The recent wave of market activity in the space reflects a broader shift away from traditional commodity products toward higher-value nutrition markets as companies seek to capitalize on growing consumer demand for protein across fitness, healthy aging, weight management and high-protein wellness.
What started as dairy by-product is now one of the industry’s most valuable growth opportunities, and momentum continues to build with no sign of slowing down.
From dairy by-product to nutrition darling
From the 1800s, large-scale dairy companies formed as cities grew and industrialization expanded.
Dairy’s original popularity was partly driven by the need to make use of surplus milk generated by meat production. Over decades, producers began collecting milk from rural farms, pasteurizing it and building the logistics, refrigeration and distribution systems needed to reliably supply fresh dairy to rapidly expanding urban populations.
Dairy companies largely operated as industrial-scale commodity producers, focusing on processing milk into standardized products like milk, cheese, butter and milk powders as efficiently and cheaply as possible. Until the millennium, companies predominantly competed on size, how efficiently they could move products and how widely they could get them into stores, rather than branding or health positioning. Protein existed in the system, but it was treated as a by-product of dairy processing rather than something to be strategically developed or marketed.
From around 2010, companies began actively repositioning dairy around health and nutrition. High-protein yogurt and similar products moved dairy closer to the wellness space, and companies began investing more seriously in whey extraction and protein-rich formulations.
Soon, protein became central to industry growth, and dairy companies increasingly began behaving like nutrition businesses rather than traditional food producers. Whey protein, once considered a low-value by-product of cheese production, was upgraded into a premium ingredient used in shakes, bars and sports nutrition products, and companies began launching dedicated protein sub-brands, expanding into fitness and gym retail channels, and pursuing acquisitions in the sector.
Now, the shift has firmly matured into full convergence between dairy and the broader wellness and performance nutrition industry. Large dairy players have been actively acquiring sports and active nutrition brands, and protein is now positioned as a foundational health product tied to muscle maintenance, aging, weight management and recovery.
Lactalis latest in line to bet on protein
On June 1, dairy giant Lactalis announced that it had acquired Britain’s active nutrition brand Protein Works—entering to compete for its share of the rapidly expanding consumer-facing active nutrition market.
Founded in Liverpool in 2012, Protein Works sells protein powders, meal-replacement shakes, snacks and sports nutrition supplements, generating around €65 million in annual revenue across the UK and several European markets.
As one of the world’s largest dairy companies, Lactalis is best known for consumer brands including Président, Galbani, Parmalat and Leerdammer, alongside infant and medical nutrition brands such as SMA Nutrition and Guigoz.
“The integration of this innovative company and its talented teams strengthens our position in the fast-growing active nutrition market,” said Emmanuel Besnier, chairman of Lactalis, following the acquisition.
“By combining our longstanding expertise in dairy proteins and health nutrition Protein Works’ strong brand and innovative approach, we are confident we can continue to create products that respond to changing consumer expectations in this dynamic and growing category.”
Lactalis joins a long line of companies that started as dairy suppliers and are now betting on protein. These include Arla Foods, FrieslandCampina, Glanbia, Kerry Group, Danone and Nestlé, which have spent the past few decades laying the groundwork for today’s dairy-to-active nutrition shift.
By investing in finished consumer products alongside its established ingredient business, the company captures margin at both the raw material and branded product levels.
From dairy company to protein player
- In the 2000s, Arla Foods operated as a large European dairy cooperative producing milk, cheese and butter. It began investing in whey protein production capabilities and launched the Arla Protein brand in 2015, entering the consumer protein shake and snack market.
- FrieslandCampina shifted from commodity dairy into specialized protein ingredients between 2010 and 2015, expanding its whey and casein protein capabilities and developing advanced nutrition systems for sports and medical applications.
- Irish dairy cooperative Glanbia also began shifting towards a modern nutrition business status in the early 2000s. It acquired Optimum Nutrition in 2010 and Isopure in 2014, strengthening its position in premium whey isolate products.
- Kerry Group evolved from a food ingredients company into a key enabler of the nutrition industry. In the 2010s, it expanded into functional ingredients and built a dedicated nutrition division focused on protein systems and recovery solutions. It now positions itself as an upstream supplier of precision nutrition and hybrid protein technologies powering the wider sector.
- Nestlé began shifting in the 2000s from traditional packaged foods into health and wellness nutrition, formalizing its strategy in 2011 with the creation of Nestlé Health Science. Between 2017 and 2019, it expanded through acquisitions such as Atrium Innovations, adding supplement brands like Garden of Life, and in 2020, it acquired Vital Proteins, strengthening its position in collagen and lifestyle protein. More recently, it has expanded across medical, sports recovery, and ready-to-drink nutrition, including the recently announced acquisition of Yfood.
- While it did not start as a dairy cooperative, Danone began moving toward health-focused dairy in the early 2000s, linking dairy with gut health, protein, and wellness. In 2017, it restructured its portfolio around health nutrition and scaled its Nutricia medical nutrition business. From 2023 onwards, it pushed high-protein dairy into mainstream wellness and connected clinical nutrition with sports performance. It further accelerated this strategy with the recent acquisition of the high-protein meal replacement brand Huel, strengthening its position in complete, functional nutrition alongside brands like Activia, Alpro and Aptamil.
Dairy companies enter with competitive advantage
Dairy companies may be uniquely positioned to benefit from the growth of active nutrition because they already control much of the key raw materials and infrastructure that underpin the category. While many nutrition brands compete through marketing and consumer engagement, dairy companies often control the entire value chain—from milk production to protein ingredient manufacturing.
