Your ‘proteinmaxxing’ is creating a whey shortage that’s ratcheting up prices and leaving snack companies to eat costs or make recipes worse

Peter Rahal, David’s founder and CEO, said a wave of demand for high protein foods—dubbed “proteinmaxxing” is behind the skyrocketing prices.

“I don’t see it slowing down necessarily because people are trying to get more protein to look better,” Rahal told Fortune. “You’re seeing protein capitalism at play.”

Protein-packed products, from pasta to cereal to popcorn, have made their way to store shelves amid a surge in protein popularity. Many of these products source the macronutrient from whey, a byproduct of the cheesemaking process. But as demand for these products explodes, companies are facing a supply shortage of this key ingredient and are faced with soaring prices—and difficult decisions to make.

The rise of proteinmaxxing

The recent obsession with protein isn’t fueled by bodybuilding or even a diet fad, but rather by the increasing use of GLP-1 weight loss drugs, which can suppress appetite and require users to pivot to nutrient-dense foods, such as those high in protein, to avoid muscle loss. About 10% of the U.S. population has taken a GLP-1 drug, and the increase in protein intake directly helps GLP-1 users preserve muscle. The Department of Health and Human Services has also revised its Dietary Guidelines for Americans, putting an emphasis on protein-heavy foods, such as red meat and full-fat dairy.

“We have a tremendous amount of demand that’s come into the market here in the last few years,” Kathleen Wolfley, vice president of agriculture consultancy Ever.Ag Insights, told Fortune. “I’ll say that a lot of that demand is probably being driven by a push towards wellness and protein being one of those key wellness focal points.”

For many companies, whey is the gold standard for protein-packed snack foods. Compared to protein isolates from milk or plant-based sources, whey tastes the best, Rahal said, and it offers the best texture in protein bars, which can often develop the reputation of being chalky or hard.

But the strong preference for whey protein has come at a literal cost. According to data from the U.S. Department of Agriculture, the cost of high-protein whey concentrate has jumped 40% over the past few months, and some suppliers have already sold out of the product.

Companies feeling the pinch

For food companies, switching to another supplier or type of protein isn’t a superficial switch. HelloAmino, a Canadian company selling gluten-free boxed cake and beverage mixes, tried to switch its whey protein supplier after its previous distributor gave it a five-week backorder, then completely cut the company off.

HelloAmino founder Aelie Swift told Fortune a new supplier provided an ingredient that was slightly different, but completely changed the composition of its products.

“It was complete sawdust,” she said of a pancake mix. “Everything turned out dry and inedible.”

Swift spent months reformulating mixes to accommodate different types of protein isolate or simply just less protein. She’s had success with some products, but has had to ditch some inventory altogether.

 “To say it’s had an impact on our business is really an understatement,” Swift said.

To make matters more challenging, the proteinmaxxing trend has completely saturated the market with new consumer brands trying to enter the space by putting protein in snack foods beyond bars and powders. Swift claims to be among the first in the protein baking space, but said how crowded the space is has made her rethink HelloAmino’s value proposition to be oriented more around wellness than protein, and she sees other small businesses having to either adapt or shutter.

Big businesses don’t have this same problem, Swift said. If anything, she argued, they’ve benefitted at the expense of smaller brands. When Starbucks launched protein beverages late last year, Swift said she noticed greater strain on supply, exemplifying the outsized impact just one company can have on the larger market.

“All of a sudden, we had back orders we’ve never seen before,” she said. Starbucks did not respond to Fortune’s request for comment.

Finding a systemic solution for the shortage is challenging. Wolfley said investments have been poured into increasing cheese production or whey capacity in order to alleviate the shortage. But dairy farms can’t ratchet up production too much: Because whey is a byproduct of cheese, it is constrained by demand for cheese, which is rising, but expected to slow as consumer preferences change, especially in an inflationary environment.

“Just producing more whey without producing more cheese, and that would destroy the cheese industry,” Swift said. “It’s really unlike any shortage that you normally see in the food sector, in my opinion, because of that fact. It’s not an easy one to solve.”

Tough decisions

Beyond changing recipes and discontinuing certain products, HelloAmino has had to increase prices about 10%, but the company is still absorbing part of the increased whey costs. While she hasn’t noticed a dip in product demand, Swift warned the worst is yet to come for the consumer.

“People are going to see this in any protein brand,” she said. “It’s not in the shelves yet, like the consumers are not really feeling it to its full extent because it’s so delayed in how it shows up on the shelves.”

David’s Rahal believes other companies will follow HelloAmino’s lead in switching protein bases, which could lead to a “demand destruction” of whey protein as companies pivot. Increased demand for other sources of protein runs the risk of raising prices of those ingredients, as well.

David has taken a different approach: do nothing.

“The strategy is just, like, survive versus changing anything,” Rahal said.

The brand has had to absorb the rising cost of whey, but Rahal said that altering its product could mean taking away what makes it appealing to consumers in the first place.

“We have a really good product, and I wouldn’t want to cause harm to it,” he said. “It’s like a sort of a knee-jerk reaction. The main factor that is most important is just the quality of a product, or keeping them consistent.”