Lactose Market Size, Share & COVID-19 Impact Analysis, By Application (Food, Feed, Pharmaceuticals, and Infant Formula (Dry-blend Infant-grade Lactose, Wet-blend Infant-grade Lactose)), By Color (Yellow, Pale-Yellow to White, and White), By Purity (Crude, Edible, and Refined Edible), and Regional Forecast, 2022-2029

The global lactose market size was valued at USD 2.22 billion in 2021. The market is projected to grow from USD 2.32 billion in 2022 to USD 3.00 billion by 2029, exhibiting a CAGR of 3.8% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with lactose experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a higher growth of 22.9% in 2020 as compared to 2019.

Lactose is a byproduct of cheese; it is extracted from liquid whey during the manufacturing process. Commercially, it is one of the major dairy ingredients with numerous applications in different industries, including the food industry for manufacturing creams, bakery products, confectioneries, and in the feed industry predominantly as an ingredient for pig feed. Moreover, it is widely used in infant formula manufacturing and excipient/filler in the pharmaceutical industry.

The growing pharmaceutical industry in developing countries, along with the increasing utilization of lactose in food processing and manufacturing of infant formula, is resulting in the growing demand in the global market. Additionally, major dairy-producing countries’ increasing demand for food and infant-grade lactose has been instrumental in propelling the lactose market growth.

• For instance, according to regional and national databases, import-export statistics, and other credible sources, the domestic consumption of lactose in China was around 390,000 MT in 2020, which accounted for roughly 40% of the total consumption of lactose globally.

Thus, a significant increase in the demand for lactose from developing countries is fueling its demand and adoption, further supporting the market growth during the forecast period.

COVID-19 IMPACT

Supply Chain Disruptions led to Increase in Prices of Lactose during 2020

The COVID-19 pandemic had a positive impact on the global market. The majority of the production was unaffected by COVID-19 as dairy foods are seen as essential foods and dairy processing units were fully functional during the lockdown period. A significant gap between the supply and demand was observed during 2020, where the production of lactose was stable. On the other hand, the demand was increased due to mass buying and stocking up on essential raw materials from players operating in the food processing and dairy industry. The significant increase in the prices due to the supply shortage was mainly responsible for the significant surge in the market size.

• For instance, according to the report published by GlobalDairyTrade, the annual weighted average price of lactose for 2021 was USD 1,224 per MT, which was nearly USD 1,093 MT in 2020 and USD 869 in 2019.


• Moreover, the GDT trading platform experienced an increase in the number of lactose bidders during the 2020 auction and 24 bidders were present in the event as compared to the 15 bidders in the previous year.

These trends, along with significant changes in currency exchange rates, are accountable for the positive impact of COVID-19 on the market.

LATEST TRENDS

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Declining Breastfeeding Rates Globally to Fuel Lactose Demand

Increase in the working population and availability of breast milk substitutes are primarily responsible for the declining breastfeeding rates across the globe. The declining breastfeeding rate in developed and developing countries is one of the critical factors increasing the demand for infant formula in developing countries such as China.

• For instance, according to the report published by the World Health Organization, the rate of infants fed exclusively with breast milk for the first six months after birth was 29% in 2019. Also, the U.S. and European countries have recently seen rising demand for infant formula. Hence, there has been growing demand and consumption of infant formula in recent years.

Thus, several market players are focusing on developing infant formula, which is as close to breast milk as possible. Therefore, it is surging the demand for infant-grade lactose globally. Similarly, with continued economic growth and urbanization around the globe, breastfeeding rates are expected to remain at low levels in developed countries, such as the United States, Germany, and Japan, creating more demand for infant milk formula. This subsequently uplifted the demand for infant-grade lactose and supported the market growth.

DRIVING FACTORS

Increasing Demand for Food and Infant-grade Lactose and Growing Pharmaceutical Industry in Developing Countries Led to Market Growth

There has been a significant increase in demand for infant formula, especially from developed countries, including the U.S. and major European countries. China, which has been among the largest single consumers of infant formula, was historically dependent on the import of infant formula. There was a higher preference for imported infant formula brands owing to the melamine scandal in 2008. However, China has shifted its focus towards domestic brands which has promoted the major domestic manufacturers in the country.

• China Feihe and Inner Mongolia Yili Industrial Group Co. are among the leaders in the infant formula market in China. China Feihe witnessed an increase in revenues by around 38% during 2019-2020, owing to strong demand for its infant formula brands from China.

