Analysis Dairy Deals
Whey deserves better, but not with everyone
For several decades, standard whey powder with a minimum of 11% protein has been the product that cheese makers in Northwestern Europe have produced from their by-product, whey. A significant portion of this was sold as animal feed, with a smaller share finding its way into human food. Some larger dairy producers went further and produced higher-quality whey products for baby food, sports drinks, and more.
This has also been an established situation for quite some time. It is widely known that high-quality whey powders yield much higher returns than the old standard product.
Nevertheless, the whey powder market appears to be on the verge of another significant step forward. This involves a broad wave of investments in facilities to produce even higher-quality whey. This development is logical for several reasons.
Demand for high quality continues to grow
The demand for high-quality whey (WPC 80 and higher, whether or not demineralized, WPI's) continues to grow, driven by sectors such as baby food, sports nutrition, and lifestyle and elderly nutrition. Over recent years, prices for these high-quality whey products have soared to great heights, despite some market fluctuations. Still, the prices for high-quality whey derivatives remain attractively high.
At the same time, the demand for regular whey has stagnated. Prices have been low in recent years, while inventories have piled up. Additionally, demand from the animal feed sector does not appear to be increasing. Animal feed companies are also seeking other, preferably cheaper, raw materials. Hence, there is not much profit to be made here.
So, what could be more logical than to invest in the production of higher-quality whey? Several dairy companies are already pursuing this path, and the market still seems to have room. However, caution is warranted. The dairy industry has a tendency to follow the lead of competitors, and investing in high-quality whey processing is not inexpensive. A thorough market analysis and collaboration can prevent significant capital destruction and market spoilage.
