Bakers prefer butter, helping prices soar
Consumers around the world are willing to pay more for products containing dairy and this is driving demand for butter and cream, says Fonterra.
In a comprehensive study of the lactose free dairy market across 33 countries around the world, food and drink consultancy Zenith International found that the most developed markets include the US, Scandinavia, Germany and Spain.
Families are an important target market for lactose free dairy products, especially for parents who wish their family to benefit from dairy nutrients even if they are lactose intolerant, it says.
Plant and nut-based dairy alternatives such as soy beverages, are a competitive threat, but these do not always provide the nutrients that consumers can obtain from dairy. Encouraging dairy consumption is particularly important in addressing deficiencies in calcium and vitamin D.
Although lactose free dairy products are currently a niche segment, it is clear that they have considerable long term potential. Most significant opportunities lie in markets with a prevalence of lactose intolerance and where dairy consumption is rising, such as Asia and Latin America. Manufacturers are in a strong position to drive milk and dairy consumption through lactose free offerings, provided they meet the challenge of affordability for lower average incomes.
"Another vital challenge for manufacturers looking to enter underdeveloped markets is education," says Zenith senior analyst Laura Knight.
"Consumers need to be educated about what lactose intolerance is, how lactose free dairy products can help them manage their condition and to overcome the misconception that lactose free milk is not real milk. Education of health professionals is also important, so they are encouraged to advise those who are lactose intolerant to avoid cutting dairy products from their diets and use lactose free products as a way of continuing to consume dairy without experiencing discomfort."
There are also opportunities in more developed lactose free dairy markets to broaden the range of lactose free dairy products available and to drive consumption in non-retail channels.
Given the higher price points that lactose free dairy products often command, there is great potential to help manufacturers drive value growth despite the current challenging market conditions.
