Discarded Whey, Now Golden Protein

Whey, a large-volume byproduct of cheese manufacturing, was once a headache for the dairy industry. It was mostly used as livestock feed or fertilizer, or often simply discarded as waste.

New possibilities emerged from the 1960s to the 1970s as technology to extract protein from whey began to develop. Subsequently, as protein demand increased, the value of whey also rose, gaining attention as a high-value resource.

This process involves repeatedly passing the whey through fine filters to continuously remove water, lactose, minerals, and other components.

Through this refining process, only protein remains, elevating raw whey to the status of a premium protein source.

The price of high-quality whey protein isolate (WPI) is currently $14 per pound, which is approximately 42,000 Korean Won per kilogram.

This corresponds to top-grade whey with a protein purity of 90% or more. In contrast, the price of cheese is approximately 4,200 Korean Won per kilogram, showing a price reversal where whey commands a price 10 times higher than cheese.

Even low-grade whey (WPC 34) with 34% protein content is seeing prices soar due to increased demand. This whey was formerly a cheap ingredient used in calf feed or as an ice cream bulking agent.

Recently, it has surpassed $2 per pound, more than doubling its price compared to three years ago, and even low-grade whey is experiencing shortages.

These constraints lead to a situation of cheese oversupply, making it difficult to increase whey production.

According to the Financial Times, a joke is circulating in the industry that cheese factories produce cheese to obtain protein whey.

This phenomenon arises from the coexistence of a sluggish cheese market and a booming whey market, creating a dilemma where increased whey production leads to lower cheese prices.

Continuous technological advancements have significantly improved taste and texture, making it less objectionable to consume compared to other ingredients like soy or casein.

In particular, its leucine content, a muscle-building signaling substance, is significantly higher than other materials. Whey contains about 11g of leucine per 100g, while cheese has 3.4g, chicken breast 2.5g, and tofu 1.4g.

They also strengthened their position in the finished product market by acquiring the American brand 'Optimum Nutrition', leading the market with a strategy that combines raw material production and finished product sales.

Glanbia recorded sales exceeding 3 trillion Korean Won in the first half of this year and saw its stock price rise by over 50% year-to-date, making it the biggest beneficiary of the whey protein market boom.

Danish cooperative Arla Foods is successfully growing in the protein market. Coca-Cola is actively investing in the protein business through its subsidiary Fairlife. Notably, Coca-Cola has self-developed technology to concentrate protein from raw milk, directly producing its own raw materials.

This strategy of in-house raw material production serves as a key factor in widening the competitive gap with companies like Pepsi, which rely on external sourcing.

Domestic dairy companies currently rely entirely on imported whey protein. Whey is a byproduct of cheese manufacturing, but domestically produced cheese is not abundant due to price competition with imported cheese. This is why major dairy companies like Maeil Dairies must source whey ingredients externally.

While some companies, such as Johung, are attempting to localize whey powder production, they face difficulties in resolving the fundamental issues.

South Korea's dairy industry faces high production costs due to limited land and expensive feed. This is compounded by the 'raw milk quota system,' which mandates the purchase of a certain amount of raw milk from dairy farms regardless of milk inventory, creating a rigid structure. This restricts the expansion of cheese production and makes securing whey even more difficult.

The drinking milk quota system acts as another factor hindering cheese production, dampening corporate investment willingness and ultimately leading to a vicious cycle that passes the burden onto consumers.