AIRAG is produced by milking horses. This is only possible during the summer months from July until late September. Before drinking, the milk is fermented. This process can last from several hours up to a few days. Before fermentation, mare milk contains more lactose than normal cow milk. However, during the process, the lactose is converted into lactose acid, ethanol and carbon dioxide. Surprisingly, due to this, people who are lactose intolerant are also able to sample this nomadic delight.

Source: Koryo Tours

I personally really enjoyed drinking Airag.