Lactose-free dairy: Opportunities, strategies and key case studies

The growing success of lactose-free brands, particularly in Europe, illustrates the power of serving a niche in the right way. Only 5%-10% of Europeans are lactose-intolerant, but lactose-free dairy brands enjoy loyal customers who are willing to pay premium prices – usually a 100% premium to regular products. This 32-page report sets out the seven steps to creating a lactose-free dairy brand, explores opportunities in Europe, the US and Asia (where up to 95% of consumers are lactose-intolerant), and covers the leading lactose-free brands in three detailed case studies.
32 pages

March 2012

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US$395, £255, €300, NZ$530, A$420, CAD$395, JPY33,000

About this report

Most adults in the world are lactose intolerant, although the prevalence varies widely from low levels of lactose intolerance in Europe (around 10%) to as many as 95% of Chinese people.

Yet surprisingly, over the past five years it is Europe that has been the fastest-growing market for lactose-free dairy.

Growth rates and forecasts: This report estimates the size of the current market and forecasts growth out to 2016. It is Europe that is likely to remain the fastest-growing market for the next five years. The report explores why the Asian market – though growing fast – still lags Europe and may continue to do so.

Strategy and case studies: Using detailed Case Studies of Valio’s Zero Lactose, Arla’s Lactofree and McNeil’s Lactaid, the report sets out the seven steps to creating a lactose-free dairy brand.

Lactose-free dairy enjoys a profitable niche: The growing success of lactose-free brands including Valio’s Zero Lactose and Arla’s Lactofree illustrates the power of serving a niche in the right way. Niches of consumers can be loyal, premium-priced and very profitable.

The service opportunity: The medical statistics on lactose intolerance in fact underestimate the size of the opportunity. Beyond the medically-diagnosed lactose intolerant, there is a much larger group of self-diagnosers – possibly twice as many as the medically diagnosed – who become loyal to brands that provide services alongside the brand that help them with their health concerns.


Executive summary

Lactose intolerance
What is lactose intolerance?
Who is lactose intolerant?

Seven success factors in lactose-free dairy
Success factor 1: Make sure consumers ‘feel the benefit’ – this is a market where technology matters
Success factor 2: Make sure it tastes good
Success factor 3: Communicate to health professionals
Success factor 4: Have a big marketing budget
Success factor 5: Offer not just a product, but a service to help the self-diagnosers
Success factor 6: Build a range that meets everyone’s needs
Success factor 7: Focus on creating an “expert brand”

Where are the opportunities?
Europe forging ahead
The rewards: consumer loyalty for life and sales success

Case Study 1: Valio Zero Lactose
Sales success
Price undercutting a threat
Drinking quality of lactose-free convinces whole family
Educating health professionals
International success “a big surprise”

Case Study 2: Arla Lactose
Premium priced but sales, purchase frequency on the way up
Innovative product and solid marketing keys to success
Range extends to cream, cheese
Lactose-free on-the-go
Women the keenest buyers
Online efforts
App directs people to lactose-free eateries
Online presence crucial
Educating professionals
Merchandising challenge
Consumer loyalty for life

Case Study 3: Lactaid, America’s lactose-free giant

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