Look at any dairy case in the country, and it’s obvious that the space allotted to milk has been shrinking and the real estate for plant-based alternatives has expanded. But the shelf space going to lactose-free and low-lactose options also has expanded as the dairy industry tries to respond to concerns from minority consumers and others who are lactose-intolerant.
These products include traditional brands like Lactaid, as well as ultrafiltered, nutrient-dense, high-protein milks, and A2 milk, which contains only the A2 protein and not the A1.
While studies have shown A2 milk can prevent some symptoms of lactose intolerance, they still contain lactose. These value-added choices will become increasingly important if the dairy industry wants to retain its dominance over the plant-based alternative sector.
“Consumers today are able to demand more from the beverages they do pick,” said Anne Marie Splitstone, senior vice president for Dairy Management Inc.’s Global Innovation Partnerships.
“We need to be sure we are staying relevant and innovating in the category,” she added, whether that means giving consumers more of what they do want like protein or calcium, or removing what they don’t want such as lactose.
According to the National Institutes of Health, up to 68% of the global population and 36% of the U.S. population has some level of lactose malabsorption, with people of color being far more likely to have trouble digesting lactose, a naturally occurring milk sugar, than those of European descent.
To make its dietary guidelines and feeding programs more health equitable, while still being nutritious, the federal government has started to allow and offer more lactose-free products, including a few soy-based alternatives.
Every five years, USDA and the Department of Health and Human Services update the Dietary Guidelines for Americans, and about every 10 years, they update the Women, Infants, and Children program. In the 2020-2025 dietary guidelines, the government said of plant-based dairy alternatives, “Individuals who are lactose intolerant can choose low-lactose and lactose-free dairy products. For individuals who choose dairy alternatives, fortified soy beverages (commonly known as ‘soy milk’) and soy yogurt — which are fortified with calcium, vitamin A, and vitamin D — are included as part of the dairy group because they are similar to milk and yogurt based on nutrient composition and in their use in meals.”
The guidelines also note that other products sold as “milks” but made from almonds, rice, coconut, oats, or hemp were not included in the dairy group because their overall nutritional content was not similar to milk and consuming them would not contribute to meeting dairy nutritional recommendations.
In November, USDA published its proposed rule to update the WIC program that mandates lactose-free dairy products be offered and adds soy-based yogurt and soy-based cheese alternatives as program options. The FDA also recently rolled out draft guidance suggesting voluntary labels on nondairy alternatives to disclose nutritional differences.
Soy beverages and tofu were already allowed in the WIC program, according to Miquela Hanselman, manager of regulatory affairs for the National Milk Producers Federation. In its proposal, USDA also asked for comments as to whether other plant-based products should be allowed if they meet the equivalent nutrient density of dairy.
Over the past few years, growth in lactose-free milk products has far outpaced gains seen by plant-based alternative beverages. According to IRI scanning data, sales of lactose-free or lactose-reduced milks climbed more than 61% between 2017 and 2022.
During that same period, sales of plant-based beverages rose about 34%. However, the dairy industry will need to continue its battle for dominance through innovation and education. While milk sales by volume still account for 90% of the market combined, that’s down from 93.4% in 2017.
“There is no lactose-based need for dairy alternatives” in the WIC program, said Claudia Larson, senior director of government relations for NMPF.
“Lactose-free milk is dairy milk, and it includes all of dairy’s vital nutrients — unlike most dairy imitators — just without the lactose,” she said. “Yogurt and cheese also provide low-lactose options that have dairy’s nutrient-dense profile because, again, they are dairy, just without full lactose.”
According to information from the National Dairy Council, 96% of retail food outlets in the United States carry lactose-free milk and about 18% of American households keep lactose-free milk in their refrigerators.
The A2 category is growing, but the milk is produced from dairy cows specifically bred to produce it. Because it takes years to convert a herd from producing conventional milk to A2 milk, the product is still not widely available in the United States.
Year-over-year sales of A2 milks by volume increased 8.5% in 2022, to 11.2 million gallons, according to IRI data. Since 2017, sales of A2 milks have more than doubled, but they are still minuscule compared to the other categories.
According to Allied Market Research, the global lactose-free dairy market in 2021 was valued at $11.45 billion, and is projected to reach $24.36 billion by 2031, growing at a compound rate of 8% over the period, with the liquid segment of the market gaining the largest share.
“Intense competition in the lactose-free dairy market has encouraged market players to focus on strong branding and improved advertisements to attract the interest of the consumer,” the market research firm noted. “Furthermore, an increase in product launches of lactose-free dairy products fortified with vitamins and minerals attracts consumers to opt for the product.”
Prime examples of these products include the highly successful Fairlife brand of high-protein, ultrafiltered milk that has taken the additional step of removing the trace amounts of lactose left after filtration, and Chobani’s new ultrafiltered, protein-rich, lactose-free milk.
USDA has received more than 10,500 comments on its proposed changes to the WIC program. The Plant-Based Foods Association (PBFA) has recommended that USDA create a process for adding additional plant-based beverages when they meet the nutrient specifications of the WIC program.
“We are hopeful that USDA will see this as a sensible path to adding more options without having to wait another decade or more for the next update,” said Bev Paul, federal policy consultant for PBFA. “In many cases, WIC participants are not ‘switching’ away from dairy, rather they were not being served by the existing program requirements.”
An intolerance to lactose is not the only reason consumers choose plant-based products over dairy products. Other reasons, according to Paul, include religious or cultural preferences, additional health concerns, animal-welfare considerations, and sustainability.
“USDA has not provided a timeline to publish its final rule, but it’s likely the government will want to complete it under this administration,” Hanselman said, adding that changes to the WIC program likely won’t have many implications for the upcoming update of the DGA.
“Changes in the dietary guidelines are more likely to cause changes in the WIC program,” she said.
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