The global organic dairy market is anticipated to grow by over 50%, reaching US$28bn (£21.3bn) by 2023, with new uses for organic dairy ingredients being cited as a key growth driver.

image expired

According to the 2019 Global Organic Dairy Market Report released this week by three major players in organic dairy, the sector - currently worth US$18bn - is growing rapidly and creating new opportunities in the UK and globally.

“Worldwide consumption, distribution and market reach of organic dairy is increasing, and now represents 20% of all organic food and drink sales globally,” explains Richard Hampton, managing director of Omsco.

“The organic dairy market in the UK specifically has also grown 3.1% year-on-year, and we’ve seen a 10% increase in the number of households who purchased organic milk since 2017.”

However, although the global liquid milk market is performing well, equating to 24% of all organic dairy sales, Richard explains that the primary driver of future growth is expected to be new markets and emerging product categories, such as cheese and specialist organic dairy ingredients.

“Historically, traditional dairy products such as liquid milk and yoghurt in Western markets have dominated sales,” he says. “However, although market penetration levels remain relatively low, growth has slowed as these markets have matured, while growth in added value categories such as cheese, infant formula and sports nutrition products has accelerated, particularly in emerging markets, such as the East.”

Organic infant formula and organic cheese are both expected to grow significantly over the next five to seven years, at 12.1% and 14% compound annual growth rate (CAGR) respectively. 

“While there remain good development opportunities in traditional categories and markets, the biggest winners will be those producers and regions who can produce a broad range of products, and take advantage of global growth potential across a wide range of organic dairy applications,” he says.

“The UK is already a net exporter of organic dairy products, in stark contrast to the overall UK dairy sector, which is the third largest net importer in the world. With no clear outcome in place for Brexit, the extent to which the UK can participate in this growth potential is unclear, and a no-deal Brexit will deliver what amounts to an export ban for organic products to the EU, as UK organic standards will no longer be recognised.”

Importantly, Richard says recent conversion of new producers into the organic sector means the UK has enough milk to sustain forecasted growth in the coming few years.

“Organic dairy is a thriving part of the global organic food and drink market and the overall dairy sector, but innovation in market and product diversification will ultimately lead to the greatest opportunities globally. For the UK, how Brexit unfolds over the coming months will ultimately determine the speed at which Omsco can continue to capitalise on these opportunities.”