UHT Dairy Products Market Report

The growing preference for ready-to-consume and on-the-go food selections is creating noteworthy opportunities in the ultra-high-temperature dairy foods market. Ultra high-temperature dairy, which undergoes heat treatment to ensure longer shelf life without refrigeration, has gained immense attention due to its extended storage capability, convenience and portability. As busy lifestyles and working individuals continue to increase, customers are increasingly drawn to ultra high temperature dairy products such as milk, cream, and flavoured cheese that do not require refrigeration, making them perfect for working professionals, students, and travelers. The traction for ultra high temperature dairy lies in its ability to provide nutritious products without the need for immediate utilization, reducing food waste and allowing for easy stocking in residential and commercial establishments. This makes UHT milk a staple not only in developed regions but also in emerging markets where access to refrigeration may be limited.

Furthermore, the trend towards health and wellness also contributes to the market expansion of ultra-high-temperature dairy. Consumers are increasingly chasing fortified ultra-high-temperature dairy products that offer added nutritional benefits such as calcium, vitamin D, and probiotics. This innovation within the category, along with the increasing availability of dairy alternatives, presents additional avenues for growth. The evolving demand for these convenient and healthy UHT options positions the market for sustained development, meeting both convenience and health-conscious consumer needs.

Fresh milk dairy products, along with growing health concerns, are becoming significant factors that could hinder the growth of the ultra-high temperature dairy products market. Fresh milk products are often preferred for their superior taste, nutritional profile, and perception of being less processed compared to UHT milk products, which are subjected to high heat treatment. In countries such as Canada and India, fresh milk products still dominate the dairy market due to their association with health benefits. For instance, in the United States, fresh milk accounts for around 70% of total milk consumption, with a significant share consumed in its unprocessed or minimally processed form. Fresh milk is also a staple in many households, particularly among parents who prioritize its natural and wholesome qualities for their children, delaying the market of UHT dairy products.

Ultra-high temperature, UHT, milk, while offering a long shelf life and convenience, faces several significant quality and operational challenges that can undermine its appeal to consumers, in turn hampering the UHT dairy products market. One major concern is the alteration of flavour, which can vary from a cooked flavour to a stale and oxidized flavour or bitter taste due to peptides generated by heat-stable proteases. Additionally, the presence of residual bacterial enzymes can result in off-flavors, including the development of a rancid or acidic taste if kept for longer periods. Furthermore, fat separation and sediment formation can also compromise the product’s texture and appearance, deterring consumers from choosing UHT milk.

Furthermore, nutritional quality is compromised in ultra-high temperature milk, as the heat treatment reduces certain vitamins, for instance, reduction in B vitamins by 10%, folic acid by 15%, and vitamin C by 25%. The levels of fat-soluble vitamins, such as A, D, and E, remain largely unaltered, but water-soluble vitamins, particularly thiamine and B12 show reductions of up to 10% to 20%. This nutrient loss can be particularly concerning for consumers who rely on milk as a primary source of these essential vitamins, further restraining the market.

Apart from this, the UHT milk process itself is energy-intensive and expensive due to specialized equipment, such as aseptic filling systems, heating and cooling tanks, and hygienic chambers for containers, required to prevent microbial contamination and ensure product safety. The high cost of equipment and the complex operational requirements, including the need for highly trained personnel, further drive up production costs. These factors contribute to the overall expense of UHT milk production, making it more expensive than other types of milk, which can restrain the product value. Moreover, UHT milk’s anonymous origin, due to the blending of milk from multiple suppliers in a single batch, raises concerns about traceability, which can deter consumers from adoption of the products. The preference for fresh milk, concerns over nutrient loss, and the rise of plant-based substitutes may reduce demand for UHT milk in the coming years.

As UHT dairy product is an emerging market, many major players try to enhance their product value through product innovations, partnerships and collaborations, and mergers and acquisitions. For instance, in October 2021, I.T.S., one of the UK’s fastest-growing flavour houses, commissioned a high-quality UHT Pilot Plant at its facility in Newbury.  The UHT plant makes sure all their flavourings have been fully UHT tested and also offers the opportunity for customers to run trials alongside I.T.S. using the machine. The company has developed a large range of natural flavourings that fit perfectly in pasteurised dairy products and UHT-treated milk products.
 
In addition, in September 2024, Fonterra unveiled its plans to invest US$ 150 million in the construction of a new UHT cream plant at its Edendale site in Southland, New Zealand. This noteworthy expansion is designed to meet the rising demand for milk products through Fonterra's growing food service business, particularly in Asia. Similarly, in March 2022, PT Indolakto through its brand Indomilk Kids, introduced Indomilk Kids chocolate-flavoured UHT milk with 15% lower sugar content for kids for the first time in Indonesia. Indomilk Kids UHT milk less in sugar had met the BPOM necessities to include the Healthier Choice logo.

Europe holds the biggest share of the UHT dairy product market globally, in production as well as consumption, with countries such as Croatia, Portugal, Germany, France, Italy, and the UK driving significant demand. The high utilization of UHT milk, particularly in countries with strong dairy consumption traditions, can be attributed to the convenience and long shelf life of these products, which fit well with European consumer's fast-paced life-styles. In the region, UHT dairy is widely used not only as a staple product but also in various processed forms, including flavored milk and creams. For instance, in nations such as Spain, Portugal, and France, UHT milk is a dominant product, consisting of the majority of milk consumption due to its ability to be stored for longer periods without refrigeration. Additionally, the well-established infrastructure for dairy production, extensive retail networks, and high levels of consumer awareness about UHT benefits make Europe a leader in this segment. Countries with large-scale dairy production, such as France and Germany, contribute significantly to Europe’s UHT dairy market share. Furthermore, consumer demand for convenience and shelf-stable dairy products during travel and outdoor activities also supports the growth of UHT products in this region.

In North America, the UHT dairy product market is growing but remains smaller compared to Europe. Conventionally, customers in the U.S. and Canada have preferred fresh, refrigerated milk, and pasteurized products are widely available due to the extensive refrigeration infrastructure in both countries. However, changing consumer lifestyles and increased positive perceptions about UHT products' convenience and longer shelf-life are slowly driving growth in this category. In recent years, UHT products such as milk, cream, and plant-based alternatives have gained popularity in the region, particularly in urban areas. This demand is largely driven by younger consumers and busy professionals seeking convenient, portable, and long-lasting dairy options. For instance, single-serve UHT milk and flavored dairy drinks have become popular among on-the-go consumers who appreciate the extended shelf life without needing refrigeration.