Market Overview

The Oman dairy market share reached a volume of 256.79 Million Tons in 2025 and is projected to grow at a CAGR of 1.60% between 2026 and 2035, attaining 300.96 Million Tons by 2035. The market reflects steady expansion supported by population growth, rising disposable income, expanding retail infrastructure, and increasing demand for locally produced dairy products. Government initiatives aimed at strengthening food security and reducing import dependence are further reinforcing domestic dairy production capabilities.

Dairy consumption in Oman is influenced by traditional dietary habits, strong demand for fresh milk and laban, and increasing adoption of value-added products such as yoghurt, cheese, butter, and ice cream. While the growth rate remains moderate compared to high-growth emerging markets, the sector demonstrates resilience and long-term sustainability.

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Market Segmentation by Product

Fresh milk holds a significant share of the Oman dairy market due to daily household consumption and strong preference for locally sourced products. Government-backed initiatives promoting domestic milk production have supported the segment’s stability.

Laban, a traditional fermented milk drink, remains highly popular across Omani households. Its strong cultural relevance and suitability to the regional climate ensure consistent demand throughout the year.

Milk powder plays an important role in both household consumption and foodservice applications. Although Oman has expanded local dairy production, milk powder imports still contribute to overall supply dynamics.

UHT milk continues to gain traction due to its longer shelf life and convenience. Increasing urbanization and demand for packaged products are supporting segment growth.

Yoghurt and curd are witnessing steady demand growth, driven by rising health awareness and the perception of probiotics as beneficial for digestion and immunity.

Cheese and butter segments are expanding gradually, supported by growth in western-style food consumption, bakery applications, and quick-service restaurant chains.

Ice-cream demand is influenced by Oman’s warm climate, with seasonal peaks contributing significantly to annual sales volumes.

Other dairy products, including flavored milk and specialty dairy beverages, are gradually entering the market as consumer preferences diversify.

Market Growth Drivers

Rising Population and Urbanization
Oman’s growing population and increasing urban concentration are key drivers of dairy demand. Urban households exhibit higher consumption of packaged dairy products, including UHT milk and flavored variants.

Government Focus on Food Security
The Omani government has prioritized food self-sufficiency under national development plans. Investments in large-scale dairy farms and processing facilities are reducing reliance on imports and strengthening domestic production.

Expansion of Modern Retail Channels
Growth in supermarkets, hypermarkets, and convenience stores has enhanced product visibility and accessibility. Improved cold chain infrastructure supports distribution of perishable dairy products across regions.

Changing Consumer Preferences
Consumers are increasingly seeking high-quality, hygienically packaged dairy products. Rising health consciousness is supporting demand for low-fat, fortified, and probiotic dairy items.

Growth of Foodservice Sector
The expansion of hotels, restaurants, cafes, and bakery chains is contributing to increased demand for cheese, butter, cream, and milk powder, particularly in urban centers such as Muscat.

Market Challenges

High Production Costs
Dairy farming in Oman faces challenges such as high feed costs, water scarcity, and energy expenses. These factors can affect profit margins and pricing competitiveness.

Import Competition
Despite local production growth, imported dairy products continue to compete on price and variety, particularly in premium and specialty segments.

Climatic Constraints
Oman’s hot climate increases operational costs for cooling and livestock management, impacting overall efficiency.

Moderate Growth Rate
With a CAGR of 1.60 percent, the market reflects maturity in core categories such as fresh milk and laban, limiting rapid expansion opportunities.

SWOT Analysis

Strengths
Strong government support for domestic dairy production, established local brands, and consistent demand for staple dairy products form the foundation of the market.

Weaknesses
Dependence on imported feed, high operational costs, and limited economies of scale compared to global dairy exporters present structural limitations.

Opportunities
Product diversification, introduction of functional dairy products, and export expansion to neighboring GCC countries offer growth prospects.

Threats
Price volatility in raw materials, import competition, and shifting consumer preferences toward plant-based alternatives could affect long-term demand patterns.

Porter’s Five Forces Analysis

Bargaining Power of Suppliers
Moderate to high, due to reliance on imported feed and livestock inputs.

Bargaining Power of Buyers
Moderate, as consumers have access to both local and imported dairy brands.

Threat of New Entrants
Moderate, given capital-intensive infrastructure requirements and regulatory compliance.

Threat of Substitutes
Increasing gradually with the availability of plant-based milk alternatives.

Competitive Rivalry
High, driven by established domestic players competing on pricing, quality, and distribution reach.

Key Indicators for Demand

Population growth rate, per capita dairy consumption, disposable income levels, tourism growth, and expansion of foodservice outlets are primary indicators shaping demand trends.

Key Indicators for Price

Feed costs, transportation expenses, energy prices, import tariffs, and supply-demand balance significantly influence dairy pricing in Oman.

Competitive Landscape

The Oman dairy market features a mix of established domestic producers and regional suppliers. Key players include Mazoon Dairy Company, which has played a critical role in advancing large-scale dairy farming within the country. Oman Foodstuff Factory LLC contributes across multiple dairy categories, supporting both retail and institutional demand. Modern Dairy Factory LLC focuses on diversified dairy offerings catering to local consumption needs. A’safwah Dairy remains recognized for its range of fresh and processed dairy products.

Competition centers on product quality, pricing strategies, supply chain efficiency, and brand loyalty. Companies are increasingly investing in advanced processing technologies, packaging innovations, and distribution expansion to maintain market share.