It was two years ago when protein input prices got WHEY out of control, but as Justin Timberlake once said, "what goes around, goes around, goes around...comes all the way back around." But back in April of this year…I shared this funny meme on Instagram that provided a cryptic message to supplement brand owners that sell "whey protein" products. And I was trying to warn them that this “grossly underreported food supply story” would most-likely impact dry whey commodity pricing…even if USDA managed containment at an acceptable level. So, why did I care so much about the potential impact from the Highly Pathogenic Avian Influenza (HPAI) being detected in dairy cows? At the time, I had no idea if the virus would (1) spread quickly across dairy cow herds, (2) have high mortality rates, and (3) cause meaningful reduction of milk production of recovered dairy cows. But what I did already know was that the U.S. had low inventories of cows and there was a rising domestic demand for dry whey (especially whey protein concentrates). And as you might be able to guess, dry whey price has been climbing...doubling YoY (from the August inventory five-year high) and increasing 50% from when I posted that cryptic meme (making it the highest price since April 2022). Yet, I’m sure many of you are still wondering…what does all this information mean? So, my latest first principles thinking content will aim to make it more actionable by presenting short- and long-term insights for supplement brand owners, and I’ll even toss in a little love for consumers too. While there's tons of different puts and takes, I believe a slight market tightening will keep dry whey commodity pricing at heightened levels until the latter part of the first half of 2025. Though some supplement brand owners might not be feeling much from the recent price increases yet...savvy operators should realize it’s coming, as there’s generally a several month lag that happens because of (1) the natural timeline of production (and supply-chain) flows, but (2) most likely it’s because supplement brand owners don’t procure protein (or honestly any ingredients themselves). So, much of the impact could depend on the stock levels of protein material at contract manufacturers and if that coMan has decided to pass cost increases immediately to supplement brands. And just to add the end-consumer layer here…there would be even further lags in when this cost increase could impact you on the shelves with higher prices. But it's likely consumers will see some categorical price inflation again. It won’t be anything like two years ago…but also consider that many supplement brands haven’t lowered prices much (if at all) yet. The strongest brands will be able to again increase prices. This is already starting to take shape too, as several large public companies (that own leading protein CPG brands) have mentioned a plan to increase prices. And then finally, my longer-term outlook around what could impact whey commodity prices centers around global population increases...as it's hard to grasp how farmers, using only traditional agricultural methods, will handle protein supply for this immense population proliferation. Yes, there’s still a number of levers to pull that can increase global milk output and production “naturally,” but eventually food technology methods like precision fermentation and cellular agriculture will need to play a key role in meeting future protein demands.

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