India's dairy industry is accelerating investments in value-added products as companies seek to improve margins, diversify revenue streams and capitalise on rising consumer demand for convenience, health-focused offerings and premium dairy products, according to a media reports.
Products such as yoghurt, paneer, cheese, flavoured milk, buttermilk, lassi and protein-rich dairy offerings are emerging as key growth drivers as organised players expand their portfolios beyond conventional liquid milk.
Value-Added Portfolio Gains Traction
The shift comes amid rising disposable incomes, expanding cold-chain infrastructure and the rapid growth of modern retail and quick commerce, all of which are reshaping consumer preferences and driving demand for premium dairy products.
According to market intelligence platform 1Lattice, the organised value-added dairy segment grew from Rs 85,000 crore in FY20 to more than Rs 1.46 lakh crore in FY25, underscoring the segment's rapid expansion.
Mother Dairy has also witnessed a sharp increase in the contribution of value-added products to its dairy business. These products accounted for 28 per cent of dairy revenue in FY26, up from 15-17 per cent five years ago, while the company's dairy revenue nearly doubled to over Rs 20,300 crore from Rs 10,450 crore in FY20.
Leading dairy companies, including Amul, Mother Dairy, Hatsun Agro Product, Heritage Foods and Nestlé India, are expanding their premium product portfolios as competition intensifies across organised dairy categories.
The strategic shift reflects the industry's growing focus on higher-margin segments, where companies enjoy greater pricing power than in traditional liquid milk, which remains largely commoditised.
Industry executives expect sustained demand for functional nutrition, high-protein dairy products, yoghurt and other premium offerings, driven by evolving consumer preferences and rising urban consumption. The transition is expected to strengthen profitability, diversify revenue streams and accelerate the formalisation of India's dairy sector. |
