Modified Milk Ingredients Market Report 2026

The modified milk ingredients market size has grown strongly in recent years. It will grow from $124.69 billion in 2025 to $134.13 billion in 2026 at a compound annual growth rate (CAGR) of 7.6%. The growth in the historic period can be attributed to expansion of processed food manufacturing, rising dairy consumption across regions, increasing use of milk proteins in food applications, growth in sports nutrition products, improved dairy processing capabilities.

The modified milk ingredients market size is expected to see strong growth in the next few years. It will grow to $179.31 billion in 2030 at a compound annual growth rate (CAGR) of 7.5%. The growth in the forecast period can be attributed to increasing demand for customized nutrition solutions, rising adoption of fortified dairy products, expansion of nutraceutical and pharmaceutical usage, growing focus on digestive health ingredients, increasing investments in advanced dairy processing technologies. Major trends in the forecast period include increasing demand for functional dairy ingredients, rising use of lactose-reduced milk components, growing adoption of high-protein dairy formulations, expansion of clean-label milk ingredients, enhanced focus on ingredient standardization.

The increasing demand for dairy products is anticipated to drive the growth of the modified milk ingredients market in the future. This demand stems from the rich nutritional profile of dairy, which includes essential proteins, vitamins, and minerals, alongside a growing consumer emphasis on health and wellness. Modified milk ingredients play a vital role in the dairy sector by improving the functionality, texture, and nutritional value of dairy products, enabling manufacturers to address diverse consumer preferences and innovate with new formulations. For example, in November 2023, the United States Department of Agriculture (USDA) forecasted that Australia’s milk production would grow by 0.6% in 2024, reaching 8.5 million metric tons (MMT), following a stabilization at approximately 8.45 MMT in 2023 after several years of decline. Consequently, the increasing demand for dairy products is fueling the growth of the modified milk ingredients market.

Key companies in the modified milk ingredients market are focusing on creating innovative products with reduced lactose to meet the rising demand for lactose-free and low-lactose food options. Reduced-lactose milk products enable those with lactose intolerance to benefit from the nutritional properties of dairy without experiencing digestive discomfort. For instance, in November 2023, Nestlé, a Switzerland-based company, introduced N3 milk with enhanced dietary benefits in China. The production technology used in N3 milk reduces lactose by up to 80% while converting it into beneficial prebiotic fibers. This product maintains essential nutrients found in regular milk, such as proteins, vitamins, and minerals, and contains over 15% fewer calories compared to traditional milk products.

In June 2024, Osprey Capital LLC, a US-based investment service firm, acquired Oberweis Dairy Inc. for an undisclosed amount. This acquisition aims to enhance Osprey Capital's operational efficiency, strengthen its market presence, and foster future growth. Oberweis Dairy Inc. is a US-based company specializing in the production of modified milk ingredients, including cream and skim milk.

Major companies operating in the modified milk ingredients market are Nestle SA, Danone S.A., Groupe Lactalis S.A., Fonterra Co-operative Group Limited, Saputo Inc., China Mengniu Dairy Co. Ltd., Kerry Group, Savencia Fromage And Dairy, Agropur Cooperative, Glanbia plc, Emmi Group, Bel Group, Royal A-ware, Vinamilk, Leprino Foods, Arla Foods Group, Schreiber Foods, Valio Ltd., First Milk Ltd., Amul, Royal FrieslandCampina N.V.

Asia-Pacific was the largest region in the modified milk ingredients market in 2025, and is expected to be the fastest-growing region in the forecast period. The regions covered in the modified milk ingredients market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East and Africa. The countries covered in the modified milk ingredients market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Italy, Spain, Canada.

The modified milk ingredients market consists of sales of whey protein concentrates, whey protein isolates, milk protein concentrates, and milk protein isolates. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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