Price volatility setting back lactose and whey value - report

By Neil Merrett

- Last updated on GMT

Related tags Milk Nutrition Whey protein

While the availability of whey and lactose products continue to climb during 2008, price volatility has managed to hamper hikes in profitability of the segment as manufacturers hunt for cheaper ingredients, says a new report.

As part of a three-year report into the global market for whey and lactose products up to 2010, analyst 3A consulting says that dramatic price increases for dairy goods in 2007 has served to push down processor demand for the goods.

Although the industry is looking to adapt whey and lactose-based ingredients into a growing number of product applications, nutrition and functional foods are expected to remain a key driver for future growth, according to the report.

“The broader nutrition industry including dietary supplements, sports nutrition, clinical nutrition and functional foods is the main driving force for market development,”​ stated 3A in the findings.

Product profitability

Under current market conditions, whey powder, protein and protein fractions have a global value of about $4bn, a fall of $2bn from the summer of 2007, stated the report.

The analyst recorded a similar fall in lactose, lactose permeate, pharma-grade lactose and other derivatives of the dairy-based ingredient, which it said fell to $1.5bn from $3bn from the previous year,

“Never in history has the industry experienced such price volatility,”​ 3A added.

Report focus

As part of its findings, the analyst said it looked at markets across the EU, the US, Latin America and the Asian Pacific and Oceania regions as to the potential of both whey and lactose commodities and processed products.

These include whey powders, protein fractions and permeates like WPC35, WPC80, WPH and WPI, as well as other derivatives.

Health and wellness

According to 3A, industrially used varieties of whey continued to be dominated by manufacturer drives for health and wellness-boosting products.

“This has lead to an increasing focus on the more value-added whey and lactose products such as fractions and derivatives, which has shown significant growth rates as high as 20 per cent [annually],”​ stated the report. “However, high-end whey protein concentrates, whey protein hydrolysates and whey protein isolates are also experiencing significant growth rates on the back of the increasing demand from the nutritional segments.”

Sport nutrition products were selected by the analyst as key area for market development.

In regards to specific market demand, 3A said that for products such as WPC35, WPC80 and WPI, the US currently had the highest interest, closely followed by the EU. The US was also found to dominate whey ingredient production over the year, serving as the key exporter of the ingredients and other lactose products.

Asian markets, particularly China, are expected to undergo the largest market growth in the next five years, though Latin America and Eastern Europe are also expected to show strong potential, the report said.

Related topics Ingredients