Milking It: Surge In Lactose-Free Dairy Milk Sales

Milking It: Surge In Lactose-Free Dairy Milk Sales


Australians consume an enormous amount of dairy milk. Nielsen Homescan data shows 99% of households purchase dairy milk every year, making it the fifth-most frequently shopped supermarket category behind fresh vegetables, fresh fruit, bread, chilled meat and poultry. In the last 12 months to January, 2016, 1.1 billion litres of dairy milk (across both chilled and long life) was sold, making it a $1.6 billion market, nationally. 

Growth in the dairy milk category, however, is modest.  This is not surprising, given it is a commodity category at saturation point, dominated by private label players and subject to intense price wars. Dairy milk sales increased by just 2% in the last year – lower than the total grocery growth rate of 3.8% for the same period.

An emerging segment, however, looks set to re-energise the performance of dairy milk. Lactose-free dairy milk has seen a significant spike in consumption, with sales doubling over the past two years.

Lactose-free dairy milk offers consumers a ‘’middle ground’’ between traditional dairy milk and other milk alternatives. It has delivered 50% of the growth in total dairy milk and has contributed to the strong growth of full fat dairy milk (up 7% over the last year) and helped to counteract declines recorded by light dairy milk and skim milk (down -6% and -5%, respectively, over the same period).

Dairy milk alternatives are also on the rise. Whether driven by lactose intolerance, allergies, veganism, the paleo diet, or just general health and wellbeing, Australian consumers are exploring and embracing alternatives to traditional white milk.

No longer confined to the shelves of health food outlets and specialty stores, ‘new age’ milk alternatives such as almond and rice milk are now commonplace in supermarkets across the country. In fact, Nielsen Homescan data has revealed that we are nuts about almond milk – sales have tripled over the past two years to January 2016; while rice milk has grown by 6%. Soy milk, on the other hand, has declined by 7% over the same period.

With 83% of Australians believing “they are what they eat” according to Nielsen’s recent global health and wellness report, health benefits will continue to play a major role in consumers’ milk purchasing decisions, presenting an opportunity for brands and retailers to reach out and reconnect with consumers who may have lost their milky way.