFED)
• Orissa State Cooperative Milk Producers Federation Ltd (OMFED)
• Maharashtra Rajya Sahakari Dudh Mahasangh Maraydit (Mahasangh)
• Bihar State Co-operative Milk Producers Federation Ltd. (COMFED)
• Haryana Dairy Development Cooperative Federation Ltd. (HDDCF)
• Madhya Pradesh State Cooperative Dairy Federation Ltd. (MPCDF)
• Pradeshik Cooperative Dairy Federation Ltd (PCDF)

Private Dairies:

• Nestle India Limited
• Hatsun Agro Product Limited
• Tirumala Milk Products Pvt Ltd.
• Milk Food Limited
• Heritage Foods India Limited
• VRS Foods Limited
• Bhole Baba Dairy Industries Ltd.
• Kwality Ltd.
• Sterling Agro Industries Limited
• Parag Milk Foods Limited
• SMC Foods Limited

(Please note that this is only a partial list of the key players, and the complete list is provided in the report.)

Recent Developments:

• June 4, 2023: Delhi-based Mother Dairy is planning to set up a dairy plant in Nagpur, Maharashtra, with an investment of ₹500 crore.
  The plant will produce milk and value-added dairy products and will help the company expand its presence in south India. The company aims to dominate the dairy, edible oil, and frozen vegetables markets in north India and increase its presence in the south. Additionally, Mother Dairy plans to invest ₹700 crore in capex over the next few years.
• November 6, 2023: Two Brazil-based companies have signed a Memorandum of Understanding (MoU) with Ananda Dairy in Uttar Pradesh, India.
  The MoU aims to promote the dairy sector in the state and includes collaboration on the production of nutritious animal feed and cattle breed improvement. It is expected to provide opportunities for farmers in Uttar Pradesh to increase milk production through the use of advanced technology.

Dairy Industry in India Report Scope:

Key Benefits for Stakeholders:

• IMARC’s industry report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the dairy industry in India from 2018-2032.
• The research report provides the latest information on the market drivers, challenges, and opportunities in the dairy industry in India.
• Porter's five forces analysis assist stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the Indian dairy industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.