The dairy products and alternatives market in Sri Lanka is set to grow moderately in 2025 as a result of changing consumer lifestyles and growing health consciousness. While demand is being dampened by concerns about affordability. raised demand for functional benefits, such as lactose-free and high-protein alternatives, has helped traditional dairy products to see growth, while snacking occasions have raised sales of convenient formats, such as drinkable yoghurt. In the meantime, the market for plant-based dairy products has kept growing thanks to rising consciousness of environmental issues, animal welfare, and dietary choices avoidance of lactose and veganism. Local companies have started coming up with new nut and grain-based substitutes, but their expansion has been hampered by their high costs and restricted supply.
Dairy products and alternatives in 2025: The big picture
After the economic crisis, Sri Lanka's dairy business is still showing signs of a gradual recovery in 2025. The overall performance has been harmed by a noticeable change in customer purchasing behaviour. Both volume and penetration have decreased as a result of high inflation and prior steep price increases in important categories such as powdered milk and UHT milk, which have deterred regular usage. Even while full cream powdered milk is still widely used, demand for it has decreased as customers have sought out less expensive options. By providing perceived value for money, the advent of value-added milk blends and malted drinks has helped to keep some consumers in the dairy sector.
Key trends in 2025
The emergence of regional and reasonably priced innovations is one of the key themes in the dairy industry for 2025. In order to satisfy the financial and nutritional needs of consumers with lower and middle incomes, brands are increasingly providing hybrid mixes and reduced pack sizes. In addition to increasing affordability, this strategy aids in maintaining ingrained consumption habits despite financial strain. Furthermore, the value of dairy products with short shelf lives, including yoghurts and drinking yoghurts, is increasing. This suggests that innovation in flavour and variety, and premiumisation are important growth drivers.
Competitive Landscape
With its major brands including Anchor, Raththi, and Anlene, Fonterra Brands Lanka (Pvt) Ltd holds a clear lead in the Sri Lankan dairy products and alternatives industry. The full cream powdered milk category, which is the company's main business, is where its dominance is most evident. Fonterra has maintained a substantial market presence in spite of market headwinds thanks to its strong brand equity, extensive distribution network, and capacity for innovation within its core product lines. Demand has also been bolstered by strategic advertising, such as cross-brand ads that combine milk powder with necessities like sugar. Although the business does not directly lower prices, its marketing strategy now emphasises value-driven promotions and long-term brand development through socially conscious projects. However, slow-moving SKUs under the Newdale brand have caused the company to lag behind rivals in the yoghurt market. Despite this, Fonterra has remained strong in the face of increasing competition and changing consumer preferences thanks to its strategic focus on blends and value-added products.
Channel developments
Small local grocers remains the dominant distribution channel for dairy products and alternatives in the Sri Lankan market. These stores are widely present across both urban and rural areas, providing easy access for a broad range of consumers. As a result, they have established a central role in the shopping habits of local consumers, especially when it comes to essential items such as dairy products. Older consumers are particularly likely to buy all of their groceries from traditional kade shops, while these stores are also popular amongst younger consumers. Stores in urban and suburban areas are also increasingly offering self-service checkouts to help them better compete with supermarkets and hypermarkets.
What next for dairy products and alternatives?
Retail value sales of dairy products and alternatives are anticipated to progressively rise during the forecast period. Improved economic stability, more locally sourced milk, and an increasing emphasis on reasonably priced value-added goods will all play a significant role in supporting this expansion. The steep drops in consumer demand that occurred during the crisis years are likely to be gradually reversed, particularly as income levels level out and price-sensitive consumers' purchasing power returns. Customers will be kept in the dairy sector and regular consumption will be promoted by the move towards smaller pack sizes, milk mixes, and flavoured goods. However, aggressive expansion will be impeded by the maturity and price sensitivity of the market, resulting in moderate rather than dynamic growth.
Delivery:
Files are delivered directly into your account soon after payment is received and any tax certification is verified (where applicable).
This report comes in PDF with additional info in Excel included.
Overview:
Understand the latest market trends and future growth opportunities for the Dairy Products and Alternatives industry in Sri Lanka with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
Key trends are clearly and succinctly summarised alongside the most current research data available. Understand and assess competitive threats and plan corporate strategy with our qualitative analysis, insight and confident growth projections.
Data and analysis in this report provides further detailed coverage dedicated to a comprehensive range of core packaged food categories.