This advantage becomes increasingly important as global demand for protein continues to rise. According to data from Fortune Business Insights, the global performance nutrition market reached $62.8 billion in 2025 and is projected to grow to $114.5 billion by 2034. Meanwhile, whey protein supply remains constrained, with demand continuing to outpace available raw materials, converting access to high-quality protein into a strategic asset rather than simply an input cost.
Some dairy companies already possess many of the capabilities required to compete in this environment, with their scale providing significant operational advantages.
FrieslandCampina recently announced a €90 million investment to expand whey protein production, citing strong demand and ongoing supply constraints in the market and emphasizing its end-to-end control of the supply chain as a key differentiator.
Even when a protein source might not be the most optimal for a specific formulation, suppliers are seeing the necessity to invest in it because consumer demand drives decisions, Guus Aerts, global director of marketing and product strategy at FrieslandCampina Ingredients said following the investment announcement.
This creates a demand-led cycle where ingredient companies and dairy suppliers scale up the proteins consumers already buy, expanding production around established ingredients like whey because they deliver consistent demand and sales.
The race for dairy proteins accelerates
According to data from commodity intelligence platform Vesper Tool, WPC80 (whey protein concentrate containing at least 80% protein) has surged sharply in value, rising to about $32,000 per metric tonne, up from roughly $5,500 per tonne in 2023. Vesper’s EU Price Index also places WPC80 at around €16,900 per tonne in the EU and €18,204 per tonne in the US.
At the same time, data from the market data and analysis company focused on the dairy and agricultural commodity sector, DCA Market Intelligence, shows that food-grade whey powder has climbed to a record level of around €1,700 per tonne, up from approximately €1,100–€1,200 per tonne at the start of the year, reflecting broad-based strength in whey markets driven by rising protein demand and tightening supply conditions.
This sharp increase reflects a broader transformation in the dairy sector, where protein ingredients are becoming more valuable, said Wouter Baan, lead dairy analyst at DCA Market Intelligence.
Baan explained that the primary economic driver behind the shift from commodity products into active nutrition is the pursuit of higher margins, among other contributing factors.
He noted that dairy commodity markets are highly competitive and often experience significant price volatility, which limits profitability and creates uncertainty for producers. In contrast, protein ingredients deliver stronger and more consistent returns.
Meanwhile, demand for protein-based products continues to expand beyond traditional sports nutrition, and consumers increasingly turn to protein for broader health benefits.
“This gives dairy companies the opportunity to create more value from the same liter of milk,” Baan said. “We are already seeing this in the market. According to DCA Market Intelligence data, food-grade whey powder prices have risen by more than 50% this year to record levels, showing how valuable protein has become.”
Baan noted that as whey protein becomes more central to both sports nutrition and broader health markets, there is a risk that structural supply constraints and price volatility could influence the industry’s strategy.
Whey supply is inherently tied to cheese production, meaning it cannot be expanded independently or rapidly increased in response to rising demand. In the short term, supply is therefore relatively fixed. At the same time, demand for protein-rich products continues to grow.
“That combination can lead to tighter market conditions and stronger price volatility,” he said.
“We are already seeing that in whey markets, where prices have increased sharply. I do not think this changes the long-term strategy, but it does make access to milk, whey streams and processing capacity more important.”
As traditional dairy giants and specialist companies operate at different points in the value chain, their competitive advantages are structurally distinct rather than directly comparable. Baan said that, ultimately, the growth of protein and active nutrition markets should strengthen both segments of the industry, as dairy companies benefit from rising demand for high-value ingredients while specialist brands benefit from expanding consumer interest and category growth.
And for now at least, the market shows no signs of slowing, with key market signals indicating that the dairy-to-active-nutrition transition is continuing to accelerate.
“One of the clearest signals is whey pricing,” Baan said. “When whey prices perform much better than traditional dairy commodities, it shows that protein demand is becoming a major driver of value in the dairy sector.”
Another, he noted, is the continued investment, adding that dairy companies increased investing in protein processing capacity and protein-focused product suggests they expect further growth.
“Retail sales of protein drinks, protein yogurts and sports nutrition products are also important indicators,” he added.
“A peak would likely be visible through weaker demand growth, rising inventories, falling price premiums and new production capacity growing faster than demand. At the moment, however, record whey prices suggest the protein trend is still very strong.”
No signs of slowing down
Global protein demand is projected to rise from approximately $56 billion in 2025 to nearly $109 billion by 2034, relectings its shift over the last decade from a niche sports nutrition ingredient to a core drive of mainstream food and beverage innovation.
New consumer groups are also expanding the market. The rapid adoption of GLP-1 weight-loss medications has created ongoing demand for high-quality protein, as users seek to preserve muscle mass while consuming fewer calories.
Aging populations are increasingly turning to protein to support mobility, maintain strength and improve overall physical resilience. Growth in emerging markets is adding further momentum. In India, for example, the protein supplement market is expected to increase from $860 million in 2024 to $1.52 billion by 2033.
Nick Morgan, managing director of Nutrition Integrated, recently noted that protein has clearly shifted from a mature category into a constantly expanding functional platform. What was recently described as a ‘trend’ now behaves more like a foundational expectation in many finished products.
“The industry is seeing this momentum continue and from brands you wouldn’t necessarily expect,” he said.
Instead of slowing down, protein is accelerating into new formats and use cases, reshaping how manufacturers design everyday products. The industry, for now, remains firmly in a phase of widespread ‘proteinification’.