From volatile milk surpluses to rapid value-added growth, India’s dairy industry is entering a new phase ahead of 2026.
After years of cyclical swings between surplus and tight supply, India’s dairy sector is now at a key strategic inflection point, where traditional milk volume dominance is transitioning toward higher-value product growth. Longstanding structural patterns — with production surges followed by inventory swings — have recently given way to a more complex landscape shaped by weather disruptions, geopolitical pressures and shifting consumer behaviour.
The October 2024–March 2025 “flush” season delivered a notable production rebound, with milk output up nearly 25 %, leading to temporary surplus inventories that dairy processors worked to absorb by broadening product lines and investing in cold-chain and distribution infrastructure. However, unseasonal rains and strong festive demand through 2025 quickly tightened supplies, pushing up milk procurement costs even as retail prices remained relatively stable after recent GST cuts.
Liquid milk — still the backbone of India’s dairy consumption — is being complemented by a structural shift toward value-added products (VAPs). Analysts and industry insiders point to strong momentum in categories such as curd, yoghurt, paneer, ghee and frozen dairy desserts, with demand patterns evolving beyond seasonal peaks to year-round consumption. This premiumisation trend supports stronger margins and is reshaping dairy revenue models nationally.
Modern consumption patterns are changing how dairy is bought and sold, with quick commerce and e-commerce gaining share while traditional channels face margin pressures. Retailers and processors alike are increasingly tailoring offerings to convenience-oriented shoppers and impulse purchases, especially as dairy-based beverages and snacks take share from carbonated alternatives.
Looking ahead, the industry’s trajectory suggests that value-added growth, distribution innovation and agile supply chain strategies will define India’s role in the global dairy landscape, even as production cycles remain a factor. Navigating tight supply periods, integrating consumer trends and enhancing product differentiation will be essential for both domestic resilience and future export potential.
Source: SME Futures — https://smefutures.com/indias-dairy-sector-at-inflection-point-from-milk-surplus-cycles-to-value-added-growth/
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