Consumers can’t seem to get enough of protein. But a looming shortage means companies may not be able to get enough, either.
Once considered a cheap byproduct of the cheese manufacturing process, whey protein concentrate is one of the most in-demand ingredients as food and beverage manufacturers look to capitalize on surging demand for protein-fortified products. The unprecedented demand is creating shortages, with some suppliers sold out for the remainder of the year, according to the USDA.
Unsurprisingly, the dearth of supply is leading to higher prices. Standard whey powder prices have increased by more than 50% since January, according to DCA Market Intelligence.
Prices are higher for powders with higher concentrations of protein. For whey protein concentrate with 80% protein content, spot prices were topping $11. Protein isolate, which is more than 90% protein by weight, remains “firmly in the $12s,” according to USDA.
BellRing Brands, owner of Premier Protein and Dymatize protein shakes, is seeing whey protein prices reach “historic highs,” CEO Darcy Davenport said on an earnings call this week. Tight supply is also affecting prices of non-fat dry milk, another ingredient used in protein fortification and a key ingredient in BellRing’s protein shakes.
Protein has emerged as a breakout ingredient, with 70% of Americans saying they want more protein in their diets compared to 59% four years ago, according to the International Food Information Council. Expanding GLP-1 use has further fueled the protein craze as consumers on weight loss drugs often eat less and need more protein to fill nutritional gaps.
The popular nutrient has infiltrated nearly every aisle of the grocery store, with protein finding its way into Pop-Tarts, Kraft Mac & Cheese and Doritos. As food companies struggle with slowing sales, adding protein has become a popular way to reignite growth and command price premiums.
The dairy industry is racing to add capacity, though scaling production is not simple.
As dairy producers have moved to grow the supply of whey protein, they’ve also increased production of butterfat, another byproduct. The resulting increase in butterfat has led to a surplus and decline in prices, according to CoBank, creating market volatility. Milk from U.S. cows also tend to have lower protein content than in other countries, partly because of genetics.
U.S. dairy producers have announced $11 billion in new and expanded manufacturing capacity across 19 states, according to the International Dairy Foods Association. The trade group expects U.S. milk production to grow by 15 billion pounds by 2030 to meet demand for protein.
With higher ingredient prices, companies are now grappling whether to raise prices at a time when consumers are already tapped out by inflation. One solution may be for companies to reformulate using cheaper alternatives such as soy and pea protein.
At least one major protein competitor announced a “pretty significant pricing” increase, according to Davenport, and BellRing is evaluating whether to follow suit.
“I think that most players are going to need to reevaluate their pricing,” she said.
