Asia-Pacific Lactose-Free Dairy Market: A Potential Market?

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Lactose is the main carbohydrate in milk of mammals and makes up approximately four percent of cow’s milk. When absorbed by the body through digestion, the enzyme lactase splits lactose into its subunits, the simple sugars glucose and galactose, which are more easily absorbed in the small intestine.

Infants and toddlers naturally produce enough lactase to digest lactose. After weaning, however, the lactase production decreases resulting in lactase deficiency and adverse reactions to lactose. After consumption of milk and products containing lactose, symptoms such as abnormal discomfort, flatulence, bloating and diarrhoea may occur.

This affects almost 70 percent of adults worldwide; only the majority of the West Europeans and North Americans are tolerant to lactose. Yet, removing dairy products from their daily diet is not an option for many consumers; this hence creates an opportune market for lactose-free dairy products.

According to Visiongain’s report, the lactose-free foods industry is worth US$6.1 billion in 2015, with Western Europe and North America dominating the market space. Euromonitor forecasts an annual growth of six percent in volume terms until 2017, driven by an increase demand of lactose free products. This outstrips the overall global growth of the dairy industry by two-fold.

In East and Southeast Asia, where 90 percent of the population is estimated to be lactose-intolerant and the market penetration of lactose-free products is relatively low, an even higher market growth is expected in the next couple of years. In China, for example, an annual growth rate of 10 percent is forecast despite the fact that a large part of the population’s disposable incomes are not yet sufficient to allow dairy products; especially lactose-free products, to be affordable.

Lactose is found in different dairy products such as whole, yoghurt, cream, sweetened condensed milk, and hard cheeses. Additionally, due to the widespread use of dairy in the bakery and confectionery industry, lactose may also be present in chocolate, ice cream, sausages, bread, cakes, beverages, soups, etc.; avoiding it would be difficult.

This can however be overcome with the lactose-free milk powders currently available in the global market that are suitable for the production of lactose-free confectionery, bakery and ice cream. However, these are not widely introduced to the Asian market as of yet, probably due to the lack of awareness of the lactose-free markets, restricted dairy knowledge and higher production costs.

Asia-Pacific, with over 4.3 billion citizens and a population with high lactose intolerance, is a market of almost no commercially available lactose-free products for adults and only limited selection of children’s lactose-free milk is currently available. Lactose-free cow’s milk can be found in a few Asian supermarkets but is a minority compared to soy and rice-based milk alternatives.

Low-lactose drinking milk powders are on par to its liquid version; they are only sporadically available. Milk for pregnant and lactating mothers is currently capturing the Asian market, although lactose-free versions are not yet introduced.

Considering that Southeast Asia has only recently been introduced to dairy products and this market shows a constant increasing trend according to prospective prognoses, its large lactose-intolerant population and the trend of wanting more confectioneries and healthy milk products, lactose-free milk is an under-tapped industry which manufacturers can consider exploring.