Dairy Products Market

The dairy products market in North America valued USD 74.34 billion in 2019 and is estimated to reach USD XX billion in 2027, by growing at a CAGR of 2.48% during 2020-2027

Key factors supporting the growth of the market in North America are the increasing awareness among people for nutritional dairy products and zeal for cheese and butter in culinary application. According to USDA data, per capita milk consumption between 1975 and 2017 decreased by a whopping 98 pounds in the US. But growth of another dairy staple more than made up for those declines during that same timeframe. Per capita consumption of cheese grew from 14.3 pounds to 36.9 pounds, amounting to a 22.6-pound increase. Moreover, cheese consumption increase equates to 226 pounds of milk. Per capita consumption of American-style natural cheeses such as cheddar, colby and jack cheeses rose from 11.7 pounds in 1995 to more than 15 pounds in 2017. Meanwhile, per capita consumption of natural Italian-style cheeses (dominated by mozzarella) rose from 10 pounds to more than 15 pounds during the same timeframe. In 2017, per capita consumption of processed cheese reached 5.2 pounds, the highest level since 1996. The gains can largely be attributed to demand in the foodservice and food ingredient sectors. Despite rising domestic demand and increased exports, U.S. cheese stocks — as of Nov. 30, 2018 — topped 1.35 billion pounds, up 7% from the previous year. Increased production has contributed to more cheese in the supply chain. In 2018, milk prices were lower than they’d been since 2010, a reality that also contributed to the bump in cheese stocks.

Higher stocks and lower-than-expected cheese exports to Mexico have contributed to weaker domestic cheese prices. The average consumer price index for cheese slipped 1% during the last six months of 2018 in comparison to the first six months, and that price index was lower during the first quarter of 2019 than it was in the first quarter of 2018. Moreover, falling milk prices have increased the supply of dairy products in the North-American market. According to the U.S. Bureau of Labor Statistics, the price of fresh milk decreased from 3.318 USD per gallon in December 2010 to 3.198 USD per gallon in June 2020. Margin Protection Program for Dairy by USDA is incentivising production even with declining sales, resulting in a growing milk oversupply. Producers are converting the excess milk to items like milk powder and butter, which have a longer shelf life than liquid milk.  Exports to emerging markets such as China, India and Africa are deemed to be the present solution. Even with a decrease in cow numbers, the total milk production in the US saw a 1.1% increase in 2018, as compared to the previous year, to reach 97,730 thousand tonnes. Moreover, the U.S dairy market exhibits sluggish growth owing to weak domestic demand for dairy products and more traction for dairy alternatives and lactose free products. Canada is another significant market in the region whose milk production rose by 5% in 2017 and witnessed a further growth of 3.7% in 2018, compared to 2017, due to government schemes like National Ingredient Strategy and soaring production quotas under the managed production system. While a trade deal with Canada gives the US 3.6% tariff-free access to Canada’s dairy market, it might prove detrimental to the growing dairy market in Canada as it scraps the Class 7 scheme which regulated the prices of certain dairy products like skimmed milk powder. The Canadian dairy industry is one of the leading agricultural sectors in the country and contributes significantly to the country’s GDP.

Moreover, major players in North America are launching new products and investing in dairy products which is expected to drive the market. For instance, in August 2018, Dairy Farmers of America (DFA) invested USD 470 million in a new whey and cheese facility in St. Johns, Michigan, partnering with Glanbia Nutritionals and Select Milk Producers Inc. The disruption to supply chains due to coronavirus is causing tonnes of fresh produce to be wasted in the U.S. Despite food shortages and high demand for dairy produce, the Dairy Farmers of America has had to ask farmers to dump their milk. The short shelf life and perishable nature of dairy products means the effects of coronavirus have hit them harder, and faster, than other agricultural industries. Despite strong demand for basic foods like dairy products amid the coronavirus pandemic, the milk supply chain has seen a host of disruptions that are preventing dairy farmers from getting their products to market. Trucking companies that haul dairy products are scrambling to get enough drivers as some who fear the virus have stopped working. And sales to major dairy export markets have dried up as the food-service sector largely shuts down in North America and other regions as well. 

However, dairy products in grocery stores have been in high demand as consumers stay home during the pandemic, though panic buying may be slowing. Dairy analysts have stated that it would take millions of dollars, for instance, to install new equipment to switch a plant from making one type of cheese - such as barrel cheese used to make processed slices for fast-food restaurants - to producing cheddar wedges for grocers. 

Value-added products account for significant share in the dairy ecosystem in Mexico with nearly 50% of the domestic production used in the production of cheese, yogurt and other products. Cheese is the largest segment in consumer dairy products holding 35% in terms of dollar sales in 2019. It is dominating the value-added dairy industry market and use of fluid milk in the country. According to The United States Department of Agriculture (USDA) estimates, the cheese consumption is set to reach 538,000 MT in 2019. The consumption is likely to surge over the forecast period owing to increased use of cheese in culinary applications. U.S. imports have been catering significant cheese demand in the market. 

The changing trade regulations and import duties on agricultural produce, particularly with the U.S. is posing a significant impact on the cheese market in the country. In July 2019, Mexico imposed import tariffs on the U.S. agricultural goods such as apples, pork cuts and cheese. Cheese exports from the U.S. have faced increased tariffs of nearly 25%. This has resulted in a drop of 40% in the monthly cheese import from the U.S.

However, this changing regulatory environment is likely to aid in the growing domestic production of value-added dairy products. Traditional cheeses such as Fresco, Panela and Doble Crema that are widely produced in the country are expected to surge in production and sales. On the other hand, household consumption of butter has been continuously declining in the country in the past decade. However, sales value is likely to surge accounting to the increasing product price

About Us:

DataM Intelligence was incorporated in the early weeks of 2017 as a Market Research and Consulting firm with just two people on board. Within a span of less than a year, we have secured more than 100 unique customers from established organizations all over the world.

For more information:

Sai Kiran

Sales Manager at DataM Intelligence

Email: [email protected]

Tel: +1 877 441 4866

Website: www.datamintelligence.com