Global Anhydrous Milk Fat Market - Strategic Insights and Forecasts (2026-2031)

The global anhydrous milk fat market is projected to grow at a CAGR of 6.5% over the forecast period, increasing from USD 5.9 billion in 2026 to USD 8.1 billion by 2031.

The global anhydrous milk fat (AMF) market is expected to showcase steady growth as demand for dairy fat-rich ingredients increases among food processing industries. AMF consists of a very high percentage of milk fat and little moisture, owing to which it is used in bakery, confectionery, dairy products, and infant nutrition formulations.

One of the main drivers of overall market growth is the rising demand for premium dairy goods, especially from developing countries. Food producers rely on AMF rather than ordinary butter for mass production because of its stable fat content and better storage capacity. Furthermore, this factor, coupled with the increased need for superior dairy components such as chocolates, ice creams, and other ready-to-eat foods, has contributed to its increased acceptance. Production of ice cream, regular hard in the US for January 2024, was 52,014 (1,000 gallons). It increased to 59,544 (1,000 gallons) in January 2025.

However, fluctuations in raw milk prices, strict dairy trade regulations, and supply chain volatility could affect market stability. Technological enhancements in the dairy segment and rising global trade of dairy fats are likely to drive the growth of the AMF market worldwide during the next few years.

Several food safety and quality regulations govern the global anhydrous milk fat market. The Codex Alimentarius Commission is the body that defines international standards for milk fat products. Regulation (EU) No 1308/2013 is the legal basis for milk fat enforcement in the European Union, whereas the United States Food and Drug Administration controls the safety and labelling of dairy ingredients.

MARKET DYNAMICS

Market Drivers

• Increasing Consumption of Processed and Convenience Foods

The rising intake of processed and convenience foods has become one of the primary reasons driving the global demand for anhydrous milk fat. Fast urbanization, hectic lifestyles, and a larger working consumer base have together notably increased the demand for ready-to-eat and simple-to-prepare food items. In 2025, around 953.8 million people lived in urban areas and 451.1 million in rural areas of China. China had a total population of almost 1.405 billion people that year.

Diverse processed food products like breads and pastries, packaged snacks, ready-to-eat frozen food, sauces, and instant mixes need reliable and premium dairy fat components to increase flavor, texture, and shelf life. AMF is used in these end-products owing to its high fat content, uniform quality, and the ability to endure harsh processing temperatures without altering its functional characteristics. Moreover, its limited moisture content means producers can use it more effectively than regular butter; hence, it is ideal for large-scale food manufacturing and world trading.

Modern retail chains and food service industries are growing rapidly across developing economies such as China, India, and Brazil. This is leading to rising consumption of packaged and convenience foods and, in turn, increasing the demand for AMF as a major ingredient in food processing. Since consumers are increasingly looking for food products that are convenient, tasty, and have a long shelf-life, the use of AMF in the global processed food industry is anticipated to rise gradually.

MARKET SEGMENTATION

By Application: Diary Products

Based on application, the global anhydrous milk fat market is divided into dips & spreads, bakery & confectionery, dairy products and others. Anhydrous milk fat (AMF) is utilized in many aspects of dairy processing because of its abundance of milk fat, flavour, texture and long shelf life properties, owing to which it is used in the processing of dairy foods such as butter blends, ice cream, processed cheese, recombined milk and dairy spread. Hence, AFM helps ensure uniformity and full-flavour throughout the production process.

The U.S. Department of Agriculture’s “Agricultural Outlook Forum” maintains an updated track of milk fat and skim solids supplies and demands through 2026, and currently shows that milk fat percentage is witnessing a growth in milk components produced in the USA. In 2025, the milk fat percentage level grew from 2.1% to 4.33%, driven by strong consumer demand.

AMF improves the stability of processed dairy products and allows higher standardization of fat levels in recombined dairy products. As more producers process dairy products with AMF, the trend towards increasing milk fat levels will continue to grow.

The rising global population is expected to support higher demand for dairy products, which directly benefits the application of anhydrous milk fat in the dairy industry. According to estimates from the United States Census Bureau, the global population is projected to reach about 8.1 billion in 2025 and increase to nearly 9 billion by 2038.

A larger population increases overall food consumption, including milk, cheese, butter, and other dairy products that rely on milk-fat ingredients during processing. As dairy manufacturers expand production to meet growing nutritional and food demand, concentrated dairy ingredients such as anhydrous milk fat will be widely used to maintain consistent fat content and improve texture. According to the USDA’s “Dairy: World Market and Trade”, in 2025, the global butter production reached 12,321 thousand metric tons, with a projection for 2026 reaching 12,622 thousand metric tons.

REGIONAL ANALYSIS

North America: the US

The evolving consumer landscape in the United States has impacted their food choices, with preferences for products featuring natural and clean-labelled ingredients gaining traction. Moreover, improved disposable income has positively impacted the overall foodservice and snacks culture in the United States, which is primarily driven by the young population, whose total strength stood at 45.89 million in 2025.

Likewise, anhydrous milk fat, a source of essential fatty acids and fat-soluble vitamins, is also used in infant nutrition to improve their digestibility. With ongoing parental concern regarding the child’s health, it is expected to provide new growth prospects for anhydrous milk fat in such applications. The favourable government policies, such as the recently passed “Whole Milk for Healthy Kids Act,” which outlines the use of milk fats in school meals, are further propelling market expansion.

With the food processing sector witnessing constant growth, fueled by rising bakery and confectionery consumption, the scope of use of anhydrous milk fat is further set to grow in high-end baked goods, chocolates and other processed food items. According to the National Confectioners Association’s “State of Treating 2026” report, total confectionery sales in 2025 reached USD 55 billion, showcasing steady growth over the USD 54.2 billion sales recorded in 2024. Additionally, the same source further specified that chocolate accounted for a major share of 51.7% of total sales, followed by non-chocolate candy with 40.9%.

Additional factors, like the well-established presence of key market players, namely Fonterra Co-Operative Group Limited, which sells anhydrous milk fat under its New Zealand Milk Products brand through strategic collaboration with domestic distributors like Batory Foods, have further improved the overall market landscape.

Besides high confectionery sales, the overall demand for dairy products, including butter, is also experiencing a steady expansion in the United States, fueled by a positive uptick in demand. According to the USDA’s “Dairy: World Market and Trade” report, in 2025, the total butter consumption in the United States reached 1,041 thousand metric tons, which is expected to reach up to 1,135 thousand metric tons in 2026. Such growth will directly benefit anhydrous milk fat as concentrated form.

List of Companies

• New Zealand Milk Products (Fonterra Co?operative Group Limited)

• Lactalis Group

• Uelzena Group

• Royal VIVBuisman (Van Ballegooijen Foods)

• Tatua Co-operative Dairy Company Limited

• Royal FrieslandCampina N.V.

• Flechard SAS

• Meadow Foods Ltd.

• Dairy Farmers of America, Inc.

• Synlait Milk Ltd.

Synlait Milk Ltd. is a manufacturer of high-quality dairy products and raw materials for a variety of industries. They manufacture both powder and liquid forms of milk, as well as butter and nonfat dry milk (NFDM) from fresh whole milk obtained from local New Zealand dairy producers. The company has several large processing plants that process the fresh milk into an exportable dairy ingredient; they focus on developing innovative products through advanced processing techniques. The majority of the ownership of the organization is by Bright Dairy Holding Limited, one of the largest dairy companies in China, giving it a wider range of distribution in international markets.