(Bloomberg) — Big Food is packing protein into chips, waffles and even Starbucks’ lattes, and consumers can’t get enough of it.
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But that insatiable demand now has the industry grappling with shortages and skyrocketing prices of whey protein, forcing some manufacturers to halt production or reformulate their top-selling products with alternative ingredients.
In early May, a supplier delivered bad news to baking and beverage company HelloAmino: It had run out of whey protein. Canada-based HelloAmino uses the ingredient in all of the 30 high-protein baking mixes it sells. Founder Aelie Swift found another supplier, but it means importing whey protein isolate from the US at a price that’s 50% higher and due to increase again soon.
The new whey protein delivered other complications: it dried out the company’s baked goods due to the manufacturer’s different processing method.
“Our pancakes came out like sawdust,” Swift said. The company plans to reformulate using a different combination of proteins, since “whey has become too expensive to continue to use the way we previously have,” she said.
The protein mania that has swept the food industry in the US and many other parts of the world is starting to run smack into the realities of a supply chain that is struggling to keep up. As the biggest food companies raced to roll out higher-protein versions of beloved items, including Mars Inc.’s Protein Eggo waffles, cold foams from Starbucks Corp. and an endless proliferation of protein-boosted bars, shakes, soda, candy and other snacks, whey protein became a star ingredient. It’s a complete protein that dissolves well, is digested easily and can be added to a variety of foods.
But now there isn’t enough of it to go around. Some suppliers already are sold out for the remainder of the year, according to the US Department of Agriculture. What is available has shot up in price: Offers for high-protein whey concentrate have jumped more than 40% on average just in the last couple of months.
Whey protein is a byproduct of cheese making, so processors can’t simply ramp up production of the protein on its own. During the cheese-making process, milk is separated into curds and the protein-rich liquid whey is then pasteurized and dried to turn it into protein powders.
“You start to think of yourself as a protein company, not a cheese company,” said Bryan Weller, the vice president of commodity and dairy sales at dairy cooperative Agri-Mark, which manufactures cheese under its Cabot Creamery brand. “That’s just how crazy it’s gotten.” The company is completely oversold on whey protein and still gets daily queries for more immediate purchases.
Buyers now need an existing relationship with those making whey, whereas makers used to instead approach food companies, said George Saker, the vice president of supply chain at protein bar company David. That will only become more crucial in the second half of the year, he said, as food companies that saw higher-than-anticipated demand will have to go back to their suppliers to negotiate more product.
At this point, many companies are simply focused on locking down their supply, said David Lenzmeier, chief executive officer of ingredient supplier Actus Nutrition. They’re willing to “roll with what the market price is” just to get some whey, he said.
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Price increases and tight supply are forcing some companies to consider whey alternatives, including milk protein concentrate and plant-based options like soy and pea.
Food companies may find relief if they switch to milk protein concentrate, which is cheaper relative to whey-based products, said Nate Donnay, the director of dairy market insight at StoneX Group Inc. The product has a simpler manufacturing process starting from just milk, instead of the whey that is a byproduct of cheesemaking, though it isn’t a one-for-one swap for food producers.
Majic Protein, which makes cookie dough desserts high in the macronutrient, said finding a replacement for whey is not straightforward.
The UK-based company saw the price of whey protein go up 30% over three months before its wholesale supplier flagged it would run out of stock by September, said its co-founder Ben Ayres. Two weeks ago, Ayres said the company bought all the whey protein concentrate the wholesaler had left, which he believes will keep them supplied for another two months, or less.
In the meantime, he’s looking at other sources of protein, including pea blends, but a swap may not be easy. Milk protein concentrate, for example, “results in a completely different mouthfeel and a few of the ingredients act differently when they’re combined,” he said.
Vitalura Labs, a supplement company based outside of Austin, Texas, had to pause selling its whey protein isolate, which comprised about half of its sales, said co-founder Anna Victoria. The cost of its grass-fed whey protein isolate had gone up more than 300% since 2023. Vitalura absorbed much of that increase before modestly raising prices, and even sold the product at a loss before pulling it.
Now the company is promoting more heavily its creatine, collagen and plant-based protein, a blend of pea, pumpkin seed, and brown rice proteins. “None of these products are going to replace whey, but collectively they are able to help us stay in business,” Victoria said.
So far, consumers largely haven’t felt the consequences of the whey protein shortage, but that could change soon. Prices for protein-enhanced products are likely to start rising, said Scott Dicker, senior director and head of research and insights at Spins, a market research firm.
“We know protein pricing is going up for the ingredient,” he said, an increase that usually takes between 12 to 18 months to emerge on retail shelves. Currently, the average price of products that tout whey protein on their package is roughly flat compared to a year ago, although up 32% from four years ago, according to NielsenIQ data. Total dollar sales of those products are up 7% over the past year.
With the protein craze showing no signs of relenting, the shortage has given an advantage to snacks that rely on non-whey sources of protein, including meat sticks and jerky. Sales of dried meat snacks in the 12 months running through mid-May are up 6.8% by volume, compared to a year ago, according to Circana data.
Jason Wright, CEO of Wilde Protein Snacks, which makes chips and crackers made from chicken breast and egg whites, said some days he’s jealous of how quickly snack makers have been able to add whey protein to their products.
“But thank god we didn’t go the whey route because there’s a serious shortage coming,” he said.
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