That wasn't always the case. This transformation from cheesemaker to milk processor has been driven by the growing value of dairy proteins found in whey. Once a by-product of the cheesemaking process, whey and its components are now essential for adding value to milk.
"One in four consumers are actively seeking out protein these days," said Tom Benson with Milk Specialties Global. "Dairy protein lines up perfectly with the future as meat consumption is down 10 percent over the past decade," said the milk protein specialist.
A significant amount of whey protein now goes into sports nutrition products.
"The sports nutrition market has grown into about a $10 billion business. It drives the whey protein bus," said Benson.
At the moment, the U.S. dominates the sports nutrition market, garnering one-half of all sales. The European Union (EU) accounts for one-quarter with the remaining sales sprinkled throughout the world.
"As to specific whey protein allocation, sports nutrition represents 85 percent of the HPDF market," said Benson. For those not in dairy marketing, HPDF is lingo for high protein diet products. "The powder and shake business makes up 80 percent of that total," Benson went on to say.
"The category has been on an annual 10 percent growth trajectory," noted Benson, whose company was an early pioneer in the category. "However, achieving the next growth will be tough because of production constraints.
"Using an oil analogy, think of drilling for oil and placing a pipe in the sand. That represented the easy-to-pump oil found throughout the Middle East. These days, the more difficult drilling involves shale oil production," Benson said in explaining the situation. "The next growth in capturing milk protein also will be more challenging. That's because cheese and milk growth is capped at 1 to 2 percent per year and building new plants costs between $150 million to $350 million."
As for plant-based proteins making inroads into this dairy mainstay . . . Benson admits that has been taking place, but he doesn't have great concerns about the long-term future.
"I am a big believer that taste, texture, and performance wins with consumers," said Benson. "Plant protein will have its space, but it will not impede dairy's growth."
(c) Hoard's Dairyman Intel 2016
May 16, 2016