In Western Europe, the dairy industry is forecast to stagnate over the next five years, generating little to no growth in volume or value terms. With the market being so fragmented, dairy companies are constantly looking for an advantage over their competitors. The use of lactase, which hydrolyses lactose into glucose and galactose, is one way for manufacturers to produce a lactose-free dairy product, setting themselves apart from their rivals and capitalising on the lactose-free health trend. But will future regulation dampen or enhance opportunities in this market?
Growth of lactose-free dairy products outstrips growth of dairy products globally in volume terms
Western Europe is the world’s largest market for enzymes used in dairy products although growth is forecast to be weak over 2011-2016, mirroring the poor performance of the dairy industry. North America and Latin America, the next two largest markets in turn, are forecast to do much better with annual volume growth rates of 2% and 5%
respectively. The lactose-free dairy market is dominated by Western Europe and North America in value terms, with these two regions accounting for 70% of the $2.8 billion industry in 2012. In volume terms, it has an annual growth rate of 6% over 2012-2017 globally, twice as high than that of the dairy industry overall, albeit from a much lower base.
As discussed in ‘Lactose-free Foods Maintain Their Global Appeal’, the prevalence of lactose-intolerance varies enormously between populations. In general rates are a lot lower amongst white Europeans compared to populations where dairy remains mostly absent from the diet. In Afro-Caribbean, sub Saharan African and South East Asian populations for example, rates are thought to be as high as 90%. This indicates that the growth of lactose-free dairy products in Western Europe and North America is being driven by a health fad rather than a medical necessity.
There is no current European Union regulation surrounding the remaining content of lactose in products that claim to be lactose-free, according to Aurélie Gammelin, Global Product Manager of Dairy Enzymes at DuPont, although she suspects that “eventually regulations in Europe will be introduced”. Manufacturers in Nordic countries do comply with a lactose limit of <10mg/100g in their lactose-free products. If EU levels were to be defined, this would no doubt improve harmonisation across different parts of Europe.
In the short to medium term, lactase producers should continue to take advantage of Western markets where sales of lactose-free products are driven by the faddism of lactose intolerance amongst consumers. Currently the second largest enzyme market globally, China, like most of Asia Pacific, has a genuine lactose intolerant population and therefore has great potential for lactase producers. However, until disposable incomes rise sufficiently to allow both dairy and lactose-free products to become more affordable for Chinese consumers, growth rates of dairy enzymes in China and the surrounding region will remain slow.