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Sugar free milk is either milk that has had its natural sugars chemically removed or product that is labeled “milk” but is actually made from entirely non-dairy, sugar free sources, including soy and various nuts. The milk produced by all animals naturally contains at least some sugars. Low-fat milks contain the least amount of sugar, but even these are not completely sugar-free. For diabetics and others looking to remove or severely curtail sugar intake, sugar free milk, though often hard to find, is usually one of the only milk options.
In nature, milk is designed to provide baby animals with the nutrition they need to grow and develop. Milk is, accordingly, not a sugar free food. To the contrary, it is usually high in fats and sugars both. Commercially produced milk is often processed to remove at least some of the fat content, but sugars — which usually take the form of lactose — are always present. Removing them is usually a matter of chemical isolation or evaporation.
It is not usually easy to find sugar free milk. Chemical sugar removal is usually quite costly, and in most places the demand is too low to justify production. A number of manufacturers create lactose-free milk that is made by adding a lactase enzyme to regular milk. This removes the lactic acid that upsets individuals with lactose intolerance, but does not actually remove the sugars. It just breaks them down and alters their chemical composition to make them more digestible.
A more successful place to look for sugar free milk is among evaporated milk products. Evaporated milk and powdered milks are milk that has been dehydrated and is usually sold as either dry crystals or concentrated liquid. Milk tends to lose a lot of sugar during dehydration, but even still, only a very few of these products are truly sugar free. Consumers should carefully read labels, too, as many powered or evaporated milk products have sugar substitutes or preservatives added.
Many of the milk products marketed to lactose intolerant people and diabetics are not really milk at all. Soy milk and almond milk are two common examples. These “milks” are creamy, milk-like beverages that are made by condensing natural, protein-rich elements into liquid form. Soybeans and almonds are usually rich in natural sugars, however, which means that even without adding sugar, these milks are unlikely to be sugar free. Some manufacturers sell sugar free milk, but these are not usually the most common varieties and can be hard to find.
Just the same, these milks are almost always low sugar. The sugars that these milk substitutes contain is usually significantly lower than the sugars present in regular milk. This means that they are usually still a fine milk for diabetics and others looking to adopt a low carb diet. Individuals adhering to a strictly sugar free diet usually simply avoid milk and milk substitutes.
I am surprised that you did not discuss the white sugar that is added to the milk. It is the added sugar that is not needed in the milk, not the naturally occurring sugar in the milk, which is totally fine for a diabetic. White sugar is incomplete sugar, and therefore bad for you, but sugar derived from eating sugar cane is completely fine because it contains a complete sugar.