Summary of Key Points
Recently, the prices of whey protein (especially high-end varieties like WPC80) have skyrocketed irrationally. Import volumes have decreased, but average prices have surged, leading to price increases in downstream products such as protein powders and milk powders for the elderly. The underlying reasons are a surge in global demand (for fitness, weight management, and GLP-1 weight loss drugs) and insufficient supply (as production capacity in Europe and America cannot keep up with the demand). China, due to low cheese consumption and low whey protein production as a byproduct, is highly dependent on imported materials. Domestic dairy companies are trying to reduce their import reliance through technological breakthroughs, advanced processing, and partnerships. However, prices are unlikely to fall in the short term, and consumers will have to bear the higher costs, which could accelerate the industry's transformation in the long run.
1. Why Has Whey Protein Suddenly Become So Valuable?
The increase in whey protein prices is not accidental; it is a result of both a surge in demand and insufficient supply:
- On the Demand Side: There has been a sudden increase in the demand for protein. The number of people working out (who need protein powders for muscle building) and those looking to manage their weight (such as those trying to lose weight and needing protein supplements) has grown, along with the popularity of GLP-1 weight loss drugs. These drugs suppress appetite, but they can cause reduced meals, so doctors recommend protein supplementation to maintain health, further driving up demand for whey protein.
- On the Supply Side: Global production is falling short of demand. Whey protein is a byproduct of cheese production, and Europe and America are the main producers. In January and February this year, China's imports of WPC80 decreased by 18% year-on-year, and local prices in these regions have also continued to rise. Although U.S. production increased by more than 10%, it still cannot meet the demand, and new capacity will not be available until the fourth quarter, so the supply-demand imbalance will not be resolved in the short term.
2. Which Products Will Be Affected by the Price Increase?
The most directly affected products are two types:
- Professional Protein Powders for Fitness: Brands like Combt have seen their operating costs increase by 23% in 2025 due to higher whey protein prices, and there are fewer discounts available, meaning consumers will have to pay more.
- Milk Powders for the Elderly Containing Whey Protein: If these products contain a high amount of whey protein, their costs will rise. However, manufacturers can use alternative proteins (such as soy protein) or regular milk powder, so the impact is less severe than on professional protein powders.
Additionally, protein bars and infant formula may also be affected, but the news focuses on the first two types.
3. Why Does China Rely on Imported Whey Protein?
The key issue lies in China's low cheese consumption: Whey protein is a byproduct of cheese production, and Chinese people consume much less cheese than Europeans and Americans. As a result, domestic dairy companies produce little whey protein and are heavily dependent on imported materials. Even though imported ingredients are more expensive, the economic cost of producing cheese domestically is too high, so China continues to rely on imports, with prices being completely controlled by foreign suppliers.
4. How Are Domestic Dairy Companies Trying to Break This Dependency?
To reduce their import reliance, large companies are focusing on advanced processing:
- Yili: Its third-phase cheese project will be operational in 2025, allowing them to use whey liquid to produce whey protein powder and partially localize the supply.
- Mengniu: The company is entering the market for lactoferrin and desalted whey powder products and has overcome technical barriers in producing mascarpone cheese, reducing its import needs.
- Feihe: It already has a production line capable of extracting WPC80 and is collaborating with Combt to supply each other's raw materials, complementing their capabilities.
However, these breakthroughs will take time. Producing whey protein also generates byproducts like casein and fat, which require a mature cheese market in China (where more people consume cheese) to be economically viable.
5. Short- and Long-Term Impacts:
- Short Term: Consumers will face higher prices for protein powders and some milk powders for the elderly, with fewer discounts available.
- Long Term: The price increase may force dairy companies to accelerate their transition to more value-added products like whey protein and cheese, reducing their dependence on imports. If domestic production capacity increases in the future, prices may stabilize.
In summary, the current surge in whey protein prices reflects a global imbalance between supply and demand and structural issues in China's dairy industry. Although consumers will suffer in the short term, this could potentially drive the upgrade of China's dairy sector and reduce its reliance on imported materials in the long run.