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The global butter market size was USD 35.61 billion in 2020. The market is projected to grow from USD 37.01 billion in 2021 to USD 49.07 billion by 2028 at a CAGR of 4.11% during the forecast period (2021-2028). The global impact of COVID-19 impact has been unprecedented and staggering, with the market witnessing a positive impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited higher growth of 22.02% in 2020 as compared to the average year-on-year growth during 2017-2019. The fall in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
The market is witnessing substantial growth across the globe. The increasing demand for processed food products such as bakery, confectionery, desserts, and ready-to-eat meals among consumers has significantly increased the demand across the food industry. The rising demand for packaged products across retail and foodservice channels is expected to propel the butter market growth during the forecast period.
Increased Retail Sales to Drive Market Growth during COVID-19 Pandemic
In the initial months, the global pandemic negatively affected milk sales due to disruptions in the supply chain. However, there has been a positive effect of the pandemic and nationwide lockdowns on sales. Consumers have turned to home baking during the stressful times during the pandemic. For some, baking during lockdown was necessary due to restrictions on the sale of ready-baked products. Cooking has also become a way to be creative and occupy themselves and their families.
According to the report published by Land O’Lakes, a leading dairy company, sales increased by 22% in 2020 compared to the previous year. The growing demand that rose across food manufacturing and processing companies is expected to drive market growth in the coming years. Moreover, the reopening of hotels, restaurants, and cafes will fuel the demand across the foodservice sector.
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Emerging Trend of Consuming Healthy Products to Drive Market Growth
In the past few years, the purchasing behavior of consumers has shifted to increase the sales of products with natural and healthy ingredients. The naturally-sourced ingredients are perceived to be more beneficial than other processed foods. Many dairy products have recently become popular due to this natural ingredient trend. Butter contains saturated fats, water, salt, and other milk solids. The growing perception among consumers that fats in butter are healthier if consumed in moderation has considerably increased its consumption in recent years.
Food processing companies have also shifted the fat ingredient from margarine to butter due to increased popularity of butter. The rising interest in cooking and baking at home, which started during the pandemic, is expected to further fuel the market growth in the foreseeable years.
Growing Demand for Processed Food Products to Drive Market Growth
Demand for dairy products has been shifting across the globe toward dairy fats and away from their substitutes based on vegetable oil. This trend is attributed to a positive health perception of dairy fat and evolution in taste. As discretionary incomes increase among consumers and diets become more globalized, more dairy products are anticipated to be consumed in developing countries due to increased consumption of processed foods.
The rising demand for bakery products such as cakes, bread, cookies, and biscuits is significantly driving the utilization of butter across the bakery industry. It is an essential ingredient in the manufacturing of confectioneries. The growing popularity of various confectionery items is expected to increase the demand for butter. It has found an extensive application in ready-to-cook and ready-to-eat meals, which are booming due to the rising popularity of convenience foods. Increasing innovations and developments across dairy beverages are projected to further increase its utilization of butter in the forthcoming years.
Rising Popularity of Butter Across Retail & Foodservice Sectors to Further Fuel Market Growth
Packaged butter is one of the fastest-selling products across retail channels. Many consumers turned to cooking and baking at home during the pandemic and nationwide lockdowns. These factors significantly increased the demand for its retail packs in developed and developing markets. In recent years, premium grade also gained popularity among consumers in developed countries. Premium butter includes butter from A2 milk, organic, and clean-label butter. Increasing discretionary income levels are further expected to propel the demand for premium butter among consumers.
Butter is a widely used ingredient across hotels, restaurants, cafes, and catering worldwide. Consumers' evolving taste has increased its utilization in various cuisines that are served fresh in cafes and restaurants. The emerging trend of eating out and purchasing ready meals is anticipated to drive the market growth in the foreseeable years.
Increasing Popularity of Lactose-free and Plant-based Foods to Limit Market Growth
The demand for plant-based foods increases due to rising consumer awareness regarding animal welfare. Moreover, plant-based food & beverages are briskly moving toward the mainstream retail products market. The ever-increasing perception that plant-based products are healthier and safer surges the demand for natural butter alternatives such as soymilk and nut milk-based butter.
Rising cases of lactose intolerance also increase the demand for dairy alternatives. Lactose-containing products are considered unhealthy as they contribute to obesity and lifestyle-related disorders. The fast-developing dairy substitutes industry with new product innovation, such as non-dairy ice-creams, vegetable oil-based bakeries, and confectionery products, is expected to hamper the growth of the global market.
Salted Segment Holds Largest Market Share due to Higher Consumption
Based on type, the market is divided into salted and unsalted butter.
