Global Lactose-Free Dairy Products Market Projected to Reach $29.15 Billion by 2033

17 Apr 2024

The market for dairy products without lactose, a niche within the broader allergen-free food sector, serves those who either cannot digest lactose or prefer their dairy without this sugar. These offerings are either treated with lactase — an enzyme that decomposes lactose — or made from alternative sources like soy, almond, or coconut milk.  

This segment is expected to grow at a CAGR of 7.12% between 2023 and 2033, reaching an estimated value of $29.15 billion by the end of the forecast period. The market's expansion is driven by the increasing number of people with lactose intolerance, a rising demand for options that are lower in sugar and calories, broader distribution networks, and product innovation from leading companies in the sector.  

Lactose-Free Dairy Products Market Overview  

The market for lactose-free dairy products globally has experienced notable growth recently, fueled by heightened awareness of lactose intolerance and an increased appetite for dairy alternatives. This surge in demand has led to the expansion of the market, encompassing a wide array of products like milk, yogurt, cheese, and ice cream that do not compromise on taste or nutritional benefits.  

Industry leaders are dedicating resources to research and development efforts to improve the quality and selection of lactose-free products. Regionally, North America and Europe stand out as key markets, with the Asia-Pacific region also showing significant growth.  

The sector is distinguished by its focus on innovation, variety in product offerings, and strategic collaborations aimed at meeting the changing dietary needs of consumers worldwide. 

Market Segmentation: 

Segmentation 1: by Distribution 

• Direct 
• Retail 

Retail Segment to Dominate the Global Lactose-Free Dairy Products Market 

Segmentation 2: by Product 

• Milk 
• Yogurt 
• Cheese 
• Ice Cream 
• Others 

Milk Segment to Dominate the Global Lactose-Free Dairy Products Market 

Segmentation 3: by Source 

• Animal 
• Plant  

Animal Segment to Dominate the Global Lactose-Free Dairy Products Market 

Segmentation 4: by Category 

• Organic 
• Conventional 

Conventional Segment to Dominate the Global Lactose-Free Dairy Products Market 

Segmentation 5: by Region 

• North America: U.S., Mexico, and Canada 
• Europe: France, Germany, Italy, Spain, U.K., and Rest-of-Europe 
• Asia-Pacific: China, Japan, India, South Korea, Australia, and Rest-of-Asia-Pacific 
• South America: Brazil, Argentina, and Rest-of-South America 
• Middle East and Africa: Israel, Turkey, South Africa, and Rest-of-Middle East and Africa 

Europe's dominance in the global lactose-free dairy products market can be attributed to the increasing prevalence of lactose intolerance, driving the demand for alternative dairy options. The region has witnessed a growing health-conscious consumer base, leading to a surge in the adoption of lactose-free products.  

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Lactose-Free Dairy Products Market: Demand Drivers, Challenges, and Opportunities  

Market Driver: Rising Lactose Intolerance 

The lactose-free dairy market is set to grow, driven by the increasing prevalence of lactose intolerance, affecting 65% of the global population. This has led to higher demand for lactose-free products such as milk, yogurt, and cheese. The market responds by either breaking down lactose or using alternative sugars, catering to the growing number of lactose-intolerant consumers and fueling market expansion.   

Market Challenge: High Cost of Lactose-Free Products 

Producing lactose-free dairy demands high initial investments, more energy, and ongoing maintenance costs, raising production expenses. The need for longer processing times and extra infrastructure slows efficiency and increases quality control efforts, impacting costs for producers.  

Additionally, processing lactose-free dairy faces hurdles like managing the effects of temperature and time on enzymes, requiring long hydrolyzation periods and more storage, which leads to the need for further investment in facilities and specialized equipment, affecting production efficiency. 

Market Opportunity: Rising Demand in Quick-Service Restaurants (QSRs) 

The surge in quick-service restaurants (QSR) stems from a growing workforce seeking time saving, convenient food options. However, this trend towards convenience also heightens exposure to health issues like gut inflammation, cancer, heart diseases, and obesity.  

With obesity rates climbing globally—39 million children under five were reported obese or overweight in 2020—there's a rising consumer shift towards healthier diets. This shift includes an increasing preference for lactose-free food, boosting the lactose-free dairy market. The demand for healthier alternatives offers a significant growth opportunity for producers of lactose-free dairy products worldwide. 

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Key Market Players 

Leading Companies in the Lactose-Free Dairy Products Market 

• Arla Foods amba 
• Valio Oy 
• Nestlé 
• Dairy Farmers of America, Inc. 
• Organic Valley 
• Danone 
• Granarolo S.p.A. 
• Lactalis International 
• Hiland Diary 
• Saputo Inc. 
• SmithFoods, Inc. 
• Cabot Creamery  
• Alpro  
• Almarai 

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Analyst View 

According to Debraj Chakraborty, Principal Analyst, BIS Research, “The increasing awareness of lactose intolerance and rising demand for alternative dairy options may drive the growth of lactose-free dairy products. As consumers prioritize health and dietary preferences, the market for these products is expected to see a positive trajectory in the coming years.”