If you're in the Dairy Products and Alternatives industry in Sri Lanka, our research will help you to make informed, intelligent decisions; to recognise and profit from opportunity, or to offer resilience amidst market uncertainty.
The Dairy Products and Alternatives in Sri Lanka report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volume and value sizes, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent research methodology, conducted in-country
This report answers:
- What is the market size of Dairy Products and Alternatives in Sri Lanka?
- Which are the leading brands in Dairy Products and Alternatives in Sri Lanka?
- How are products distributed in Dairy Products and Alternatives in Sri Lanka?
- How is the rise of e-commerce and/or the expansion of modern grocery retail impacting traditional retail?
- What are the key health and wellness concerns driving, or challenging, sales in Dairy Products and Alternatives?
- How significant are vegan and vegetarian dietary requirements in determining sales growth in Sri Lanka?
- How has COVID-19 impacted consumer demand? To what extent have lockdown, home seclusion and stockpiling boosted sales? Will the longer term economic repercussions of the pandemic stimulate or suppress future growth?
- Where is future growth expected to be most dynamic?
- How significant will values-based claims, such as sustainability and ethical labelling, be in supporting future growth and brand equity?
Dairy Products and Alternatives in Sri Lanka
Dairy products and alternatives in 2025: The big picture
Key trends in 2025
Competitive Landscape
Channel developments
What next for dairy products and alternatives?
DISCLAIMER
Key Data Findings
2025 Developments
Demographic and economic constraints
Nestlé benefits from nutritional profile and extensive distribution
Small local grocers remains dominant
Prospects and Opportunities
Growing demand for convenience to fuel growth
Rising demand for health-focused products
Increasing emphasis on sustainability
Category Data
Key Data Findings
2025 Developments
Growth despite economic challenges
Fonterra Brands Lanka retains lead
Small local grocers dominates sales of dairy
Prospects and Opportunities
Middle-class households and health consciousness key to growth
Growing emphasis on wellness
Sustainability and digital innovation
Category Data
2025 Developments
Plant-based dairy remains niche despite rising sales
Blue Diamond Growers out in front
Supermarkets playing key role in raising product awareness
Prospects and Opportunities
Growth set to be concentrated amongst higher-income urban consumers
Health and wellness to exert a strong influence on category development
Growing awareness of the environmental benefits of plant-based dairy
Category Data
The following categories and subcategories are included:
Dairy Products and Alternatives
-
- Dried Baby Food
- Prepared Baby Food
- Other Baby Food
-
-
- Liquid Standard Milk Formula
- Powder Standard Milk Formula
-
- Liquid Follow-on Milk Formula
- Powder Follow-on Milk Formula
-
- Liquid Growing-Up Milk Formula
- Powder Growing-Up Milk Formula
-
- Liquid Special Baby Milk Formula
- Powder Special Baby Milk Formula
-
-
-
- Butter
- Cooking Fats
- Margarine and Spreads
-
- Spreadable Cheese
- Processed Cheese excl Spreadable
-
- Packaged Hard Cheese
- Unpackaged Hard Cheese
- Soft Cheese
-
-
- Dairy Only Flavoured Milk Drinks
- Flavoured Milk Drinks with Fruit Juice
-
-
-
- Fat-free Fresh Milk
- Semi Skimmed Fresh Milk
- Full Fat Fresh Milk
-
- Fat-free Shelf Stable Milk
- Semi Skimmed Shelf Stable Milk
- Full Fat Shelf Stable Milk
-
- Goat Milk
-
- Powder Milk
-
-
- Sour Milk Products
-
- Drinking Yoghurt
- Flavoured Yoghurt
- Plain Yoghurt
-
-
- Chilled Dairy Desserts
- Shelf Stable Dairy Desserts
- Chilled Snacks
- Coffee Whiteners
-
-
- Flavoured Condensed Milk
- Plain Condensed Milk
- Evaporated Milk
-
- Cream
-
- Flavoured Fromage Frais and Quark
- Plain Fromage Frais and Quark
- Savoury Fromage Frais and Quark
-
-
-
-
- Soy Drinks
- Other Plant-based Milk
- Plant-based Yoghurt
- Plant-based Cheese
-
Why buy this report?
- Gain competitive intelligence about market leaders
- Track key industry trends, opportunities and threats
- Inform your marketing, brand, strategy and market development, sales and supply functions
This report originates from Passport, our Dairy Products and Alternatives research and analysis database.
NEW REPORT GUARANTEE
If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extraction Free!