The brand, which is derived from cow's milk that has had the lactose removed, was launched in 2005 and is now worth just under £11m at retail level.
The range includes yogurts, cheese, 1-litre packs of milk and 20ml portion packs for catering.
"Lactofree is enjoying value growth of 37% year-on-year. It is the fastest-growing brand within the dairy alternative market and thanks to the new TV advertisement, which launched in January, awareness of the product range is increasing," said the firm.
Meanwhile, filtered milk Cravendale had doubled in value in the last four years and was forecast to break through the 200m litre barrier by the end of the year, added Arla, which posted a surge in profit from DKK263m (£31m) in the first half of 2009 to DKK 697m (£81.2m) in the first half of 2010.
Turnover was up 6.7% to DKK 23.8bn (£2.77bn).
“Overall, these are satisfactory interim results," said chief finance officer Frederik Lotz. “We are maintaining good market positions in our biggest markets in the UK, Sweden and Denmark.
“We are continuing to see increasing growth in markets such as Russia, China and the Middle East as well as the potential for further growth in a number of our core markets going forward.”
Higher dairy commodity prices won't last
However, high prices in international commodity markets (where Arla sells butter, cheese and powder to industrial customers), were unlikely to continue in the second half, he said.
“We have to expect lower earnings from the commodity markets in the second half of the year... A decisive factor will be how consumer confidence develops. European consumers still bear the scars of the economic recession.
"Many are still cautious and prefer discount products to brands and this obviously impacts on earnings.”