The global lactose-free dairy market was valued at $11.5 billion in 2021, according to a report published by Allied Market Research. The market is estimated to generate $24.4 billion by 2031, representing a compound annual growth rate of 8.0% from 2022 to 2031.
Here’s what you need to know. Many consumers with lactose sensitivities strayed from real dairy foods because of the lactose content. Now, in their quest for nutrient-dense, minimally processed foods, they are coming back to the category because dairy processors have decided to either eliminate or break down that lactose in finished products in order to make the products more tummy friendly.
And it’s working. Even better, it’s working in fluid milk. Value-added fluid milk is driving volume sales. In fact, 2024 ended with volume milk retail sales posting growth (less than a percent) for the first time in a long time in a year of pandemic-free shopping, according to Circana data. Lactose-free milk is the leading form of value-added options driving this growth, followed by organic and grass fed.
Note how today’s blog sponsor, Dutch Farms, calls out that its lactose-free milk is “real milk without the discomfort.” Shoppers want to better understand the foods they are buying and may require such explanations, especially with consumer demand for lactose-free dairy products predicted to grow rapidly over the next five years.
Some of that growth will be coming from outside the supermarket. In early 2024, the U.S. Department of Agriculture (USDA) released a final rule to update meal patterns for the National School Lunch Program and School Breakfast Program. The agency re-emphasized lactose-free milk as an option in all reimbursable meals. Offering lactose-free milk as a choice to all students supports child health and nutrition equity in school meals.
Dairy checkoff initiatives in 2024 successfully increased milk consumption in schools by offering lactose-free options. The National Dairy Council (NDC) and American Dairy Association Mideast worked with Cincinnati Public Schools (CPS) to offer the country’s first single-serve lactose-free chocolate milk program. When compared to the rest of the district, the pilot schools experienced a 16% increase in milk consumption.
The hugely successful pilot project has now been adopted district-wide, improving nutrition, boosting school lunch participation and reducing food waste. The Cincinnati model points to a promising path for milk in schools, as student bodies become more diverse and millions of children rely on school meals as their main nutrition source for the day.
“These are kids who may not be able to go home to a refrigerator full of food, and so it's our job to make sure that we are providing them with the most healthy and nutritious meals possible when they’re here with us at school,” said Jessica Shelly, director of student dining services for CPS. “Part of that is making sure they have all the nutrients and protein they need, and we know that milk plays a large role in that.”
The dairy industry is uniquely poised to use the lactase enzyme to assist with converting milk’s inherent sugar--lactose, a disaccharide—into its sweeter-tasting monosaccharide units: glucose and galactose. It’s a win-win for marketers who want to make an added sugar content claim and consumers who avoid lactose because of digestive issues.
In case you missed it, the 2025 Dietary Guidelines Advisory Committee (DGAC) issued its final scientific report at the end of 2024. The DGAC advised the U.S. Departments of Health and Human Services (HHS) and USDA to continue to recommend that Americans consume three servings of dairy per day and that dairy products stay a distinct food group in recognition of their unmatched health and nutrition benefits.
Offering lactose-free options makes this recommendation easier to follow for those with lactose sensitivities.
“The U.S. dairy industry is pleased to see that the science has once again affirmed the unmatched health and nutrition benefits that dairy products provide to people of all ages. The DGAC scientific report confirmed lactose-free dairy as an integral part of the dairy group, ensuring dairy nutrition is accessible to all Americans. The report also highlighted the association between total and higher fat milk with favorable growth outcomes, including lower risk of obesity, in younger children. Dairy processors provide a wide range of nutritious dairy options, at a variety of fat and sweetness levels that can work within the healthy diets of Americans. No matter the level of sweetness or fat, milk, yogurt and cheese provide the same nutrient package of up to 13 essential nutrients.
“Unfortunately, the DGAC excluded a number of scientific studies which show the health benefits of dairy at each fat level. IDFA has for many months urged the Committee to disclose what research it would rely upon to form its recommendations, yet the DGAC science selection and review process remained opaque and unavailable to public review and comment until now, after the report has been submitted to HHS and USDA. There is robust evidence to support the federal government disposing of its outdated recommendation to limit dairy consumption based on fat level. The latest science shows that full-fat dairy products do not increase risk of cardiovascular disease or weight gain, and that they may in fact have positive health benefits. IDFA provided the Committee with the body of science to support this point, but the vast majority of those studies were ultimately excluded from DGAC review. IDFA encourages HHS and USDA to remedy this oversight in the final DGAs expected to issue in 2025, and to work to ensure a more transparent and scientifically rigorous process for the development of future DGAC reports.”
Those scientific studies that Wagner referred to show a relationship between dairy foods at varied fat levels and a reduced risk of cardiovascular disease (CVD), not an increase in risk. A 2016 systematic review, partially funded by NDC, found either a neutral or favorable association between dairy consumption and cardiovascular-related outcomes. The researchers emphasized that the recommendation to focus on low-fat in place of high-fat dairy is currently not evidence-based, and further research is needed to specifically address this key research gap.
Much of this has to do with dairy matrix, something researchers are still learning about. Scientists are starting to better understand that nutrients, when present in whole, minimally processed foods, interact with each other, impacting digestion and absorption. In the dairy industry, this is now called the dairy matrix effect, and it’s all about bioactives, which are small molecular compounds that have only recently been discovered.Basically, these components work together and are greater than the sum of their parts. Milk is more than a collection of isolated nutrients, rather milk is a complex matrix that truly is a powerhouse. Make it easier for consumers to reap the benefits of this matrix by going lactose free.