Report Description

United States dairy market is experiencing significant growth due to government initiatives and the high demand for dairy products from households. Moreover, the increasing production of dairy products in the country is having a positive impact on market growth.

United States Dairy Market Scope

Dairy products are generally defined as food products that are produced from milk. These products undergo various processes such as pasteurization, homogenization, and fermentation to enhance taste, texture, and shelf life.

United States Dairy Market Overview

Due to the increasing milk production in the United States and the demand for milk-related products, the United States dairy market is experiencing significant growth. California, Wisconsin, Idaho, Texas, and New York are the top five states in milk production, collectively supplying over 50% of the country's annual milk. Furthermore, the domestic market for dairy products in the country is substantial, with milk being a staple in most households and cheese consumption being particularly high.

United States Dairy Market Drivers

According to data from the United States Department of Agriculture (USDA), milk production reached 226.46 million pounds in 2022, positively impacting market growth.  Dairy product consumption in the United States has outpaced population growth, with variations in the consumption patterns of different dairy products among consumers. For example, per capita consumption of milk has decreased in recent years, likely due to competition from other beverages and a decline in the population of children.

The surging demand for cheese has played a significant role in the growth of the United States dairy market. Factors such as a wider selection of cheese, increased dining out, and the popularity of ethnic cuisine incorporating cheese have contributed to the rise in cheese consumption. Mozzarella has been the most popular cheese in recent years, and the consumption of various cheese varieties has been steadily growing, indicating its importance in the American diet.

Government initiatives have also contributed to the growth of the dairy market. For example, the United States Department of Agriculture (USDA) introduced the Organic Dairy Marketing Assistance Program (ODMAP) in January 2023. ODMAP aims to mitigate market volatility, higher input and transportation costs, and unstable feed supply and prices in the organic dairy industry. Under ODMAP, USDA's farm service agency has allocated USD104 million to assist organic dairy operations with marketing expenses.

United States Dairy Market Trends

Consumers' awareness of the nutritional benefits of dairy products, such as calcium, protein, and vitamins, leads to consistent demand for items like milk, yogurt, and cheese. The taste and flavor profiles of various dairy products appeal to consumers, making them popular choices for daily consumption or as ingredients in recipes. Consumers often seek convenient and ready-to-eat dairy products, like pre-packaged yogurts or single-serving milk containers, to fit their busy lifestyles. Dairy products are versatile ingredients used in a wide range of culinary applications, including cooking, baking, and desserts, which drive their demand in households and restaurants.

E-commerce and D2C sales provide convenience to consumers, allowing them to purchase dairy products from the comfort of their homes. It eliminates the need to visit physical stores, saving time and effort. By selling directly to consumers online, dairy companies can reach a broader audience beyond their local markets. This allows them to tap into new customer bases and increase their market reach. Direct sales channels enable dairy companies to engage directly with their customers. They can gather feedback, respond to queries, and build stronger relationships, leading to better customer loyalty. E-commerce platforms often offer customization options, allowing consumers to personalize their dairy product orders, such as selecting specific flavors, sizes, or packaging. Online sales platforms provide valuable data on consumer behavior, preferences, and purchase patterns. These companies can bypass traditional distribution channels and bring their unique products directly to consumers. Some dairy companies emphasize sustainability in their D2C operations by using eco-friendly packaging and implementing efficient shipping practices to reduce their environmental impact.

Challenges in the United States Dairy Market

Plant-based milk alternatives directly compete with traditional dairy products, leading to a shift in consumer preferences and a potential decrease in dairy sales. Plant-based alternatives have captured a notable share of the milk market, especially among younger consumers who are increasingly health-conscious and environmentally aware. Growing awareness of health and wellness has prompted many consumers to opt for plant-based alternatives, perceiving them as healthier options with lower cholesterol and saturated fat content. Plant-based products are often considered more environmentally friendly than dairy products due to lower greenhouse gas emissions and water usage, attracting consumers who prioritize sustainability. The increasing popularity of plant-based alternatives has encouraged more investment in research, development, and marketing, further propelling their growth and market presence.

Recent Developments

  • In 2022, Land O'Lakes, Inc. launched Butter Balls for everyday cooking, which is a first-of-its-kind product and has a pre-portioned size that makes cooking easier.

Market Opportunities

·    The increasing interest in dairy products is driven by consumers' growing awareness of the importance of maintaining a healthy lifestyle and making informed food choices. This trend has significantly impacted the dairy industry, leading to a surge in demand for fortified and functional dairy products with added probiotics, omega-3 fatty acids, and vitamins. Probiotics are beneficial live bacteria that support gut health and aid in digestion. Consumers have become more conscious of the connection between gut health and overall well-being, leading to a rising interest in probiotic-rich dairy products like yogurt and kefir. Omega-3 fatty acids are essential nutrients known for their heart-healthy benefits. As consumers seek ways to improve their cardiovascular health, they are looking for dairy products fortified with omega-3s, such as enriched milk or dairy-based supplements. Fortifying dairy products with vitamins, such as vitamin D or calcium, addresses specific nutritional needs. These additions cater to consumers who may have dietary restrictions, deficiencies, or specific health goals. Functional dairy products go beyond basic nutrition, offering additional health benefits. For instance, some dairy beverages are formulated to improve bone health, boost the immune system, or enhance cognitive function, catering to health-conscious consumers looking for targeted solutions. The broader wellness and self-care trends have influenced consumers' dietary choices. They are seeking foods that not only satisfy their nutritional needs but also contribute to their overall well-being. The dairy industry has played a significant role in promoting the health benefits of fortified and functional dairy products through marketing campaigns and consumer education. This has helped raise awareness and drive demand. Dairy manufacturers have responded to the demand for health-conscious products by continuously innovating and developing new dairy offerings with added functional ingredients. This diversification appeals to a wider range of consumers with varying health preferences. As personalized nutrition gains popularity, consumers are seeking products that align with their individual health needs. Fortified and functional dairy products offer options for consumers to tailor their diets to their specific health goals.

Market Segmentation

The United States Dairy market is segmented based on product type, distribution channel, region and competitive landscape. Based on product type the market is segmented into drinking milk, cheese, yogurt, butter and others include cream, ice-cream, butter milk, etc. Further based on distribution channel the market is fragmented into departmental stores, convenience stores, supermarkets/hypermarkets, online and others, including direct sales, institutional sales, etc. Based on region, the market is divided into South, West, Midwest, Northeast.

Company Profiles

Dairy Farmers of America, Inc., Saputo Cheese USA Inc., Land O’ Lakes, Inc., Danone North America, Lactalis American Group, Inc., California Dairies, Inc., The Kraft Heinz Company, Nestle USA, Inc., Agropur Inc., Prairie farms dairy, Inc., are some of the leading companies in the United States Dairy market.