Milk Growth Strategy Examples: Fairlife, a2 Milk & LACTAID

Executive summary: To understand the factors that affect growth strategy in 2025, three leading brands of value-added dairy milks are compared: Fairlife, a2 Milk, and LACTAID. The landscape of dairy versus plant milk is explored, with attention to the salient features of value-added milks, and key questions determining growth strategy are proposed. 

Dairy is Making a Comeback with Value-Added Dairy Milks that Cater to Food & Beverage Trends 

As we have discussed extensively in earlier growth strategy examples, the last few years have seen new challenges and new opportunities in the food and beverage sector. AI is transforming the way brands do sales and analysis. Inflation has increased food prices, making customers more sensitive to sales and more willing to buy store-brand options. The popularity of GLP-1 drugs has also had an impact on what customers are buying at the supermarket: while sales are down 6% overall, nutrient-dense options have seen steadier demand.

How Can Food & Beverage Companies Respond, and Even Grow, in These Times? 

Today, we’ll focus on growth strategy examples straight from the dairy aisle: value-added dairy milks. Like the protein-packed options I discussed a few weeks ago, value-added milks are appealing to the health-conscious customer. We will discuss the opportunities and possible roadblocks to growth strategy in value-added milks, and ask some of the key questions necessary to understanding a growth strategy for three brands: 

1. Fairlife
2. a2 Milk
3. LACTAID 

What Are Value-Added Milks? 

The term “value-added product” refers to a raw product (often a raw agricultural product), which has been altered somehow to increase its perceived value to consumers. For example, spinning flax into linen is an ancient method of adding value: linen would be value-added thanks to the flax. Value-added milks include: 

• lactose-free milk
• milk with extra protein
• filtered milks
• organic milks
• A2-only milks (sourced from cows that produce slightly different proteins in their milk) 
• and more 

All of these milks have some kind of value add, be it digestive comfort, extra nutrition, or ecological benefits.

Growth Strategy Examples: How Value-Added Milks Fit Into Current Dairy Trends

We should understand the growth strategy of value-added milks in the context of larger trends in dairy sales. Dairy is popular because it delivers on two key qualities: nutrition and value. Dairy is making a comeback, due to perceptions that plant milks might be missing key nutrients and that they also might render it harder for consumers to control their blood sugar, according to the website Food Navigator. 

These factors might be even more relevant for the youngest consumers: according to Midwest Dairy, 54% of Millennial and Gen Z consumers expect their food and beverages to contribute to both their mental and physical health. According to Victor Martino writing for Just Food, a specific health appeal is protein: compared to plant-based milk, cow milk products are appealing because: 

“many products provide a protein-rich, nutrient-dense option with limited added sugars.” 

Overall, the prices of dairy milk products compare favorably to those of plant-based milks. For example, at the Whole Foods near Princeton, NJ a 64 oz carton of store-brand soy milk costs $3.29 while a 64 oz carton of store-brand whole milk costs $2.69. Soy milk has fewer than half of the calories per cup as compared to whole milk: a hungry customer might well look at that price differential and opt to save money (especially when considering cost per wholesome calorie) and buy dairy.

Both Price & Nutrition Are Driving the Dairy Comeback. How Do Value-Added Dairy Milks Compare?

When it comes to nutrition, value-added dairy milks can often offer equivalent or even improved health benefits as compared to standard milk. Lactose-free milks, for example, are produced by using the lactase enzyme to break down a natural dimer found in milk called lactose (a dimer is a molecule made of two smaller building blocks). 

As the digestive system will break down these dimers into two blocks (monomers), and lactase also breaks down the dimers into the same two blocks, processing milk with lactase doesn’t actually affect the nutritional profile (although interestingly it does affect taste, making the milk slightly sweeter — your tongue perceives the components of lactose differently than it perceives the lactose itself).  

A2 milks are similarly marketed as easier to digest because of a different mix of proteins in the milk. 

Some milks do one better on the nutrition front, by increasing key nutrients in milk. Almost all milk could be considered value-added, as most commercially available milks contain added vitamin D, a key nutrient. But adding vitamin D is quite basic compared to some of the ways these milks have been altered. 

