Consumers are craving protein more than ever. But a looming shortage means many companies might not keep up with demand.
Whey protein, once a byproduct of cheese making, has become a must-have ingredient. Food and beverage manufacturers are scrambling to meet this rising demand. Unfortunately, some suppliers are already sold out for the rest of the year, as reported by the USDA.
This supply crunch is pushing prices up. The cost of standard whey powder has jumped over 50% just since January, according to DCA Market Intelligence.
For whey protein concentrate boasting 80% protein, prices are exceeding $11. Protein isolate, which is over 90% protein, sits firmly in the $12 range, per USDA data. Darcy Davenport, CEO of BellRing Brands, which owns Premier Protein and Dynamize, noted that whey prices have hit “historic highs.” The tight supply is also affecting the cost of non-fat dry milk, a key ingredient in many protein shakes.
A recent survey by the International Food Information Council shows that 70% of Americans want more protein in their diets, up from 59% four years ago. This surge in interest is partly driven by the growing use of GLP-1 medications for weight loss, which can create nutritional gaps in diets.
Protein is now found in an array of products, from Pop-Tarts to Kraft Mac & Cheese, as brands seek to boost sales with protein-rich offerings. With many companies facing slower sales, adding protein has become a go-to strategy for growth.
The dairy industry is rushing to expand capacity. Scaling production isn’t easy, though. While dairies are increasing whey protein output, they’re also producing more butterfat, leading to a surplus and price drops in that sector. Interestingly, U.S. milk has lower protein content compared to some other countries, a situation influenced by genetics.
To meet the rising demand, U.S. dairy producers are investing $11 billion in new and expanded facilities across 19 states, according to the International Dairy Foods Association. They estimate that U.S. milk production could increase by 15 billion pounds by 2030.
As ingredient costs rise, companies face the tough decision of whether to increase retail prices when consumers are already struggling with inflation. Some may consider alternative proteins, like soy or pea protein, which could help manage costs.
Davenport mentioned that at least one competitor had already raised prices significantly, and BellRing is weighing its options. “Most players are going to need to reassess their pricing,” she noted.
In summary, the protein market is in a state of flux, driven by consumer demand, supply chain issues, and rising costs. Brands must navigate these challenges carefully to stay competitive in an evolving landscape.
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