Many people in the United States struggle to digest milk sugar. Researchers estimate that about 36% of Americans have some level of lactose intolerance. That could open a new opportunity for ice cream makers. A team from Penn State and the University of Wisconsin looked at whether these shoppers would pay more for ice cream that is low in lactose or free of it. Their results appeared in the Journal of Dairy Science.
The study used an auction. People bid on three types of ice cream: regular, lactose-reduced, and lactose-free. The team found that shoppers with lactose intolerance were ready to pay extra for the lactose-free kind. This is useful for companies, but only if the extra price is big enough. Lactose-free ice cream takes more time and money to make.
Grace Lewis, a co-author, works at Penn State as a food science professor. She also advises dairy makers through Penn State Extension. She said the findings can guide both new and growing companies. She explained that businesses need to know if buyers will really pay more, since these products cost more to produce.
Making lactose-free dairy is a special process. Producers add lactase, an enzyme that the human small intestine makes naturally. Lactase breaks lactose into simpler sugars that are easier to digest. The enzyme, longer processing times, and other changes all raise the cost.
In total, 135 people took part. They placed bids in person, and the ice cream was real. After the first round, the researchers shared details about nutrition and ingredients. Then everyone bid a second time. At the end, winning bidders took home ice cream based on their bids. The auction method was designed to push people to state what the product is truly worth to them.
The team then built a statistical model. It checked which traits linked to higher or lower bids. These included favorite ice cream type, lactose intolerance, how severe it was, age, gender, education, ethnicity, and how often people ate ice cream. People who bought ice cream more often were willing to pay more. Participants of Asian ethnicity were willing to pay less.
Across the whole study, the average bid was $5.43 for a half gallon. Extra value for lactose-free ice cream depended on how well people could tolerate lactose. Those with very limited tolerance would pay an extra $2.17. People with limited tolerance would add $0.82. Those with moderate tolerance would add $0.55. This means someone with very limited tolerance valued a half gallon of lactose-free ice cream at $7.60.
Lewis said this points to added value among people who cannot digest lactose well. Still, she warned that firms must weigh what buyers will pay against the added costs of making and marketing the product. Profit is not guaranteed. She also noted that brands adding lactose-free options to their usual range have mostly not raised prices, though the situation is slowly changing. Brands that sell only lactose-free items already charge more. Together, the results give the dairy industry a clearer view of what shoppers may truly value.
Charles Nicholson led the study as first author. He is a clinical professor of supply chain management at the Smeal College of Business at Penn State. Other researchers also helped. Elena Krasovskaia is an assistant teaching professor of agricultural and resource economics at North Carolina State University. Jack Myers is a doctoral candidate in dairy science at the University of Wisconsin-Madison. At the University of Wisconsin, Scott Rankin serves as a professor and chair of food and nutritional sciences.
The research received funding from the University of Wisconsin Consortium for Extension and Research in Agriculture and Natural Resources. The University of Wisconsin-Madison Dairy Innovation Hub also provided support.
