What’s next for whey? European processors prepare for decline in herds while stressing importance to innovate

16 Dec 2022 --- Key stakeholders in the whey industry are warning herds could be shrinking in the coming years due to environmental impacts, while adding that alternatives to traditional whey – like cell-based and fermentation-derived offerings – will continue to gain traction and diversify. Meanwhile, demand for whey used for specialized nutritional applications will continue to grow.

Industry players, under the European Whey Processors Association (EWPA), have presented an overarching review of the forecasted challenges and potential market developments for the whey protein sector.

For whey producers, now is deemed the right time to invest in innovation, highlights Cubel.The project, led by Benno van Mersbergen, director of product strategy and marketing at FrieslandCampina Ingredients, examined the external forces that could shape the future of the whey industry and how manufacturers can adapt to these potential scenarios.

“For me, the importance of collaboration is the most impactful takeaway,” Luic Cubel, EWPA president, tells FoodIngredientsFirst. “The whey industry can be a volatile one.”

“However, in most scenarios we see that demand for whey used for specialized nutritional applications will continue to grow, even when supply is limited – leading to a new value level for whey. In this instance, whey producers and consumers will benefit from collaboration and long term partnerships.”

For whey producers, now is deemed the right time to invest in innovation, continues Cubel. “This is valued across each of the four scenarios. In most scenarios, whey continues to grow as a specialized nutritional ingredient so perfecting quality, nutritional value, digestibility and functionality in applications will help secure a producer’s future in the market.”

The state of whey
Whey has many specialist uses, including in infant formula, sports nutrition and in applications for aging consumers. As a side stream of cheese production, it makes essential use of upcycled byproducts.

However, more can be done to ensure whey is produced as sustainably as possible, outlines the EWPA. Meanwhile, the rising cost of fuel, global supply chain issues and reduced production volumes have all had a significant knock-on effect to the whey industry.

Dairy herds could be shrinking in the coming years due to shifting diets prompted by environmental concerns.Research is the key to fueling the whey sector’s innovation pipeline, reiterates van Mersbergen. “EWPA members are actively working with scientists at renowned universities to learn more about whey as a specialized nutritional ingredient,” he notes.

“FrieslandCampina Ingredients, for instance, is also investigating the possibility of whey supporting additional health benefits that are currently unknown.”

Among examples of significant R&D moves this year, Arla Foods Ingredients recently launched a whey protein solution that allows the creation of fermented drinks that are both clear and high in protein which significantly minimizes cloudiness and sedimentation.

“The EWPA is also currently looking for new applications with its partners and members to make whey even more accessible to the groups who need it most – like infants, athletes and our aging populations,” details van Mersbergen.

“This research will help to drive an even deeper understanding into the future of the whey industry, and what we all need to do to provide whey for future generations.”

FrieslandCampina previously teamed up with bakery solutions player Zeelandia to craft an accessible whey protein-based alternative to premium New York cheesecake. Dubbed The New Cheesecake, it uses local ingredients, offering bakeries and outlets in Europe and Asia the opportunity to create their own unique variations. 

Four possible scenarios for sector
Using insights provided by key whey sector experts, the EWPA white paper presents its findings on the basis of an impact-uncertainty axis. It considers economic, environmental, political, regulatory, social and technological factors that impact the whey industry. 

The report also delves into the impact that global consumer trends and evolving attitudes toward animal-based proteins will have. In examining the industry from every possible angle, the white paper reveals four potential future outcomes for the whey market. These can be summarized as:

“Whey for all” – In this first forecasted case scenario, global policymakers prioritize food security in their policy in global food availability, partly driven by ongoing environmental restrictions. This means the decline in European dairy herds will be limited/stopped for now, while on-farm costs will remain relieved from extra mitigation. 

As a result, European milk output will be maximized, with no limitations on the growth of the European whey pool, outlines the EWPA. In Oceania, a similar trend can be observed. North American whey supply continues to grow as of today, the report highlights.

Another factor in this first outlined scenario is that cell-cultured and precision fermentation-based proteins will become a part of the regular diet and continue to grow. In this context, consumer preferences developed at a “high pace” and these new alternatives to traditional diets are more openly embraced, ranging from increased penetration of vegan options to fast acceptance of new technologies.

Companies like Perfect Day have recently made significant advancements in producing fermentation-based whey, while traditional dairy players like Nestlé and Bel Group look into harnessing this technology to create new offerings.

“New horizons” – European policymakers have put a high priority on reducing emissions and are expected to continue to roll out the Farm to Fork Strategy. Globally, similar trends can be observed, highlights the EWPA. As a result, increased environmental restrictions are expected to continue spurring the need to reduce dairy herds while also increasing on-farm compliance costs. 

Besides a slowdown in whey protein demand for performance and active nutrition applications – partially due to a growing appetite for dairy alternatives – this trend also has led to lower meat consumption, like veal and pork. 

Here is where the whey market “moves into a new equilibrium,” where reduced supply and demand establish a new balance. Innovations in whey protein are accelerated and whey becomes an “increasingly specialty ingredient.” In this scenario, whey will no longer be applied because of traditional or cost-saving reasons.

Whey has many specialist uses, including in infant formula, sports nutrition and in applications for aging consumers.“Wheyvolution” – Under this scenario, global conflict and geopolitical tensions have also increased across the world, putting more limitations on trade. This creates a lot of uncertainty in food availability, which puts food security globally higher on the priority list. As a result, milk output continues to grow, as well as the global whey pool. 

Meanwhile, consumers continue to have whey protein as a continued and consequent growth in demand for high-whey proteins, especially in performance and active nutrition. A continued and consequent growth in demand is forecasted for high-protein whey, especially in performance and active nutrition. 

Whey demand for infant formula applications is also forecasted to increase at a steady rate in line with the growth of the global population, while premiumization requires more specialty whey products, under this case scenario.

Also, plant-based diets in this scenario will continue to grow, but not at the pace observed in the early 2020’s. Cell-culture and precision fermentation-based alternatives remain niche, as consumer acceptance is low and prices are perceived as too high.

“Indispensable whey” – In this instance, demand for protein continues to grow, however supply limitations force formulators to use alternative proteins, with whey only being used where it cannot be substituted.

The urgency to cut back on global emissions has received more attention, which has led to significant tightening of environmental restrictions by rolling out the Farm to Fork Strategy in Europe and similar policies globally.

Consequently, the reduction of dairy herds have accelerated, while higher environmental costs have put extra pressure on farmer margins. As a result, global milk and whey output sees a “significant slowdown” compared to historical growth.

By Benjamin Ferrer