However, despite the significant increase in demand and subsequent consumption of lactose globally, the production has not increased in that ratio. Moreover, the pharmaceutical industry has been experiencing significant growth in recent years, especially in developing countries such as Brazil, China, India, and other Asia Pacific countries. The rising prevalence of chronic diseases and increasing initiatives by the government for healthcare awareness are fueling the demand for advanced treatment options. As a result, the major market players are focusing on introducing blockbuster drug molecules to fulfill the demand, which is anticipated to foster the growth of the pharmaceutical market during the study period.

This high growth in the pharmaceutical industry is projected to fuel the demand for lactose, which assists in the compressibility and flowability of the drug molecules while formulating drugs.

RESTRAINING FACTORS

Increasing Substitution of Lactose in Feed Manufacturing and Product Recalls to Impede Growth

The major applications of lactose are in the feed, food, and pharmaceutical industries. Moreover, due to the high cost and limited availability of lactose, majority of the feed manufacturers are shifting toward alternate options such as table sugar, molasses, dextrose, and maltodextrins. This is a prominent factor restricting the market growth during the forecast period.

Moreover, recent product recalls related to lactose-based products, such as infant formula, will affect the demand for formula and subsequently hamper the market growth.

• For instance, in February 2022, Abbott Nutrition initiated a voluntary recall of certain powdered infant formulas due to potential bacterial infections, including Salmonella. Products made at the Sturgis facility can be found across the U.S. and were likely exported to other countries as well. Thus, Canadian health officials have also issued a recall warning.

Thus, the availability of substitutes and increasing recalls of lactose-based products are projected to hamper the growth of the market during the forecast period.

SEGMENTATION

By Purity Analysis

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Refined-edible Segment Dominated Owing to High Application in Pharmaceutical Industry

The market is segmented into crude grade, edible grade, and refined edible grade lactose. The specification of the grades differs on various parameters, including total ash content, microbial count, and others. In terms of revenue, the refined-edible grade segment dominated the global market in 2021. Refined-edible grade is widely used in pharmaceutical and infant formula manufacturing. The rising demand from infant formula and pharmaceutical industries for refined-edible grade lactose combined with innovative product offerings, such as dry-blend infant-grade lactose, by the market players, is responsible for the dominance of the segment in the global market. The stringent specification requirement for refined-edible grade lactose has led to a comparatively higher price (per ton) of refined-edible grade. These factors have further contributed to the growth of the refined-edible grade segment in the global market in 2021.

On the other hand, the demand for crude lactose is majorly influenced by the rising applications in feed manufacturing and fermentation applications. The crude segment experienced significant changes in pricing due to the supply-demand gap and the increase in the manufacturing cost of lactose.

By Color Analysis

Pale-yellow to White Segment to Exhibit Notable Growth Attributed to the High Demand from Food Industry

The market is segmented into yellow, pale-yellow to white, and white based on color. The increasing demand for pale yellow to white lactose from the food industry and the growing emphasis of major players on increasing the production of infant formula are resulting in the growing demand for pale yellow to white lactose from developing and developed countries.

• For instance, in December 2020, Perrigo Company plc announced the expansion of its plant in Georgia to meet the growing consumer demand for store brand infant formula. The expansion will help the company to enhance its infant formula manufacturing capabilities.

Moreover, the steady demand for white lactose from the pharmaceutical industry and the rapidly growing pharma industry in emerging countries are increasing the demand and growth of the market. The prerequisite of the pharmaceutical industry is pure white lactose, owing to its basic applications in inhalation drugs and as fillers in oral drug formulations.

On the other hand, the increasing applications of yellow lactose in feed manufacturing and other industrial applications are responsible for surging the demand for yellow lactose from developing and developed countries.

By Application Analysis

Infant Formula Segment to Dominate the Market Attributed to Increasing Demand for Infant Grade Lactose from Developing Countries

Based on application, the market is classified into food, feed, pharmaceuticals, and infant formula. The infant formula segment is anticipated to hold the dominant share in the market during the forecast period. The growing emphasis on domestic manufacturing of infant formula in China, along with the increasing consumption of infant formula in the U.S. and European countries, is responsible for the dominance of the segment.

