Joanna Cosgrove12.30.10
According to a recent report from Denmark-based 3A Business Consulting, the worst is over for the whey and lactose ingredient markets. A pricing freefall in 2007-2008 stunted volume growth for the two functional staples but "Ingredients 2010-2014" affirmed that in 2010 prices had recovered to a more normal level.
“The extreme price increases in 2006 and first half of 2007 forced many food manufacturers to replace expensive whey and lactose ingredients with cheaper food ingredients, resulting in less demand for products. However, demand has been re-established at previous levels in 2010, assisted by lower prices and recovery of the global economy,” commented Tage Affertsholt, managing partner of 3A Business Consulting.
Whey powder, whey proteins and whey protein fractions amassed a global market value of approximately $5 billion in 2010 and were forecasted to be worth approximately $6.4 billion by 2014, corresponding to a CAGR of 4% at constant prices.
Lactose, pharmaceutical lactose, permeate and lactose derivatives were tabulated to be worth more than $1.6 billion in 2010, growing to nearly $2 billion by 2014, resulting in a CAGR of 3%.
Mr. Affertsholt said that while mainstream whey and lactose ingredients are not used to any great extent in the dietary supplement industry, some of the high value-added bioactive ingredients such as whey peptides and whey protein fractions often find their first commercial applications within the dietary supplement sector. “Whey and lactose ingredients are generally more used in the mainstream processed food sectors, including functional foods,” he said. “Also, the infant formula and clinical nutrition sectors represent important end user sectors for the industry.”
In fact, the report gave high marks to the nutritional sector, where whey protein is a pivotal ingredient, noting that the sports and energy nutrition products are mainly responsible for the strong growth in the high-end protein ingredients. “The sports nutrition sector, including both drinks and bars, is highly important for whey proteins, especially whey protein isolate (WPI) and whey protein hydrolysates (WPH),” said Mr. Affertsholt. “In fact this sector has been the major driving force behind the significant increase in production of these ingredients. The U.S. market for sports nutrition is several times bigger than the European market and as such plays a very important role for these ingredients.”
When asked to spotlight emerging trends in the whey and lactose sectors, Mr. Affertsholt spoke glowingly about bioactive derivatives that find their way to market via the dietary supplement industry, followed by the functional foods and then the infant formula industry. “Some of the emerging whey and lactose ingredients include peptides e.g. glycomacropeptides, protein fractions such as lactoferrin, immunoglobulins and alpha-alactalbumin as well as galactooligosaccharides,” he said. “For the whey and lactose processing industry these emerging ingredients are attractive as they are potentially highly profitable compared to the commodity types of ingredients. Relatively high processing costs and regulatory issues are, however, some of the challenges the industry needs to be overcome in order to succeed.”
According to the report, the major players in the current whey and lactose ingredient industry are the leading dairy and cheese companies in the world such as Lactalis, FrieslandCampina, Fonterra, Arla Foods, Glanbia, Murray Goulburn and Hilmar. Specialist whey and lactose ingredient companies such as Meggle, Euroserum, Milei and Davisco also played a significant role, particularly in various specialty products.
The world’s two largest dairy companies—Nestlé and Danone—are not actual producers; they are however major users of whey and lactose ingredients.
Europe and the U.S. are the major markets for whey products, whereas Asia is rapidly approaching the top spot for lactose.