Anhydrous Milk Fat (Butter Oil) Market Size, Share, Growth, and Industry Analysis, By Type (Conventional, Organic), By Application (Offline, Online), and Regional Forecast to 2033

Last Updated: 16 January 2025

ANHYDROUS MILK FAT (BUTTER OIL) MARKET OVERVIEW

The global Anhydrous Milk Fat (Butter Oil) market size was USD 3.70 billion in 2024 and is projected to touch USD 10.86 billion by 2033, exhibiting a CAGR of 12.69% during the forecast period. 

The Anhydrous Milk Fat (Butter Oil) market is also an important segment in the dairy industry where its uses are relatively promiscuous in food, confectionery, and pharmaceuticals. Anhydrous milk fat is a concentrated dairy product, containing high fat content and enjoying a relatively long shelf-life and adding value to food. This type is often employed in processed foods, baked products and manufacture of chocolates because of their stability and ease of storage. The market growth is on the rise due to consumer shift towards higher quality dairy products, trend of convenience foods and widening use in premium confectionery goods. Further, the increase in population base all around the world and improvements in the per capita income, predominantly in the developing countries, have put a stronger emphasis on adding value added products such as butter oil. However, there are issues such as sustainability and concerns for health implications that make the market less expandable besides availability of plant product.

COVID-19 IMPACT 

Anhydrous Milk Fat (Butter Oil) market had a negative effect due to disruption in supply chain during COVID-19 pandemic

The global COVID-19 pandemic has been unprecedented and staggering, with the market experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden market growth reflected by the rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

An analysis of this Anhydrous Milk Fat (Butter Oil) market share reveals that the on-going COVID-19 pandemic had a profound effect on its operations due to disruption of supply chains, decline in industrial use, and restrictions on global exports and imports. The COVID-19 restrictions such as lock-downs and ban on travels affected transportation of raw materials and the finished products hence supply chain interruptions. A cut on food servings especially restaurants, hotel and catering businesses directly led to reduced demand for butter oil. Conversely, reduced customer affordability to goods, as well as the alteration of their expenditure tendency towards necessities affected retail sales. Restrictions in exporting countries that are major players in dairy production deepened the problems of the market for the importing zones. However, COVID-19 proved the importance of more robust supply chains in the market and multiple networks for its distribution.

LATEST TREND

"Increasing Demand for Organic and Sustainable Anhydrous Milk Fat (Butter Oil) Products to Drive Market Growth"

The current trend emerging in the Anhydrous Milk Fat (Butter Oil) market is one that calls for the use of organic and socially responsible products. As the consumer grows more aware of health and the environment, organic butter oil which is without synthetic additives and pesticides is slowly receiving attention. Also, sustainability conscious buyers want product from milk that has been sourced sustainably or products produced using sustainable approaches to production. This trend is helping producers to embrace such labels as USDA Organic and directing their attention to the reduction of emissions to meet consumers’ preferences.

ANHYDROUS MILK FAT (BUTTER OIL) MARKET SEGMENTATION

By Type

Based on Type, the global market can be categorized into Conventional, Organic

• Conventional: This comprises butter oil produced using regular agricultural practice, common butter oil due to its accessibility and cheapness.
• Organic: This type is obtained from unpreserved milk that does not contain chemicals or hormones making it desirable by conscious and environment conscious consumers.

By Application

Based on Industry Analysis, the global market can be categorized into Offline, Online

• Offline: This includes conventional platforms such as supermarkets, hypermarkets, and speciality stores allowing physical product touch, and immediate purchase.
• Online: Homes, consumers have an easy time purchasing butter oil from the comfort of their homes, from various e-commerce platforms ranging from various UK e-commerce platforms to those located internationally, with various types of butter oil available in the market, at competitive prices.

MARKET DYNAMICS

Market dynamics include driving and restraining factors, opportunities and challenges stating the market conditions.                  

Driving Factors

"Increasing Demand for Processed and Premium Foods to Boost the Market"

Factors that are pushing the Anhydrous Milk Fat (Butter Oil) market include factors like concerns with processed and premium food products needs. Therefore, butter oil is widely applied in manufacturing of bakery and confectionery goods, and ready-to-eat dishes because of its creamy consistence, ability to enhance the taste and prolonged shelf-stability. While consumer increasingly embrace convenience and indulge themselves with some extra snacks and treats, there will be a bigger demand for high quality such as anhydrous milk fat. This trend is evident most in our urban areas where there are so many activities taking place, that people consider convenience foods. Further, it is used in premium chocolates and gourmet foods that are consistent with consumer’s emerging trends with luxury experience with food products, thus driving the growth of the market.

"Expanding Global Dairy Industry to expand the Market"

The increase in the production of dairy products all over the world is the other factor that is putting pressure on the Anhydrous Milk Fat (Butter Oil) market growth. Dairy farming has increased over the years due to processing technology development, and supply chain, meaning that customers can now access butter oil product easily. Urbanization, increase in disposable income and population in the global new economy countries have all contributed to high demand for dairy ingredients in food and beverages, personal care products and pharmaceuticals. Additionally, there has been an increasing trend in functional dairy products, which are enhanced with other nutrients, extending the marketing prospects for anhydrous milk fat in health-oriented products.

Restraining Factor

"Competition from Plant-Based Alternatives Impede Market Growth"

The Anhydrous Milk Fat (Butter Oil) market has one great threat in the form of the plant-based butter oils. The vegan goods especially vegan butter, coconut oil, along with additional non-dairy fats are popularizing as customers think more about their health and habits towards the nature. Such alternatives are considered to be healthier and less damaging to the environment; therefore, they are gaining more market share within the young and special diet consumers. This change in demand and consequent shift in the structure of the food oils market represents a threat to producers of butter oil that have long relied on domestic-market volumes, as they must adapt or change their product range in order to maintain market share.