• According to the industry experts and KOL interviews, “China is among the major importer and consumers of infant grade lactose. Out of total imports of China, around 70% - 80% of the imported lactose is infant-grade”, as per Independent Consultant, Dairy Ingredients 

Additionally, the food segment accounted for the second largest share in the market. The growing applications of lactose in the food industry and the increasing demand for lactose for the standardization of dairy products are responsible for the segment growth. The major dairy processing countries such as New Zealand are actively involved in importing food grade lactose from countries such as the U.S.

• For instance, according to the data published by the European Commission, China and New Zealand were the top importers of lactose with the import of 120 thousand MT and 103 thousand MT during the 2021 season.

REGIONAL INSIGHTS

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In terms of geography, the market is categorized into North America, Europe, Asia Pacific, and the rest of the world.

The market size in the Asia Pacific stood at USD 1.40 billion in 2021. Increasing manufacturing of infant formula in the region and the growing pharmaceutical industry in Asian countries, such as China and India, are some of the factors responsible for the dominance of Asia Pacific in 2021. Moreover, strategic expansion plans by major players operating in the market to cater to increasing demand are also supporting the market growth.

• For instance, in September 2021, Olam Food Ingredients announced an investment plan for developing a new dairy processing plant in Tokoroa, New Zealand. The new plant will strengthen the company’s manufacturing network across the globe to produce high-value dairy ingredients such as lactose.

Europe accounted for the second-largest share in the global market. The growing food industry in the region and the rising consumption of infant formula across Europe and well-established dairy sector are likely to drive the market growth in the region.

• According to the industry experts and interviews with KOL, Europe is one of the major lactose manufacturing regions across the world with around 650-700 thousand tons of production in 2020.

Meanwhile, the market in North America is expected to register a significant CAGR during the forecast period. The favorable business policies regarding the dairy sector, the higher demand for refined-edible grade lactose from the pharmaceutical industry in the U.S., and the growing demand for confectionery and other food products in the country are driving the market growth in North America. Moreover, the rest of the world is anticipated to show prominent growth during the forecast period attributed to the strong demand for infant formula from the Middle East & Africa and South America region.

KEY INDUSTRY PLAYERS

Production Capacity Expansion and Strong Distribution Channel of Key Players Led to Market Dominance

The global market is fragmented, with the existence of a few international players along with a large number of domestic lactose manufacturers. The major players operating in the market focus on production capacity expansion and strategic collaborations to gain a competitive advantage over other players.

• Similarly, in February 2022, Saputo Inc. announced USD 169 million investment plans to expand three cheese manufacturing sites in the U.S. It will help the company increase its cheese production and subsequently help the company increase its lactose manufacturing capacity.


• For instance, in May 2021, Hilmar Cheese Company, Inc. announced plans to establish a new state-of-the-art cheese and whey protein processing plant in Dodge City, Kansas. This will allow the company to strengthen its position in cheese, whey, and lactose segments.

On the other hand, some prominent players, such as MEGGLE GmbH & Co. KG, Sachsenmilch Leppersdorf GmbH, Hilmar Cheese Company, Inc., and Glanbia PLC, are focusing on research and development activities for the introduction of innovative lactose products to gain a competitive advantage over other players.

LIST OF KEY COMPANIES PROFILED:

• Fonterra Co-operative Group (New Zealand)


• FrieslandCampina Ingredients (Netherlands)


• DFE Pharma (Germany)


• Arla Foods Ingredients P/S (Denmark)


• MEGGLE GmbH & Co. KG (Germany)


• MILEI GmbH (Germany)


• Lactose (India) Limited (India)


• Hilmar Cheese Company, Inc.  (U.S.)


• Kerry (Ireland)


• Käserei Champignon Hofmeister GmbH & Co. KG (ALPAVIT) (Germany)


• Armor Proteines (SAVENCIA SA) (France)


• Glanbia PLC (Ireland)


• Lactalis International (France)

KEY INDUSTRY DEVELOPMENTS:

• March 2022– Arla Foods Ingredients Group P/S launched two new products in its organic sector Lacroprodan and Premium Lactose Organic, with an aim to expand its product portfolio.


• September 2021– FrieslandCampina Ingredients relaunched its infant nutrition brand Friso in the Netherlands market with an aim to expand the brand presence in the country.

REPORT COVERAGE

An Infographic Representation of Lactose Market

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The global lactose market research report provides a detailed analysis of the industry and focuses on key aspects such as leading companies, competitive landscape, products, and applications. Besides this, it offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the market report encompasses several factors that have contributed to the growth of the market in recent years.

Report Scope & Segmentation