According to Stratistics MRC, the Global Reduced Fat Butter Market is accounted for $1.12 billion in 2024 and is expected to reach $1.61 billion by 2030 growing at a CAGR of 6.3% during the forecast period. Reduced-fat butter is a modified version of traditional butter with less fat and calories per serving, designed for those who want to reduce their fat intake while still enjoying the flavor and versatility of butter. It is made by blending regular butter with water, skim milk, or other fat-reducing ingredients, resulting in a product with 25% to 50% less fat compared to full-fat butter. The texture is softer and less creamy, with a milder taste and different mouthfeel. It is commonly used as a spread or in cooking and baking, but may not perform identically in certain recipes.
Market Dynamics:
Driver:
Growing health consciousness
The reduced fat butter market is being driven by increasing awareness of health and wellness among consumers. With rising concerns about obesity, heart health, and overall fitness, people are seeking healthier alternatives to traditional high-fat butter. Reduced fat butter offers a lower calorie option while retaining the flavor of regular butter, appealing to health-conscious individuals. Furthermore, the global trend toward clean eating and balanced diets is encouraging consumers to incorporate such products into their meals. This demand is further supported by growing educational campaigns highlighting the benefits of reduced fat products.
Restraint:
Taste and texture perception
Despite its health benefits, reduced fat butter often faces criticism for its taste and texture compared to traditional butter. The reduction in fat content can affect the creaminess and richness that consumers associate with butter, leading to a perception of inferior quality. Many consumers prefer the authentic taste of full-fat butter, which may hinder the adoption of reduced-fat alternatives. Additionally, the reformulation challenges in achieving the perfect balance of flavor and mouthfeel make it difficult for manufacturers to meet diverse consumer preferences. These factors limit the market penetration of reduced fat.
Opportunity:
Changing dietary preferences
Shifting consumer dietary preferences, including increased interest in plant-based and low-fat diets, present a significant opportunity for the reduced fat butter market. The growing trend of flexitarian eating, which emphasizes healthier and more sustainable food choices, is driving demand for innovative butter substitutes. Additionally, consumers seeking allergen-free or lactose-free options are likely to embrace reduced fat butter products tailored to their needs. This trend aligns with the rise in functional foods, as manufacturers are incorporating additional nutrients like omega-3s and probiotics into reduced-fat butter formulations, expanding their appeal.
Threat:
Availability of substitutes
Reduced fat butter market faces competition from various substitutes, including margarine, plant-based spreads, and nut butters. These alternatives often appeal to consumers seeking vegan, allergen-free, or highly customizable options, drawing attention away from reduced-fat butter. Additionally, the perception that some substitutes are more environmentally sustainable adds to their appeal. The abundance of choices in the low-fat and alternative spread categories creates intense competition, potentially impacting the growth of reduced-fat butter sales.
Covid-19 Impact
The Covid-19 pandemic impacted the reduced fat butter market by influencing purchasing behaviors and supply chains. Supply chain disruptions also affected the availability and pricing of key raw materials. However, as people adapted to post-pandemic lifestyles, the focus on health and wellness regained importance, leading to a renewed interest in reduced-fat products. The pandemic also highlighted the need for shelf-stable and convenient food products, spurring innovation in reduced fat butter packaging and formulation.
The salted segment is expected to be the largest during the forecast period
The salted segment is expected to account for the largest market share during the forecast period due to its widespread appeal and versatility. Salted snacks, including chips, nuts, and popcorn, remain consumer favorites because of their balanced flavor profiles and convenience. Additionally, salted butter benefits from continuous product innovations such as unique seasoning blends and reduced-sodium options catering to both indulgent and health-conscious consumers.
The dairy-based segment is expected to have the highest CAGR during the forecast period
Over the forecast period, the dairy-based segment is predicted to witness the highest growth rate due to consumer’s value for natural, authentic food products. It aligns with consumer expectations of traditional butter, making it perceived as more wholesome and real. This natural association strengthens consumer trust and loyalty, making it a dominant category in the market. Dairy-based reduced fat butter retains essential nutrients like vitamins A, D, E, and K while reducing calorie and fat content. Advancements in dairy processing technology allow manufacturers to fortify it with additional nutrients, catering to functional food demand.
Region with largest share:
During the forecast period, the North America region is expected to hold the largest market share owing to high degree of health awareness, with consumers actively seeking products that align with their wellness goals. Rising rates of obesity, cardiovascular issues, and diabetes have driven many individuals to reduce their intake of high-fat foods, creating strong demand for reduced fat butter. The popularity of diets like keto, paleo and low-fat regimens further fuels interest in butter alternatives that balance health benefits with flavor and functionality. This growing preference for healthier options ensures a robust and consistent demand for reduced fat butter in the region.
Region with highest CAGR:
Over the forecast period, the Asia Pacific region is anticipated to exhibit the highest CAGR due to Rapid urbanization in countries like China, India, and Southeast Asia has brought about significant changes in dietary habits. As more people move into urban areas, they are adopting Western-style diets that include butter and other dairy products. Urban consumers, who are increasingly exposed to global food trends, are more likely to embrace reduced fat butter as part of their modern, health-focused lifestyle which helps fuel the growth of the reduced fat butter market.
Key players in the market
Some of the key players in Reduced Fat Butter market include Upfield, Savencia, Saputo, Rockview Farms, Palsgaard, Ornua Co-operative Limited, Land O'Lakes, Inc., Lam Soon Group, Kerrygold USA, Fonterra Co-operative Group, Finlandia Cheese, Inc., Dairy Australia Pty Ltd, Aurivo Co-operative Society Ltd., Arla Foods, Amul Dairy and Agral S.A.
Key Developments:
In August 2024, Kerrygold, introduced a new format of pure Irish grass-fed butter: Salted and Unsalted 1LB Butter Sticks. Rolling onto store shelves across the U.S. now with four 4 oz. sticks per 16 oz. box, Kerrygold 1LB Butter Sticks are an all-purpose, all-natural butter, perfect for baking, cooking, or serving tableside with every meal.
In March 2024, Amul launched Fresh Milk in the United States of America. This partnership between the two cooperatives will bring the Amul – the Taste of India to millions of Americans through its branded fresh milk products in the United States using MMPA's superior technology.
Types Covered:
• Salted
• Unsalted
Forms Covered:
• Spreadable
• Non-spreadable
Sources Covered:
• Dairy-Based
• Plant-Based
Distribution Channels Covered:
• Online Retail
• Supermarkets/Hypermarkets
• Convenience Stores
• Specialty Stores
• Other Distribution Channels
Applications Covered:
• Bakery & Confectionery
• Sauces & Spreads
• Processed Foods
• Foodservice Sector
• Household
• Other Applications
Regions Covered:
• North America
US
Canada
Mexico
• Europe
Germany
UK
Italy
France
Spain
Rest of Europe
• Asia Pacific
Japan
China
India
Australia
New Zealand
South Korea
Rest of Asia Pacific
• South America
Argentina
Brazil
Chile
Rest of South America
• Middle East & Africa
Saudi Arabia
UAE
Qatar
South Africa
Rest of Middle East & Africa
What our report offers:
- Market share assessments for the regional and country-level segments
- Strategic recommendations for the new entrants
- Covers Market data for the years 2022, 2023, 2024, 2026, and 2030
- Market Trends (Drivers, Constraints, Opportunities, Threats, Challenges, Investment Opportunities, and recommendations)
- Strategic recommendations in key business segments based on the market estimations
- Competitive landscaping mapping the key common trends
- Company profiling with detailed strategies, financials, and recent developments
- Supply chain trends mapping the latest technological advancements
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