Beyond Milk? What does the future hold for dairies?

Functional dairy products and precision fermentation

Consumer trends are fuelling a boom in whey

First things first: a key unique selling point of dairies is, and always has been, rooted in their history. For centuries, they have been using an extremely valuable yet sensitive raw material – raw milk – to produce a wide range of end products that are both valued by consumers and suitable for the market. This trust is paying off. The current global hype surrounding proteins, for example, is playing right into the dairy industry’s hands for this very reason. The extraordinary rise of whey – originally a by-product – and the renaissance of the ‘Handkäs’ niche are just two examples.

How can dairies expand their portfolio technologically?

But what exactly are the growth drivers? An online search reveals the following keywords: alongside the aforementioned ‘high-protein’ trend, these are ‘plant-based’, ‘functional’ and ‘convenience’. However, each of these usually also entails investments ranging from manageable – as with ‘high-protein’ – to complex – as with ‘plant-based’ – in a dairy’s production, filling and logistics. Not to be forgotten are the sometimes highly volatile situations regarding the supply of raw materials and energy.

From the dairies’ perspective, it is understandably ideal when a standard product such as skyr or the aforementioned Handkäs becomes the focus of online attention. Empty shelf spaces, even out in the provinces, were suddenly the order of the day. Carefully adapting this trend is hardly rocket science. Adding more or more specific proteins, or enriching the end product with minerals, trace elements or dietary fibre that are in demand, can be implemented quite quickly in collaboration with ingredients specialists. Of course, in the end, it is still the matrix of fluid, proteins, fats, carbohydrates, emulsifiers, hydrocolloids, functional ingredients and particle size distribution that determines the product’s stability and taste – and thus its market success. But this is, at least, technologically feasible.

Focus on one’s own core competence, including all ancillary streams

Admittedly, with an extremely rapidly increasing variety, there is always the risk that consumers will perceive this ‘added extra’ as a trick. This is a not insignificant factor. For one thing is crucial, particularly for dairies: milk is and remains a natural product, and dairies refine it for the benefit of the consumer. A second, almost even more emotional ‘purity law’, so to speak. Added to this are the increasingly high hurdles regarding carbon footprint, water consumption and the origin of raw materials. Packaging requirements are also becoming stricter. Perceived quality, legal constraints and actual costs must be reconciled within this context – otherwise it all remains mere idealism, a futile endeavour.

It is therefore certainly worth focusing first and foremost on the actual core competence, including all its offshoots. Stick to what you know best, for despite all tradition, this can be diverse and adapted to modern times in many ways. The evolution of whey from animal feed to a muscle-building agent is worth mentioning here. Buttermilk, on the other hand, has a different protein structure, which has a distinct physiological effect. A possible approach? Back to whey. It can also be used to produce valuable prebiotics for gut health. A research project at Anhalt University of Applied Sciences promises sustainable prebiotic production for consumers and industry: prebiotic galacto-oligosaccharides, or GOS for short. All from a trusted source provided by a reliable manufacturer.

Certainly not a bad starting point.

Plant-based alternatives: interesting, but not dominant growth drivers

Then there is the issue of animal welfare. Roland Berger, for example, assumes that, despite this debate, the market for dairy products will continue to grow in Germany until 2030, thanks to their diversity and the measures already taken. Whilst plant-based alternatives are certainly interesting, in absolute terms they are not dominant growth drivers for dairies. So, if dairies focus on their core competence – milk – this still makes sense. But it is no longer the case that all milk constituents must continue to come exclusively from cows, goats or sheep.

Precision fermentation in the dairy industry

This is where precision fermentation comes into play. Fermentation has probably been part of human life since very early times. Beer, wine, sourdough and kimchi are prime examples of this. In principle, during fermentation, microorganisms produce one or more new substances from a starting substrate. This is how alcohol or lactic acid is produced from sugar.

Precision fermentation goes one step further: through selection or genetic reprogramming, microorganisms in a bioreactor can produce a wide variety of food and pharmaceutical ingredients from a substrate under strictly specified process parameters. These ingredients offer users a colourful array of possibilities. For instance, precision fermentation has long made it possible to produce cheese varieties or burger patties from proteins that have never come into contact with an animal – and which are also delicious. An extremely interesting market: the Boston Consulting Group and the impact investor Blue Horizon, for example, expect alternative proteins alone to generate revenues of 290 billion US dollars across the value chain by 2035.

The bottleneck remains production scalability

So much for the forecast. As is so often the case, however, the bottleneck is and remains the scalability of production: standardisation, regulatory classification, investment requirements and reliable supply chains will determine how widely these technologies will spread over the coming decades.

Professor Marius Henkel, Chair of Cellular Agriculture at the Technical University of Munich / Weihenstephan, is quoted as follows in an article in the Süddeutsche Zeitung: “Therapeutic proteins have long been produced synthetically in medicine. The difference is: we need a lot of it, and we need it cheaply. Otherwise, it won’t work as a mass-produced product.” But that may well still happen. The potential is certainly there. As is the opportunity to find out first-hand about innovations in this field – from 11 to 15 September 2028 at drinktec in Munich.

Machine translated