Anhydrous Milk Fat (AMF), also known as butter oil, is a high-fat dairy ingredient derived from milk or cream by removing water and non-fat solids. AMF contains over 99.8% milk fat and has a longer shelf life and greater thermal stability than traditional butter, making it ideal for industrial food production and culinary applications.
The AMF market is expanding steadily, driven by demand from sectors such as bakery, confectionery, dairy processing, infant formula, and foodservice. Its functional properties — such as richness in flavor, smooth texture, and high heat resistance — make it a preferred fat source in both developed and emerging economies.
The global anhydrous milk fat market was valued at USD 4.07 billion in 2022 and growing at a CAGR of 8.33% from 2023 to 2032. The market is expected to reach USD 9.05 billion by 2032.
Market Dynamics
Drivers:
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Growing demand for premium and functional dairy ingredients: AMF is used in high-quality bakery and confectionery products for enhanced mouthfeel and flavor.
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Rising consumption of processed and convenience foods: Ready-to-eat meals, sauces, and desserts often contain AMF as a key ingredient.
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Long shelf life and ease of transportation: AMF can be stored without refrigeration and is used globally in regions with limited cold chain infrastructure.
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Expanding global foodservice and hospitality sectors: Chefs and industrial users value AMF for its versatility and flavor stability under heat.
Restraints:
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High cost compared to vegetable fats: AMF is more expensive than alternatives like palm oil or margarine, impacting adoption in cost-sensitive markets.
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Dietary shifts toward plant-based products: Rising vegan and plant-based trends may hinder AMF consumption in certain regions.
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Volatility in milk supply and prices: Dairy industry fluctuations directly affect AMF production and pricing.
Opportunities:
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Emerging demand in Asia-Pacific and Middle East: Growing middle class and expanding food processing industries offer growth potential.
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Product innovation: Development of flavor-infused AMF, organic AMF, and specialized formats (e.g., powder, microencapsulated) for niche applications.
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Increased use in infant formula and nutritional products: AMF mimics human milk fat and is being adopted in high-end formula products.
Product Insights
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Standard AMF: Used in general food processing, including bakery, confectionery, and dairy products.
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Organic AMF: Derived from organically certified milk; gaining traction in health-conscious consumer segments.
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Specialty AMF: Includes flavored, fractionated, or microencapsulated AMF for specialized applications.
Applications:
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Bakery & Confectionery: Enhances flavor, texture, and shelf life in pastries, cookies, and chocolates.
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Dairy Reconstitution: Used in recombined dairy products like UHT milk, cheese, and yogurt.
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Infant Formula: Acts as a source of dairy fat in formulations that mimic human milk.
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Culinary and Foodservice: Used in sauces, soups, spreads, and gourmet applications.
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Ice Cream and Frozen Desserts: Improves creaminess and melt behavior.
Regional Insights
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North America:
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Steady demand due to the mature dairy industry and widespread use in processed foods.
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U.S. is a key exporter and consumer of AMF, particularly in the foodservice sector.
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Europe:
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Significant production and consumption, especially in France, Germany, Ireland, and the Netherlands.
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Regulatory focus on quality and origin labeling boosts demand for premium AMF.
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Asia-Pacific:
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Fastest-growing market driven by urbanization, rising incomes, and growing bakery and dairy sectors.
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China, India, Japan, and Southeast Asia are major consumers of both imported and domestically produced AMF.
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Middle East & Africa:
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Strong reliance on dairy imports and increasing demand for long-shelf-life products like AMF.
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GCC countries are major consumers, particularly in foodservice and hospitality.
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Latin America:
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Moderate growth with Brazil, Argentina, and Mexico being the key markets.
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Growth supported by expanding processed food industries.
Some of the Key Market Players
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Fonterra Co-operative Group Limited (New Zealand)
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Glanbia plc (Ireland)
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Arla Foods Ingredients Group P/S (Denmark)
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FrieslandCampina (Netherlands)
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Dairy Farmers of America (USA)
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Ornua (Ireland)
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Uelzena Group (Germany)
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Murray Goulburn Co-operative (Australia)
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Groupe Lactalis (France)
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Hilmar Cheese Company (USA)
These companies are involved in milk fat processing, export, and supply to industrial buyers across food and nutrition sectors.
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Segments Covered in the Report
By Product Type:
By Application:
By End User:
By Distribution Channel:
By Region:
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North America
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Europe
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Asia-Pacific
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Latin America
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Middle East & Africa
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