Flavors, whey permeate and phage test kits are all ways food formulators may respond to rising dairy ingredient costs.

Increases have come in whey protein concentrate, which traded at $1.65 to $1.92 per lb on Aug. 19 compared with $1.10 a year ago; butter, up to $2.94 per lb from $1.68; and CME cheddar barrels, up to $1.89 per lb from $1.50.

Turning to Butter Buds Cheese Buds 32X cheddar, a concentrated cheese flavor enhancer, is one way to save on cheddar costs.

“This is very dependent on what application our Cheese Buds 32X cheddar type is being used in,” said Michael Ivey, national sales director for Butter Buds, Inc., Racine, Wis. “However, we have seen applications where standard cheese powders have been reduced dramatically, which in turn results in cost savings.”

The ingredient works in such applications as sauces, soups, seasonings and baked foods.

“Really any application that you want to reduce your current cheddar powders usage or boost the ‘cheesiness’ in your project,” Ivey said.

Formulators may replace a higher-fat, higher-price dairy ingredient with a lower-fat product and then enhance the lower-fat ingredient with a Butter Buds item, Ivey said.

“For example, replacing a formula using half and half with 2% combined with a Butter Buds ingredient,” he said. “This type of replacement can not only provide a cost savings but also a reduction in fat levels.”

Edlong Flavors, Elk Grove Village, Ill., offers high-intensity cheese and cultured profiles to reduce or replace dairy commodities in sauces, dressings and dips without sacrificing taste, according to the company. The line, when introduced in 2020, included cheese, sour cream and buttermilk profiles.

Whey permeate is cost-effective, and it increases shelf life, improves color and texture, enhances flavor, and reduces sodium, according to Agropur, which has its US headquarters in Appleton, Wis. Potential applications include baked foods, confectionery items, hot drinks, dairy items and snacks.

Reducing waste

Royal DSM, Heerlen, The Netherlands, offers a Delvo phage test kit and Delvo analytics app to help increase cheese yield and quality, reduce waste and boost value in cheese production by 5% to 10%. The phage test kit detects phages in dairy within an hour. Dairy manufacturers may use the app to view results of the phage analysis and access insights into phage results and trends.

Together with DSM’s whey testing and culture rotation services, the two digital items enable cheese and fermented milk product producers to make decisions in real time for more efficient and cost-effective production processes, according to DSM.

Siobhan Talbot, executive director of Glanbia, addressed dairy ingredients in an Aug. 17 earnings call to discuss results for the first half of the fiscal year. Glanbia increased internal sales of whey-based dairy ingredients to ensure security of supply for Glanbia’s performance nutrition business.

“Dairy volumes declined largely due to higher internal sales to GPN (Glanbia Performance Nutrition) and some supply challenges, an aspect where COVID restrictions and logistics did impede our delivery,” Talbot said.

Mark A. Garvey, group finance director and executive director, added, “I mean, managing the whey complex has been very important for us to do, right? And I think it’s led to some of the success you’ve seen in the first-half results as we saw whey move significantly up over the last year.”

Whey costs are beginning to peak and come back down, he added.

“Actually, there’s quite a number of anecdotal points we’re seeing in that regard,” Garvey said. “We’re covered for this year, and we’ll determine over the next number of months what we want to do for ‘23, but feeling better than we did the last time we had a call with you on this.”

Revenue in the first half increased in both Glanbia segments. Glanbia Performance Nutrition was up 14% when compared with the previous year’s first half. Glanbia Nutritionals was up 25%, including 29% for US cheese.

Category growth ahead

Expect the dairy ingredients category overall to continue growing. MarketsandMarkets, Inc., Northbrook, Ill., forecast the global dairy ingredients market to have a compound annual growth rate of 7.2% from 2021 to 2026, rising to a value of $89.9 billion from $63.6 billion. Multiple applications of milk powder in food, beverages, confectionery items and baked foods are driving the growth.

High demand for whey protein concentrates from the fitness and sports nutrition industry will increase the market, and manufacturers are incorporating ingredients such as A2 beta-casein protein in infant formulas, according to MarketsandMarkets.

The global whey protein market, meanwhile, is forecast by MarketsandMarkets to have a compound annual growth rate of 4.3% from 2022-27, rising to $6.25 billion in 2027 from $4.9 billion in 2021.

Whey accounts for almost 20% of the protein content of cow’s milk and is considered beneficial for the human body, according to MarketsandMarkets. Whey is popular because of health benefits such as building muscles, promoting fat loss, repairing muscle tissues, reducing stress and inflammation, lowering blood pressure and cholesterol levels, preventing diseases and promoting overall health.