Protein boom reshapes dairy growth playbook

The country's dairy industry is expanding its focus toward functional proteins as stronger margins in high-value ingredients offer a new avenue for growth, according to industry players.

During the 17th Dairy Conference, recently held in Nanchang, Jiangxi province, industry leaders highlighted functional proteins as a key strategic priority, as demand accelerates across nutrition, wellness and food applications.

Prices for premium whey ingredients remain elevated, according to commodity monitoring data from StoneX. Over the past two years, whey protein concentrate prices have climbed 108 percent, while whey protein isolate prices have risen 139 percent. Prices for WPC80 and WPI90 have more than doubled during the period. With additional whey processing capacity difficult to bring online quickly, industry participants expect prices for high-value whey proteins to remain buoyant.

The surge reflects growing global demand for high-protein diets, expanding use of protein products among consumers taking weight-loss medications, and limited near-term supply growth.

Protein powders, once largely associated with sports nutrition, are increasingly moving into the broader wellness market. China's sports nutrition sector expanded at a compound annual growth rate of 22.7 percent from 2015 to 2024, according to Broadview Consulting. The market was expected to reach 6.8 billion yuan ($1 billion) in 2025. Protein powder remains the largest segment, accounting for 62 percent of the market. Sales were forecast to have reached 4.22 billion yuan in 2025, nearly five times the level of a decade ago.

According to a liquid protein industry report released by the China Nutrition and Health Food Association, protein supplements in China remain dominated by powders, with the penetration of ready-to-drink liquid products developing rapidly.

Data from Moojing Market Intelligence indicate that between July 2023 and June 2024, the market size for liquid protein products on major e-commerce platforms reached 34.72 million yuan, surging 478.4 percent year-on-year. The sector shows immense potential, with particularly notable growth in segments such as sports nutrition and meal replacement. Companies are rolling out innovative products — including whey protein vitamin drinks and dual-protein energy-control shakes — to cater to diverse consumer needs. Meanwhile, global packaging giants including Tetra Pak are expanding their footprint in China, offering end-to-end solutions to attract new market players and drive expansion.

According to Bord Bia, Irish whey exports reached approximately 360 million euros ($410.4 million) in 2025, while shipments to China grew by 32 percent year-on-year. Casein export value to the Chinese market rose by 36 percent over the same period.

"We have doubled down on our focus on the dairy protein opportunity in China," said Sinead Kennedy, China market manager at Bord Bia.

Chinese dairy companies are now competing to capture the protein opportunity, introducing a wave of new products.

Leading dairy producers including Yili Group and Mengniu Group are expanding their high-protein milk portfolios. In June, Mengniu launched M-plus daily protein milk, containing 15 grams of protein per bottle. In May, both companies entered the emerging protein water category, introducing beverages containing around 9 to 10 grams of protein per serving.

The investment reflects a broader push among dairy producers to strengthen control over upstream protein production.

Yili is advancing its cheese intelligent manufacturing base, aiming to improve domestic supply capabilities for high-value ingredients including whey protein, lactoferrin and casein.

Feihe Dairy Chairman Leng Youbin said the company is developing deep-processing facilities in Heilongjiang province, and Inner Mongolia and Ningxia Hui autonomous regions. The facilities are expected to reach a combined daily processing capacity of 3,000 metric tons by the end of August, with plans to expand capacity to between 10,000 and 15,000 tons within three to five years.