Organic milk is referred to the milk from livestock, which are raised through organic farming methods. Livestock are fed with organic feed and need to follow organic farming stipulation such as no artificial additives in the feed, no antibiotics, no growth hormones, living condition allow movement of livestock, and the animal should have access to outdoors.
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Changing dietary preference of the people towards organic food & beverage products is propelling demand for organic milk products. According to reports published by the Food and Drug Administration of United States, six in 10 U.S. citizens believe that organic food products are better for their health. Also, according to the U.S Department of Agriculture, 4% of the total food sales in the U.S. in 2016 were organic products. The organic retail sales in Europe stood at US$ 30.85 billion in 2014, as estimated by The International Federation of Organic Agriculture Movements.
Moreover, increasing awareness about harmful effects of chemical traces in milk products are leading to increasing demand for organic milk products. Chemical fertilizers contain harmful toxins such as nitrates, heavy metals, and metal salts, which adversely affects human health and lead to various issues related to cellular metabolic processes. However, organic farming method includes feeding of 100% organic feed to livestock, which do not contain any harmful traces or growth hormones or antibodies. Therefore, increasing popularity of organic food as a safe food is projected to fuel growth of the global organic milk market over the forecast period.
The cost of organic milk is higher than conventional milk, which is a major challenge for growth of the market. Furthermore, governments across various regions have imposed strict regulations on organic milk products. For instance, the United States Department of Agriculture (USDA) established guidelines for organic certification. Under USDA organic regulation (7 CFR 205), farms need to follow standards such as Land Requirement (205.202), origin of livestock (205.236), Livestock Feed (205.237), and Livestock Healthcare Practices (205.238) in order to be eligible for organic certification. Such strict regulations forces manufacturers to maintain their product quality and thus, is expected to be a major restraining factor for the market growth.
On the basis of distribution channel, supermarkets segment is projected to gain major traction in the market over the forecast period. Supermarkets are focusing on initiatives to tap potential opportunity in organic milk market. For instance, in February 2017, Asda, one of the key retailor in the U.K., started to sell Dairy Farmers ‘free range dairy milk’, to meet consumer demand for organic milk in the U.K. Asda identified potential 109 stores and started selling organic milk under Pasture Promos logo. Such marketing strategies are projected to boost sales of organic milk products through supermarkets.
North America accounted for highest revenue share in global organic milk market in 2017 and the region is projected to lead the market throughout the forecast period. In North America, the U.S. is the most lucrative market for organic milk. According to Agricultural Marketing Services USDA 2018 report on Organic Fluid Dairy, total organic milk products sales for February 2018 were pegged at 205 million pounds, up by 1.0% from February 2017. Total organic milk products sales for February 2018 were pegged at 85 million pounds, which is up by 10.9% compared to February last year.
Europe accounted for second-largest market share and the trend is projected to continue over the forecast period. European Union is actively promoting organic farming through the EU Common Agricultural Policy (CAP). Under the current CAP for the period 2014–2020, organic farming is supported by Pillar 1 (direct payments) and Pillar 2 (Rural Development Programme). Such factors are expected to increase availability of organic feed to livestock and in turn aiding in growth of the organic milk market in Europe.
Key players in Global Organic Milk Market
Key players operating in the global organic milk market include Groupe Danone, Organic Valley, Organic Milk Suppliers Cooperative (OMSCo), Fonterra Co-operative Group Limited, Arla Foods Amba, Agropur Dairy Cooperative, Clover Stornetta Farms, Inc., and Shamrock Foods Company, among others.
Leading market players are launching new organic milk products, in order to meet rising demand from consumers. For instance, in September 2017, Arla Foods launched its first branded organic milk product in Middle East. The product was strategically launched by company to tap potential market outside Europe. The product was launched in all leading retail chains in UAE such as Union Coop, Choithrams, Lulu, Geant, and Spinneys hypermarkets. Moreover, Arla Food is planning to expand its organic food business in Saudi Arabia and Kuwait in 2018. Such activities are projected to have positive impact on growth of the market in Middle East.
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