Whether you’re a gym rat or just someone trying to eat healthier, you’re likely about to pay more for food containing protein powder as food businesses struggle with the rising cost of whey protein.
“When you own a food brand, you always are putting your business in the hands of your ingredient suppliers, the quality and the amount that they can supply,” said Aelie Swift, founder of Calgary-based health food brand HelloAmino.
The company makes a range of health foods, from beverages and desserts to breakfast foods, with protein.
“Every single product we sell carries and uses whey isolate,” she said.
In the last year or so, Swift has found her costs going up as the domestic supply of whey protein from Canada has dried up.
“Unfortunately, we’ve had to go to the United States to do it though. So that has come at a 50 per cent increase in cost. Whey has gone up about 100 per cent in cost over the last few years,” she added.
She says the turning point for businesses like hers came last year, when large companies including coffee giant Starbucks launched a new range of protein products.
Suddenly, protein powder was everywhere — in everything from waffles and lattes to chocolate bars, with both Mars and Snickers coming out with high-protein variants of their popular candies.
“That seemed to really shift things when big brands started to grab onto the protein because at the end of the day, there’s only so much cheese production,” Swift said.
“The fear is that manufacturers of protein will want to take the big contracts and they won’t deal with the small business,” she added.
‘Once in a generation supply crisis’
The global whey market is facing a “once-in-a-generation supply crisis,” a report by global market research firm Market Decipher said on Monday.
“Whey protein concentrate — for decades a cheap byproduct of cheese manufacturing, priced as an afterthought on dairy balance sheets — has become the most sought-after, strategically contested ingredient in the global food industry,” the report said.
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The demand has only gone up with the skyrocketing popularity of GLP-1 drugs for both weight loss and diabetes treatment, the report said.
Women over 35 using GLP-1 medication have emerged as a key consumer for this category, the report said.
“Nutritionists are worried that the weight they lose might be more muscles than fat, and so they want them to increase their protein consumption to compensate for that,” said University of Alberta agriculture economist Ellen Goddard said.
Protein has transcended niche health food brands and leapt onto our grocery shelves, the market report said.
“Protein has embedded itself in Pop-Tarts, Kraft Mac & Cheese, Doritos, and thousands of mainstream food products that previously had no protein positioning whatsoever,” it said.
But that hasn’t made it any easier for small businesses to get their supply.
“The surge in the category is exciting if you can keep the supply,” Swift said.
Can we make more whey protein?
Whey isolate is a byproduct of cheese production, but the problem Canadian food businesses run into when trying to source local whey is that producers are not allowed to make more cheese, Swift said.
“There’s only so much cheese production,” she said.
This is because Canada has a system of production and import controls known as “supply management.”
Canada uses a quota system that allows a set amount of some foreign dairy products into the country, and high tariffs only apply if countries try to exceed that allowed quota coming into Canada.
Canada’s supply management system, which dates back to the 1970s, has restricted foreign access to the Canadian dairy market in order to protect domestic producers and set quality standards for products.
Whey is not the first product to face a shortage under this system. In 2015, the Canadian Dairy Commission had to lift limits on the imports of butter and change domestic quotas after a butter shortage in the country.
“When they see a shortage of a component of milk that might go into producing something like butter, they try to change the component price to send the signal to producers to increase butter fat production,” Goddard said.
The Dairy Farmers of Canada said they acknowledged “the strong demand for dairy protein in Canada and are proud to produce the high-quality milk used to make the dairy products Canadians enjoy.”
“As demand continues to grow, farmers are working with dairy processors under the guidance of the Canadian Dairy Commission to match supply with the domestic demand for dairy proteins,” a spokesperson for the industry group told Global News.
The Canadian Dairy Commission told Global News that while “Canada’s supply managed system aligns production with domestic needs,” it “does not regulate market activity.”
“Industry partners work to adjust production and support efficient use of milk components to meet demand for dairy proteins,” a spokesperson for the commission said.
The approval of generic GLP-1 drugs could mean this supply crisis could get worse, Goddard said.
“We have generic versions of some of those weight loss drugs and it may even make the demand higher,” she said.
The shortage is not likely to be resolved soon, she added.
“Changing feeding strategies is one thing, but changing breeding strategy for cattle to encourage them to produce different components in their milk is a long-term strategy, so, it’s not going to happen overnight,” Goddard said.
What food businesses are facing today, consumers who want to buy tubs of their own whey protein off the shelves will face down the line, Swift said.
While the big protein brands have already procured their supply for the year, that will run out eventually, she said.
“Towards the end of the year, early next year, I think you’ll start to see it more so on shelves,” she added.
Are there alternatives to whey protein?
Food businesses are already beginning to pivot and diversify.
HelloAmino is looking into splitting whey protein with some amount of milk protein concentrate and adding other health products like collagen and fibre to lower costs but still maintain value.
“(Milk protein) is not inferior, but different,” she said.
The higher cost of whey is also likely to drive interest in plant-based protein, Goddard said.
“Some of the crops we grow, like peas, have higher protein content, and so, it’s possible there will be a positive increase in demand for those proteins,” she said.
Canada is emerging as a leader in the plant-based protein market, the Market Decipher report noted.
“Canadian pea protein processing capacity expanded by 1 million metric tons. Roquette’s 120,000-metric-ton Manitoba facility now supplies approximately 40% of North American plant-protein isolates,” it said.
Swift hopes the changes she is planning for her business are easy to digest for her most loyal customers.
“When we tie emotion to our food, we become very particular and sensitive to change,” she said.
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