Guest Columns

Perspective:
Dairy Markets

Consumers want more protein

Mike McCully

Mike McCully is owner of McCully Consulting, South Bend, Indiana, and contributes this column for Cheese Market News®.

Protein has been a diet trend for the past decade or more. A recent survey by the International Food Information Council found 71% of U.S. adults are trying to eat more protein, up from 59% in 2022 and 67% in 2023. As people go on diets with fewer carbohydrates or calories, they need nutrient-dense foods to replace what they cut out. Those foods tend to be higher in protein content whether they are animal- or plant-based.

High-protein diets have been more durable than other diet fads since a high-protein diet generally has people eating more, which is more fun than eating less!

The higher demand for protein has benefited dairy given numerous dairy products are high in protein. The rapid growth of Greek yogurt drove a 55% increase in yogurt consumption from 2005 to a peak in 2014. Sales slowed in the last five years with a 1% annual average growth rate, but 2024 saw a strong rebound with production up 5.7% through November. Even Greek yogurt products are promoting additional protein content in some varieties.

Another dairy product which has found new life is cottage cheese. For years (decades), cottage cheese was not viewed as a contemporary product and had an aging consumer base. With new products and marketing, cottage cheese demand has exploded in the last two years with sales up double digits. This is a great example of taking an existing product and disrupting a category with new marketing utilizing TikTok and other social media platforms to target new consumers.

Milk and dairy beverages have also seen growth given the success of fairlife and other high-protein milk products. Demand for high-protein shakes is also increasing as consumers search for meal replacement products. High-protein, low-lactose and/or lactose-free beverages are partly responsible for the nearly 40% increase in sales of “other” fluid milk products in 2024, and these trends are expected to continue in 2025. These products also appeal to aging baby boomers that are looking for nutrition to fit their lifestyles.

Yet another area that has seen strong demand is dairy proteins as ingredients in a growing list of food products. Whey protein is no longer just a tub bought at the local health food store and used in smoothies. Whey and milk proteins have moved beyond nutritional bars and beverages into mainstream food products that are increasing their protein content. Examples include high-protein oatmeal, crackers, cookies and pasta products. Food companies see the demand for protein, and they are developing more products using dairy ingredients as a protein source in non-dairy food products.

While the demand outlook is quite positive, the higher costs for dairy protein ingredients are a headwind that could dampen usage in some products. Using the modern measure of protein quality, dairy proteins are superior in digestibility versus plant proteins. This advantage will need to be highlighted to prevent food manufacturers, looking to cut costs, from downgrading to cheaper ingredients. Whey protein isolate prices are at or above prior record highs, while whey protein concentrate 80% has held near historically high levels as well. In the past, whey protein prices have plunged as supply increased and/or demand dropped as products reformulated to cheaper protein sources. This is a watch-out in 2025 for whey and milk protein ingredients.

With a solid demand for protein as the backdrop, the increasing interest and use of GLP-1 drugs have the potential to supercharge dairy protein demand. This is likely already a factor in pushing up dairy protein prices in the last year. And with more people using GLP-1 drugs like Ozempic and Wegovy, this seems like it is developing into a durable trend.

How does dairy protein fit into GLP-1 diets? People using GLP-1 drugs eat less, meaning smaller meals, less snacking and fewer calories. They eat healthier foods like fruits and vegetables, and higher-protein foods to maintain muscle mass and bone density. Major food companies are developing products for consumers on GLP-1 drugs. While a small number of people are currently using GLP-1 drugs, estimates point to large increases in the future. As GLP-1 drug prices come down, with the potential for either government subsidies or insurance to cover some of the cost, there will be more interest in GLP-1 drugs for cosmetic weight loss.

There is a watch-out for dairy with GLP-1 drug users. While the protein demand story is a good one, medical professionals recommend cutting out highly processed foods and foods high in fat. Demand for ice cream, cheeseburgers, pizza and other popular foods could be negatively impacted. In fact, some of the recent softness in sales at pizza and quick-service restaurants could be attributed to this trend already.

What do these trends mean for dairy protein prices? Whey protein prices are historically high. If demand doesn’t crater like it has in the past, increased supplies in 2025 are forecast to only put modest downward pressure on prices.

The market will also respond over time by increasing supply to meet the growing demand. Multiple new cheese plants and expansions will add to the whey protein supply in 2025. There are also a number of new beverage plants being built, with some having the ability to make high-protein milk and dairy products.

While the long-term impacts of GLP-1 drugs are uncertain at this point, they add to the trend of consumers wanting more protein in their diets. These shifts are already occurring and are resulting in changing consumer eating habits. And this is not just a U.S. phenomenon — consumers around the world are eating more protein.

The challenge for dairy companies, and food manufacturers more broadly, will be to develop products to fill the growing consumer demand for protein.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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