Opportunity

"Rising Demand for Organic and Premium Products to Create Opportunity for the Product in the Market"

The Anhydrous Milk Fat (Butter Oil) market holds a good potential for growth in the increasing trend of organic and higher end products. The consumer is in many cases demanding dairy products that indeed do not contain artificial preservatives and are produced from quality milk from animals brought up through proper standards. More companies are developing organic certifications and sustainability-oriented production lines as influential buying factors. In addition, growth in the modern day’s consumption of premiums confectionery products, gourmet foods and health-enhanced and functional foods is developing a favourable market for butter oil manufacturers. This aspect means that producers stand a better chance of monopolizing the market while satisfying wealthy and nature lover’s consumer’s assignment.

Challenge

"Volatility in Raw Material Prices Could Be a Potential Challenge for Consumers"

The primary problem of the Anhydrous Milk Fat (Butter Oil) market is the fluctuation in the prices of raw materials most especially milk. Seasonal variations in milk production rates through climate and political instabilities are other genuine production cost risks. Further, there are transportation costs for transporting inputs such as energy for milking and feeding the dairy cattle whose prices have also increased. To the manufacturers, these soaring and sometimes fluctuating price changes are efficient in restraining the prices and profitability, especially in consumer-oriented markets. Solving this problem calls for guarantying better procurement practices as well as entering into long-term partnership agreements with suppliers and possibly finding other sources of revenue to reduce the financial risks.

ANHYDROUS MILK FAT (BUTTER OIL) MARKET REGIONAL INSIGHTS

• North America

Leading role in market is occupied by North America due to the need for superior quality and functional Anhydrous Milk Fat (Butter Oil). This makes it easier to have ready supplies and the region has the best dairy industry in the world processing technologies also provide quality supplies. The biggest consumers that have revealed a fondness for the product are the U.S. Anhydrous Milk Fat (Butter Oil) market especially for processed foods, bakery products and gourmet confectionery that contain the butter oil. Further, owing to increasing consumers’ consciousness about organic and clean-label products, market players have new opportunities to develop. Related market growth factors in the region include key industry players such as supermarkets and e-commerce platforms that establish a robust market structure in North America.

• Europe

The market is most developed in Europe owing to its strong roots in dairy products and high per capita consumption of dairy products. Bulk of butter oil export is from developed countries such as France, Germany and Netherlands in terms of dairy farming technology and environmental friendly production. One of the most important production segments is baking and confectionery, because the population of the region has always placed the greatest emphasis on the use of butter oil in cooking. Moreover, Europeans’ increasing demand for organic and products that are free from genetically modified organisms is well served by the region as well. European players make it easier to offer high quality and safety to its clients; the Europe region has an advantage with export potential to other continents.

•  Asia

As regards the geographical zone, Asia is in the process of becoming the market with the highest Anhydrous Milk Fat (Butter Oil) consumption owing to the progressing urbanization process and growth of the population income level. Places such as China, India as well as Japan, there are raising demand for processed and convenience foods which employ butter oil greatly. Exploding middle class population and the increasing demand for western style bakery and confectionery goods also explain this market growth. Not only that, the availability of e-commercial site has also increased the availability of butter oil to consumers. Nonetheless, factors like these, containing oscillative milk supply and varying regulatory environment across global regions, apply great pressure for adaptations on side of the market participants.

KEY INDUSTRY PLAYERS

"Key Industry Players Shaping the Market through Innovation and Market Expansion"

Key industry players in the Anhydrous Milk Fat (Butter Oil) market are Fonterra Cooperative Group which exports dairy products, Arla Foods whose products are sustainable and organic, and Glanbia Ingredients which offers functional and premium value added dairy products. Royal FrieslandCampina is another important stream due to the great number of produced Dairy products. Others include Dairly Farmers of America, Land O’Lakes and Saputo Inc with regional and international market orientation. These industry titans continue to rely on such things as superior technologies and efficient channel networks to sustain themselves.

LIST OF TOP ANHYDROUS MILK FAT (BUTTER OIL) MARKET

• Interfood Corp. (Netherlands)
•  NUMIDIA BV (Netherlands)
•  Uelzena Group (Germany)
•  UGA Group (U.A.E)

KEY INDUSTRY DEVELOPMENT

In September 2024: The Fonterra Co-operative Group introduced a portfolio of organic Anhydrous Milk Fat products to meet consumer’s increasing interest in sustainable and clean labels. This development relates with the company’s vision to operate as a sustainable and innovative firm with wider market share in more especially in the premium segments within North America, Europe and the Asian market.

REPORT COVERAGE

The Global Anhydrous Milk Fat (Butter Oil) market will grow steadily in the coming years due to increasing demand for dairy based specialities in baked goods, confectionary and processed food segments across the globe. The main drivers for such growth are; enhanced demand on high quality and organic products, the growing middle-income population in the growing economies and the innovation in the processing of milk. Nonetheless, future challenges like voluntarism and unpredictable raw material costs or competition from other plant protein sources or varying regional legislation could act as threats. Stakeholders are increasingly engaging in research and development of new products and other production innovation, buying green materials, and exploring new channels which can help unlock opportunities for growth. This factor make the market fit for the future to meet the consumer demand for so-called clean label, health and sustainability. It is very competitive at the same time the industry’s key players continue to enhance their positions in the marketplace through the incorporation of technologies and effective partnerships in the international arena.