According to the New-Nutrition report, Lactose-Free Dairy: Opportunities, strategies and key case studies, European demand accounted for the majority of this growth, with sales in the region tripling to $400m in the five years to 2011.
Sales in the region are expected to double between 2012 and 2016 to $700m – surpassing the “restricted” US market.
A lack of innovation in the US dairy industry is likely to hinder demand for lactose-free dairy products in the US, the report added. Despite this, it is estimated to hit $650m by 2016.
Author of the report, Julian Mellentin, told DairyReporter.com that growth in the lactose-free dairy market has been driven by two factors – an increase in self-diagnosed cases of lactose intolerance and technological improvements.
“The technology to manufacture lactose-free dairy products already existed, but they used to taste awful,” said Mellentin.
“With old lactose-free dairy product, they didn’t taste good enough. It didn’t taste nice and it was expensive and that is why it remained a niche market.”
“The other 50% in down to consumers,” he added.
A trend of self-diagnosed lactose intolerance in Europe and the US has significantly boosted demand for lactose-free dairy products.
Lactose intolerance is a condition where people cannot digest the lactose found in milk.
“Around 5% of people in the UK are officially lactose intolerant; however self-diagnosis has driven this up to around 15%. Self-diagnosis is a real driver for the lactose free dairy market.”
The report estimates that around 10% of the European population are lactose-intolerant. The figure in China could be as high as 95%, it added.
Despite this high intolerance rate, the report does not expect lactose-free dairy demand in Asia to take off for some time.
While liquid milk is a low-priced staple in western markets, it remains a premium-priced, niche market in Asia – meaning that people in the region may not be consuming enough to encounter the symptoms of lactose intolerance, although this may change in time.
“In Asia, they consume a tiny fraction of what we consume in the West. The dairy industry as a whole is still a niche market in Asia,” said Mellentin.
“It’s bound to happen. China has had a huge impact on the dairy sector in Asia. The lactose-free dairy category will be picked up first in China.”
The report identified McNeil’s Lactaid, Valio’s Zero Lactose and Arla Lactofree as the three most successful lactose-free bands in the world.
“There are very few mass market health products successes, but there is definitely room for a dominant lactose-free brand in every country,” Mellentin added.