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Lactose-free can give processors competitive edge - Euromonitor

By Mark Astley , 18-Oct-2012
Last updated on 05-Nov-2012 at 18:22 GMT

Manufacturing lactose-free products could offer processors a competitive edge in the stagnated European dairy market, industry analyst Euromonitor International has claimed.

According to Euromonitor International ingredients analyst Lauren Bandy, the Western European dairy market is forecast to become increasingly stagnated over the next five years.

Building up a presence in the lactose-free dairy sector is one option for processors trying to gain an advantage over their competitors, she added.

Demand for lactose-free dairy products has exploded in recent years. According to Euromonitor, global sales hit $2.69bn in 2011.

The sales growth has been attributed to an increase in the number of self-diagnosed cases of lactose intolerance - a condition where people cannot digest the lactose naturally found in milk - and improvements in technology driving the growth.

Lactose-free health trend

“With the market being so fragmented, dairy companies are constantly looking for an advantage over their competitors. The use of lactase, which hydrolyses lactose into glucose and galactose, is one way for manufacturers to produce a lactose-free dairy product, setting themselves apart from their rivals and capitalising on the lactose-free health trend,” said Bandy.

Lactose-intolerance among European consumers is fairly low, however, a trend of self-diagnosis in recent years has led to an increase in demand for lactose-free dairy products.

Europe accounted for around $1.19bn of the $2.69bn spent worldwide on lactose-free products in 2011. Demand in the region is expected to increase by 3.7% between 2011 and 2016.  

Health fad focus

While European lactose intolerance level are fairly low, industry experts believe that rates among Afro-Caribbean, African and South East Asian consumers are thought to be as high as 90%.

Despite the high rates of lactose intolerance in these regions, Bandy does not expect lactose-free dairy demand to take off for some time. In the meantime, producers should focus on the health fad-driven Western market.

“In the short to medium term, lactase producers should continue to take advantage of Western markets where sales of lactose-free products are driven by the faddism of lactose intolerance amongst consumers,” said Bandy.

"Currently the second largest enzyme market globally, China, like most Asia Pacific, has a genuine lactose intolerant population and therefore has great potential for lactase producers. However, until disposable incomes rise sufficiently to allow both dairy and lactose-free products to become more affordable for Chinese consumers, growth rates of dairy enzymes in China and the surrounding region will remain slow,” she concluded.

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