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Arla’s Lactofree increases its consumer base
With an increase in self diagnosed cases of lactose intolerance; sales of lactose free products are expected to grow at a strong rate between 2012 and 2016, according to findings from Food and Health Innovation Services. Arla’s brand Lactofree specializes in offering complete lactose free products which are not readily available in the market. The Lactofree brand offering includes milk, butter, cheese, cream, yogurt, ice-cream and many more.
According to the UK’s National Health Service (NHS), lactose is a sugar found in milk. It cannot become absorbed by the body unless its state changes to into a more simple sugar called glucose and galactose. This change happens when the lactose passes through the stomach into the upper part of the gut and comes into contact with a chemical called lactase. If there is not enough lactase in the small intestine, lactose cannot be broken down and cannot be absorbed. This leads to lactose intolerance. Therefore lactose intolerance is the inability to digest lactose, caused by a deficiency in the enzyme lactase. Lactase deficiency can present itself in three forms; congenital lactase deficiency, late-onset deficiency/ lactase non-persistence, secondary lactose intolerance.
Arla’s Lactofree brand allows the company to tap into a consumer base that would not purchase lactose dairy products.
As discussed in the MarketLine case study, Arla Foods: A global dairy giant, entering the lactose free industry gives Arla a competitive edge over its competitors. The fact that there is demand for lactose free products and the market is not over saturated means that Arla does not have to compete on price and can effectively sell its lactose free products at a considerably higher price. Consumers that are lactose intolerant will be willing to purchase products without necessarily being price conscious as lactose-free products are limited in offering from major dairy companies, such as Nestle and Danone.
Arla has carved a niche in this industry, although this was not because of first mover advantage. In fact dairy producer Valio entered the lactose free dairy back in 2001, with its brand Valio Eila. Much of Arla’s success can be attributed to its brand name; Lactofree explicitly tells consumers that this product does not contain lactose; in comparison Valio’s brand name Eila does little to make consumers aware of this.