Malaysia Dairy Food Market Outlook to 2027

Market Overview:

Malaysia’s dairy food market has been experiencing steady growth over the years due to increasing consumer awareness about the importance of dairy products in a balanced diet and rising disposable incomes. Dairy consumption in Malaysia is primarily driven by urbanization, changing lifestyles & growing preference for Western diets. The Malaysian dairy food market is considered to be one of the fastest-growing sectors within the food and beverage industry.

The market is witnessing a consistent increase in dairy consumption, with demand extending across various dairy products, including milk, cheese, yogurt, and butter. Rising health consciousness among consumers along with a growing interest in dairy-based protein products, has contributed to the market's expansion. Consumers are increasingly seeking healthier alternatives which leads to a rise in demand for functional dairy products enriched with vitamins, minerals, and probiotics. Manufacturers are focusing on product innovation which cater to evolving consumer preferences. This includes the introduction of new flavors, packaging formats, and fortified dairy products. Despite the growing demand for dairy products, price sensitivity is a significant challenge, especially among price-conscious consumers.

Malaysia dairy food market includes dairy food manufacturers, distributors, governing Authorities and end-users of dairy products. Technological innovations in dairy processing, packaging & distribution enhance product quality, shelf life, and convenience for consumers.

Malaysia Dairy Food Market Analysis

• Malaysia is making efforts towards boosting local milk production to reduce its reliance on imports. The government has been encouraging dairy farmers to increase their production through various incentives and support programs. They aim for milk self-sufficiency by 2025.
• Some dairy farms are investing in automated milking systems, which decreases the need for manual labor in the milking process. Automated milking system improves milking efficiency, reduce labor costs, and provides a more comfortable environment for cows.
• Rising income levels, urbanization and changing lifestyle in Malaysia is encouraging the consumption of dairy in the country.
• Malaysia's population has been steadily increasing, leading to a larger consumer base and dairy products. Growth of foodservice industry, including restaurants, cafes, and fast-food outlets has contributed to the increasing demand for dairy products as ingredients and menu items.
• Growing awareness among Malaysians about the nutritional benefits of dairy products, is increasing consumption of products like yogurt and milk with added probiotics and functional ingredients.
• Dairy companies are adopting sustainable practices like eco-friendly packaging and responsible sourcing of raw materials to appeal to environmentally conscious consumers.

Key Trends by Market Segment:

Butter & Spreads: In 2022, Malaysia Dairy Food market is segmented by type, with margarine & spreads at ~58% of total share. Margarine is affordable than butter and being widely available in supermarkets and grocery stores across Malaysia, it is accessible and cheaper to consumers compared to butter, thus it constitutes a major portion in the butter and spreads market, having a share of 58.5% of total market value.

Cheese: In 2022, the market is segmented into Processed Cheese, Soft Cheese, Hard Cheese and Spreadable Cheese. Processed Cheese is the dominant segment with ~89% of overall share. Processed Cheese is a convenient and ready-to-eat food option because of its increasing popularity of fast-food chains and western-style restaurants that use processed cheese in Malaysia.

 Ice-Cream: In 2022, ice-cream market is segmented into Take Home Ice-Cream & Impulse Ice-cream market. Take Home ice-cream market is the dominant segment with ~53% of overall share. Take Home ice cream in larger containers is more cost-effective that is why there’s a preference for planned purchases than impulse purchase. Also, there is wide availability of Take-Home ice cream in supermarkets and grocery stores which is driving the market.

Competitive Landscape:

Major Players in Malaysia Dairy Food Market

• Butter and Spreads Market in Malaysia is led by companies like Upfield, Fonterra and Lam Soon & brands like Plants, Anchor and Lurpak.
• Ice-Cream Market in Malaysia is led by companies like Unilever and Nestle, with leading brands like Cornetto, Drumstick, Walls, etc.
• Drinking milk market in Malaysia is led by companies like Dutch Lady, Fonterra and Nestle, with leading brands like Dutch Lady, Goodday and Anlene Milk.
• Fraser & Neave Holdings is leading in Malaysia Other Dairy Market with 62.4% market share. Below them are Etika Holdings and Malaysia Milk Sdn Bhd with 18.2% and 4.5% share respectively.
• Fonterra has a diverse product portfolio which includes Fresh Milk, Flavoured Milk, Butter, Cheese, Yogurt, ice cream and powdered milk.

Recent Developments:

• July 2023: Fonterra partnered with Yayasan Food Bank Malaysia to provide milk to 1500+ families nationwide.
• Jun 2023: Cleantech Solar partnered with Etika Group to develop 1.7 MWp rooftop solar PV systems in Malaysia and Indonesia.
• Feb 2023: Nestlé (Malaysia) Bhd signed an MoU with KESEDAR to extend its Nescafe Grown Respectfully program to Gua Musang, Kelantan.

Future Outlook:

• The market will grow at a CAGR of 2.8% during 2022-2027 due to introduction of automated milk processing system & rising population in Malaysia.
• Dairy industry in Malaysia is expected to witness increased innovation and product development efforts to cater to changing consumer preferences, including the introduction of new flavors, formulations, and packaging options.
• Trade agreements and imports are expected to impact, the availability and competitiveness of dairy products in the Malaysian market, especially considering Malaysia's participation in regional trade pacts and agreements.
• Growing environmental concerns and sustainability trends may lead to increased scrutiny of dairy production practices and encourage adopting sustainable and eco-friendly approaches within the industry.
• Technological advancements in dairy farming, processing, and distribution is expected to enhance efficiency, quality, and safety standards within the dairy supply chain while influencing market dynamics and consumer perceptions.