Lactose-free dairy is emerging from a niche health category into a potential high-growth, value-added opportunity for India’s dairy industry, as changing consumer preferences and widespread lactose malabsorption create an underserved market. According to a 2015 study by the Sanjay Gandhi Post Graduate Institute of Medical Sciences (SGPGI), an estimated 60–74% of Indians are lactose mal-absorbers, while industry estimates cited in the report put lactose intolerance at 60–70% of the population, with rates as high as 66.6% among South Indian populations.
The lactose-free milk category globally is projected to grow from approximately $13.8 billion to $21.6 billion by 2031, representing a CAGR of more than 9%, while India’s segment is forecast to expand at around 7% CAGR through 2027, with milk remaining the largest sub-category. Industry executives say lactose-free dairy is increasingly moving beyond consumers with diagnosed intolerance, attracting health-conscious households, fitness-focused consumers and food-service businesses looking for easier-to-digest dairy options.
For dairy companies facing slower growth in conventional milk and intense competition in commoditised categories, lactose-free products offer an opportunity to premiumise portfolios and expand into adjacent segments such as high-protein dairy, fortified milk, flavoured beverages and specialised nutrition products.
The report notes that India’s broader dairy industry has crossed $30 billion, while categories such as lactose-free, organic and fortified dairy remain under-penetrated at below 4% share, indicating significant headroom for growth. Technology is also enabling the category: controlled lactase-enzyme processing, UHT technology and aseptic packaging can support consistent production, longer shelf life and distribution beyond metropolitan markets and areas with limited cold-chain infrastructure. Lactose-free dairy is also gaining traction in cafés, restaurants and hospitality, while products are being developed across formats including milk, milkshakes, yoghurt and paneer.
Importantly, lactose-free milk remains real dairy milk; lactase breaks lactose into glucose and galactose, which can make the product taste slightly sweeter, while its core nutritional components, including protein and calcium, remain. The report suggests that the opportunity extends beyond lactose intolerance into the broader consumer demand for nutrition, convenience, digestibility and gut-health-oriented products, positioning lactose-free dairy as a potentially important next frontier for Indian dairy premiumisation and innovation. (The Economic Times)
Source: Dairynews7x7 12 Aug, 2026 Read full story here
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