The value for salted type is the largest in the global market due to its worldwide reach and popularity. It is primarily sold as packaged butter in retail and foodservice channels. The shelf life of salted type is higher than that of unsalted butter and preservation is easier. Salted butter also improves the taste and texture of the product. The ever-expanding distribution channels and booming online retails are projected to further fuel the market growth.
Unsalted type has applications in various processed foods such as bakery products, noodles, and pasta. The demand for unsalted type has significantly increased among food manufacturers. Moreover, the rising consumption of refined butter is attributed to its increasing utilization in various innovative food products such as premixes and ready-to-cook foods.
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Industrial Processing Segment Holds the Major Market Share
The market is divided into industrial processing, retail channels, and foodservice based on end-use.
The industrial processing segment dominates the market. The segmental growth is primarily fueled by the growing demand for butter across the processed food-manufacturing sector. The confectionery sector extensively utilizes butter as its primary ingredient. The increasing investment by manufacturers to innovate and develop novel confectionery products has ultimately increased the demand for butter across the segment. Butter is a highly used ingredient in various bakery products, mainly bread and cakes. The substantially growing bakery industry is estimated to drive the growth of the market in the foreseeable future.
Retail channels are growing fast due to their evolved distribution capabilities. These channels provide a strong base for the sale of packaged butter. Consumers nowadays have become interested in baking at home as a necessity or hobby. The packaged butter segment has experienced strong growth during the pandemic due to home growing, cooking trend.
Asia Pacific Butter Market Size, 2020 (USD Billion)
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The market is categorized into North America, Europe, Asia Pacific, South America, and the Middle East & Africa in terms of geography.
Asia Pacific is the Leading Region attributed to Flourishing Food Processing Industry
Asia Pacific remains the primary market shareholder due to the region's major milk-producing country, such as India. The rising expenditure of consumers in the region has contributed to the growing demand for dairy products. Prominent dairy brands are using strategic marketing activities to increase the sale of packaged butter products. The increasing demand for cooking and baking among consumers has also necessitated vital players to strengthen their processing capabilities and fulfil the ever-increasing demand.
Europe is expected to grow at a significant CAGR, owing to the growing demand for clean-label and sustainable milk and dairy products. Europe is mainly fueled by consumers' increasing demand for bread and assorted bakery products. Consumer inclinations have shifted toward buying healthier and safer products in the past few years. The increasing demand for organic and non-Genetically Modified Organism (GMO) butter is expected to propel the market growth in forthcoming years.
The North America market is primarily propelled by the growing demand for processed food products. The evolving and expanding foodservice sector in the region significantly drives the need for butter. Consumers in the region are nowadays taking an interest in baking at home, which considerably fuels the sale of retail packages. Furthermore, the emerging trend of clean-label food products has increased the demand for organic butter in the U.S. The major players in the market are capitalizing on the growing demand for innovative, novel, and premium butter products.
The South America market is witnessing prominent growth due to increased discretionary income levels among consumers. Baked goods are becoming popular among the millennial population. The increasing demand for confectionery is also expected to drive regional growth in the coming years.
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The Middle East & Africa market is mainly propelled by the increasing demand for bakery products, confectionery, and desserts among consumers. Urbanization and exposure to western food culture drive the changes in the food consumption patterns in the region.
Fonterra Co-operative Group to Invest in Product Launches to Strengthen Portfolio
Fonterra is a leading dairy products company based in New Zealand, actively investing in new product developments in the butter segment to strengthen its product portfolio and fortify the business in the global market. For instance, in March 2021, the company launched a new carbon zero certified organic butter to fulfill the growing demand for organic dairy products. The major players such as Arla Foods, Dairy Farmers of America, and Land O’Lakes also focus on new product developments to consolidate the market. The arrival of small players in this market considerably contributes to the competitive landscape in the market, thereby creating a positive impact on the global market growth.
An Infographic Representation of Butter Market
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The market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and top-end uses of the product. Besides this, the report offers insights into the global butter industry trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market over recent years.
Value (USD billion)
Fortune Business Insights says that the value of the market was USD 35.61 billion in 2020 and is projected to reach USD 49.07 billion by 2028.
In 2020, the Asia Pacific market value stood at USD 13.60 billion.
Growing at a CAGR of 4.11% during the forecast period (2021-2028), the market will exhibit steady growth.
The salted butter segment is expected to be the leading segment based on type in the global market during the forecast period.
The rising popularity of processed foods such as bakery products and confectionery is the key driving factor of the global market.
Fonterra Co-operative Group, Land O’Lakes, and Arla Foods are the top players in the global market.
Asia Pacific is expected to hold the highest market share in 2020.
The emerging trend of cooking and baking at home and purchasing packaged food containing natural ingredients are significant factors driving the adoption of butter.
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