By Alexander Marrow
LONDON, May 5 (Reuters) - Global dairy companies and food producers are investing heavily to meet soaring demand for protein-rich whey, driven by a surge in the use of weight-loss drugs and healthier eating trends.
Whey, a by-product of cheese-making which is traditionally used as pig feed, is an essential component of the food products now targeting consumers looking to prevent muscle loss.
Data from StoneX consultancy shows the price of whey protein concentrate with 80% protein content
(WPC 80) has risen by almost 90% in the last year to 20,000 euros ($23,410) a metric ton, far exceeding rises in other dairy segments including powdered milk and cheese.
While improved health awareness and ageing populations have also boosted whey prices, the GLP-1 trend is the key factor behind demand, interviews with a dozen companies and people working in the dairy and food sector showed.
"The ongoing strong demand for whey proteins, being fuelled even further by GLP (-1) in recent years, is what the industry needs to figure out," Luis Cubel, managing director of Arla Foods Ingredients, told Reuters. "Are there any more untapped volumes you can tap into?"
Dairy companies including Lurpak butter maker Arla Foods and Dutch producer FrieslandCampina have expanded whey production capacity, while food firms are widening their protein-rich offerings, such as Danone's Oikos yoghurt brand and Bel Group's Babybel Protein.
WEIGHT-LOSS DRUGS DRIVE PROTEIN APPETITE
Kristen Coady, chief innovation and brand officer at Dairy Farmers of America, said users of weight-loss drugs are seeking out protein, which is helping to drive new industry innovations.
DFA, the largest U.S. dairy farm collective, last month launched MULU, a cottage cheese with added whey and 18 grams of complete protein per half-cup serving, well above the typical 12 to 13 grams for a regular product.
"What we've been seeing is almost a run on dairy proteins," Coady said.
The popularity of cottage cheese has led the DFA to increase investments in its cultured capabilities, switching production sites in Pennsylvania and New Mexico from fluid milk, Coady said.
Health and wellness retailer iHerb has seen huge growth in its GLP-1-adjacent products, primarily in the U.S.
"Customers are starting to really look for ways to fight the downside or the side effects of GLP-1," said iHerb's Chief Revenue Officer Hyeyoung Moon.
She noted an uptick of searches using 'GLP-1' and more female customers looking for supplements to help when losing muscle, not just the stereotypical gym-going muscle builders that whey proteins traditionally attracted.
HIGH-END WHEY RACE
John Lancaster, head of EMEA dairy and food consulting at StoneX, said the food industry lacks the infrastructure to keep up with demand for high-protein whey concentrates and isolates.
"There's a shortage of the capacity to turn (whey) into what is required by the market at the moment," he said.
FrieslandCampina Global Director for Marketing and Product Strategy Guus Aerts said the protein boom has encouraged the Dutch Lady and Yazoo maker to invest heavily in high-end whey processing.
The company finalised its purchase of Wisconsin Whey Protein, a U.S.-based producer of whey protein isolates (WPI), in January and has doubled capacity at its Dutch Borculo plant.
For dairy companies, improving whey quality is crucial as food producers develop more high-protein versions of yoghurt, cottage cheese, drinks and salty snacks.
FrieslandCampina said on Tuesday it was investing more than 90 million euros to accelerate its growth in high-value whey proteins.
Marion Bucas, marketing director at Lactalis Ingredients, part of the world's largest dairy company, said protein represents a huge opportunity.
"Dairy proteins are still the best quality proteins on the market, but there will be lots of work to try to find substitutes to answer the demand," Bucas said.
SEEKING ALTERNATIVE PROTEIN-RICH INGREDIENTS
Demand for protein-rich peas and lentils is giving struggling U.S. farmers a crucial new revenue stream. Meanwhile, biotechnology companies producing alternative proteins using a method called precision fermentation are attracting investment.
French startup Verley, which ferments fungi to produce the protein that targets muscle recovery, said the GLP-1 impact on the typically slow-moving food sector has been "insane".
"In the U.S., in just two to three years, everything changed," said Verley co-founder and CEO Stephane Mac Millan, adding: "And that puts the whole food industry under pressure to reformulate (products)".
Standing Ovation, another French startup, which has raised investments from Danone and Bel Group, makes casein proteins and expects to begin selling its products this year.
Co-founder Romain Chayot said 80% of the products it is developing are for high-protein solutions.
"With GLP-1, developing high-protein yoghurt or cheese or beverage is booming today," he said.
Although analysts say precision fermentation is too expensive to gain critical mass for now, high whey prices create opportunities.
But one issue for sceptical consumers is taste.
"Dairy protein is delicious," said Bel Group's North America CEO Peter McGuinness, adding: "In this protein race, we've lost deliciousness".
($1 = 0.8543 euros)
(Reporting by Alexander Marrow; additional reporting by Guz Trompiz in Paris and Nicholas Brown in New York; Editing by Lisa Jucca and Alexander Smith)