Growth Strategy Examples: Fairlife Features Protein Comparison

Fairlife, for example, sells filtered milks which have many of the natural sugars and some of the water in milk filtered out: Fairlife is clearly sensitive to the comparison with plant-based milks, as they include almond milk in their comparison to other milks on their website, showcasing that their milk has 13 grams of protein per cup compared to one gram in a cup of almond milk. (We see this again and again: protein is king in 2025.) 

Pricing Strategy for Value-Added Milks

When it comes to price, value-added milks seem to cluster around $5 for half a gallon. Fifty-two ounces of Fairlife will usually run you above $5 (the packaging cleverly mimics the broad outlines of a standard 64 ounce milk carton, disguising the true price per ounce as compared to other brands). 

Lactaid is often about 10 cents cheaper, but still similar to the $5 price point. A2 is similarly priced around $5 per 64 ounces. 

These value-added milks do not have the same price advantages as less processed milks, but they are priced similarly to name-brand plant milks and usually have higher protein content, which is desirable to today’s consumers (the prices quoted above were for store-brand plant milk). The fact that they are all clustered at the same price point suggests that they are viewed as a premium category offering additional benefits that consumers are willing to pay for.

How Do Value-Added Milks Compare?

A comparison of some of the key features of these brands of value-added dairy milks reveals some of the most important questions to answer when it comes to determining growth strategy. We can compare the milks on a few features: increased protein, sugar content, whether they are lactose-free, whether they are rbST free, and other benefits.

As we can see, the macronutrient profiles of a2 Milk and LACTAID are quite similar to that of plain whole milk. 

One thing to note is that while the sugar content of LACTAID is roughly the same as either plain whole milk or the a2 milk, because the carbohydrates are split into monomers and not dimers, they would probably have a higher glycemic index and more of an impact on blood sugar (this is the distinction between simple and complex carbohydrates). If Lactaid has a higher glycemic index this makes it less healthy. Overall, LACTAID (first nationally marketed by Johnson & Johnson in 1991) appears to be at something of a disadvantage, and it is not as new of a brand as either Fairlife (milk was introduced in the US in 2014) or a2 milk (introduced 2015 in the US)  and is likely not growing as rapidly.   

Is Fairlife the Top Value-Added Milk?

The real standout nutritionally is Fairlife, which boasts the lactose-free qualities of the LACTAID along with lower sugar and more protein than any of these other milks. This brand has the potential to be a robust growth strategy example. 

Its higher price per ounce as compared to the other value-added milks makes a lot of sense in this context. Fairlife has a benefit for everyone in a family: maybe only one parent is lactose intolerant, but if someone else wants to lose weight or build muscle, and a third individual is diabetic, it’s easy to see how Fairlife could be desirable to a variety of individuals. Milk is a product that is often shared by the whole family, so if Fairlife can build an image as multifunctional (compared to LACTAID, which is more targeted to those who are lactose intolerant) this could contribute to the growth of the company. 

Key Questions for Value-Added Milk Growth Strategy Examples

To come up with a good growth strategy for any of these brands, we would need to answer a few key questions. 

• First, are these value-added milks primarily competing for sales with plant-based milks, or with standard dairy milk? 
• Second, how can these brands use packaging and pricing to communicate their premium status, while still appealing to value conscious customers? What is the best strategy? Given that Lactaid is perhaps not as expensive to produce as a2 (which requires unique cows) or Fairlife (which requires more than one ounce of raw milk to produce one ounce of product), could it sell more at a lower price point, or is it more advantageous to stay at the premium price point because customers will still buy it at that price? 
• Third, what benefits are the most important to communicate to customers, and how is it possible to do this clearly? Currently, Fairlife does not highlight its multifunctionality in its branding or advertising- should it, for example? 

Insight to Action can help you understand the market demand and create a winning growth strategy. Read more about our work on our resources page, contact us, or subscribe to our newsletter to learn more about us. We also recently explored plant based milk segmentation. We are looking forward to working with you!