Milking It: Dairy-Derived Ingredients

The stars are aligned for dairy-derived ingredients like milk powders and whey protein to shine. Fired up by greater awareness of dairy’s nutritional advantages and consumer demand for protein and functional ingredients, the $63.5 billion global dairy ingredients market will see a compound annual growth rate (CAGR) topping 6.3% from 2025 to 2034, projects Global Market Insights.

“The potential applications for … dairy derivatives continue to expand,” says Greg Hecksher, senior director, sales, for Taste & Flavors at Dairy Farmers of America, citing a jump in demand for ingredients delivering on claims for hydration, protein, and authentic labels.

The $23.7 billion milk powder segment continued to lead in 2024, according to Global Market Insights, with wide usage in confectionery, baked products, and dairy-centric beverages.

“Nearly half of the innovation launches with whole milk powders tracked globally in the last five years were in the confectionery space, but other categories are showing growth,” says Lu Ann Williams, global insights director at Innova Market Insights. “While soft drinks and sports nutrition still hold a relatively small market share, we are seeing noticeable growth in these areas.”

Hot drinks and spreads made with skim milk powder grew in the past five years, Williams says, while milk protein concentrate shows high growth in sports nutrition, hot drinks, ready meals, and side dishes.

On the whey side, Grand View Research projects a 10.5% CAGR for the $5.3 billion whey protein segment from 2022 to 2030, with whey protein concentrate (WPC) dominating the segment. Global new food and beverage launches containing WPC are relatively stable, showing a small decline of 1% during the past five years, according to Innova Market Insights. Williams suggests this may be due to the rising popularity of other proteins in the sports nutrition sector, which accounts for nearly half of launches with WPC ingredients.

Dairy-Derived Ingredients Glossary

Casein—family of related phosphoproteins in milk

Caseinate—acid or rennet casein treated with alkali to make it soluble in water

Dairy minerals—concentrated calcium phosphate with other minerals found in whey and permeate, made from either whey or permeate; also whey mineral concentrate, milk mineral concentrate, milk calcium

Dairy permeate—high-lactose product made by using physical separation techniques to remove protein and other solids from milk or whey; also milk permeate, whey permeate, dairy product solids

Dry buttermilk (DBM)—liquid buttermilk dried to contain at least 30% protein

Dry buttermilk product (DBMP)—liquid buttermilk dried to contain less than 30% protein

Dry whole milk (DWM)—whole milk dried to contain not less than 26% but not more than 40% milk fat and not more than 5% moisture by weight

Glycomacropeptide (GMP)—glycosylated peptide formed during renneting as a fragment of sweet whey

Hydrolyzed whey protein (HWP)—whey protein treated with acid conditions and high heat to isolate the protein, creating small peptides

Immunoglobulins (IgG)—group of proteins that protect against bacteria and viruses

Lactoferrin—iron-binding protein that can inhibit the growth of certain bacteria

Lactose—white crystalline product with a sweet taste, made from whey or permeate

Lactose hydrolyzed whey—whey with a portion of its lactose broken down to glucose and galactose

Milk fat globule membrane (MFGM)—thin film made up primarily of lipids and proteins surrounding milk fat globules

Milk protein concentrate (MPC)—encapsulated, high calcium concentration milk extract with 40% or more protein by weight

Milk protein isolate (MPI)—milk processed to reduce fat and lactose content, with a minimum 89.5% protein content

Protein hydrolyzed whey—whey with part of the whey protein cut up into smaller fragments

Skim milk powder (SMP)—skim milk dried to contain no more than 5% milk fat and no more than 5% moisture by weight; also nonfat dry milk

Whey protein—protein in milk that stays in water phase after casein precipitates

Whey protein concentrate (WPC)—whey with a portion of water removed and other constituents in same relative proportions

Whey protein isolate (WPI)—whey processed to at least 90% protein on a dry matter basis

Whey protein phospholipid concentrate (WPPC)—co-product from whey microfiltration with 50% to 69% protein, 12% to 38% fat, and 6% to 12% lactose.

Sources: American Dairy Products Institute, Britannica.com, Wikipedia

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Ingredients of Immunity

• Research continues to suggest that some dairy-derived ingredients can play a role in boosting immunity, a desirable function in foods and beverages for one in four consumers worldwide, according to Innova Market Insights.
• “One of the side benefits of some of the dairy proteins, such as glycomacropeptide, lactoferrin, whey protein phospholipid concentrate, and dairy-derived ingredients such as galacto-oligosaccharides, are the benefits to the gut microbiome,” says Kimberlee J. Burrington, vice president of technical development at American Dairy Products Institute.
• Lactoferrin is the most widely used of these ingredients, reports Glanbia Nutritionals, primarily in sports nutrition and infant nutrition, such as Mead Johnson’s recently launched Enfamil Enspire Optimum infant formula with lactoferrin.

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Powered by Protein

• “The dominance of dairy protein [ingredients] is set to stay for the rest of the decade…particularly in the protein bar category,” says Morten Kaas Hansen, director, functional nutrition at Arla Foods Ingredients.
• Among consumers interested in protein, 36% cite a complete protein source as the most significant factor when choosing between products, according to HealthFocus International.
• More than one-third of consumers taking GLP-1 anti-obesity drugs—7% of the population by 2035, projects Morgan Stanley—say they drink more protein beverages and are seeking higher-protein products to combat loss of lean muscle mass, reports product innovation firm Mattson.ft