S4E8 – Does Everything Really Need Protein?

Summary

When protein shows up in milk, coffee, soda and gummy bears, is it still worth paying more for? The Pricing Guys look at what a 182% rise in whey protein costs means for pricing.

The conversation started in the RML office, where the snack budget now goes mostly to protein bars. The office stocks seven brands, buys them by the box at Costco, and goes through them quickly. Every bill is a reminder of how expensive they are.

The hosts connect that to a wider trend. Whey protein costs have risen 182% since 2005 as demand outpaces supply. They discuss how food companies are passing that cost on, the capacity bet facing protein suppliers, and what happens to value when every product makes the same claim.

Key takeaways

  • Whey protein costs are up 182% since 2005, driven by food companies adding protein to more products and by weight loss drug users trying to preserve muscle mass.
  • Food companies are responding with premiumization, new formats such as protein bites, and straight price increases.
  • Protein suppliers face a capacity decision at peak prices, without knowing whether demand is structural or a fad.
  • Reformulation toward pea and other proteins shifts demand to new suppliers, who should price that incoming volume rather than give capacity away at existing rates.
  • Like pumpkin spice, protein risks being pushed into products where consumers see little value, which limits how much price it can carry.
  • If everything has protein, nothing stands out. Protein becomes table stakes, and the price premium erodes.

From gym bros to grandma

When the hosts started out in the beer industry, the office perk everyone talked about was beer on tap. Today, the biggest snack line in the RML office is protein bars. It feels, they joked, like running a small convenience store.

Protein used to be a niche product for serious gym goers. Now it is everywhere. It is added to milk, coffee and a growing list of everyday foods, and ads for it are hard to avoid.

Why protein costs have climbed

Whey protein costs have risen 182% since 2005. The hosts pointed to two sources of demand.

Food companies. Manufacturers have jumped on the trend and are adding protein to more products, especially dairy.

Weight loss drug users. People on GLP-1 medications are eating more protein to maintain muscle mass while they lose weight.

Demand is outstripping supply, and the cost of adding protein to products has climbed with it.

There are cheaper ways to get protein. The office has tried canned tuna in several flavours to bring costs down, with limited success. The hosts also noted that some ground beef producers are discussing mixing in liver to make it more nutrient dense, which also takes some cost out.

How food companies are passing on the cost

If your input cost has gone up 182%, you need to recover it and stay competitive. The hosts expect three responses.

Premiumization. Protein is moving into premium versions of everyday products. One host bought high protein milk by accident. It cost noticeably more than regular milk, and his kids said it tasted wrong. Protein gummy bears and protein soda are already on shelves.

New formats. The hosts expect boardroom conversations about protein bites: take a bar, cut it into four, rebrand it for a new occasion, and charge 40% to 70% more. They suspect it already exists.

Price increases. Some of the cost will simply be passed through as higher prices.

The supplier’s capacity bet

On the supply side, protein producers have a capacity problem. Do they build new manufacturing?

The answer depends on whether demand will last. Younger consumers caring more about health and the growth of GLP-1 medications suggest structural change. But if protein turns out to be a fad, suppliers will have made large capital investments at an all time high price. When new capacity comes online and demand cools, the market could end up with too much protein.

Reformulation shifts the opportunity

Because the spike is in whey specifically, many companies are looking at reformulating with pea protein and other alternatives.

That creates a pricing opportunity for suppliers of those alternatives. Demand that was not there before is heading their way. The question is how to price for it, rather than giving away existing capacity at today’s prices when they know the volume is coming.

The pumpkin spice problem

The hosts compared protein to pumpkin spice. When it took off, it went into everything, including at least one canned meat. Manufacturers took it too far, and the trend contracted. There is noticeably less pumpkin spice on shelves today than three or four years ago.

Protein may be reaching the same point. It has a real functional benefit, but not every product needs it. A parent buying gummy bears for a 10 year old is unlikely to want protein loaded candy. That is a different occasion and a different consumer, and it marks a breakpoint where added protein stops adding value.

When everything has protein, nothing does

The hosts raised two concerns about value.

First, has protein gone beyond its functional benefit? If it is being added where consumers see no value, a price increase will not stick.

Second, is the value sustainable? Protein used to set products like milkshakes apart. If everything has protein, there is no net incremental value to charge for. Every product becomes a me too, with no differentiation.

Quick premiumization brings its own problems, including hard price increases and pack price restructuring. And as capacity returns, someone will start competing on price. Low cost protein powders already exist. Companies need to decide where they sit in the value chain before protein becomes table stakes.

What companies should learn from the episode

When an input cost spikes on the back of a trend, a pricing team should be able to answer:

  1. How much of the cost increase can we recover, and through which levers: list price, pack price, or new formats?
  2. Where do consumers actually value the added ingredient, and where have we pushed it past their breakpoint?
  3. Is the demand behind the trend structural, or could it fade before our pricing and capacity decisions pay back?
  4. If competitors make the same claim, what still differentiates our product?
  5. Where will we sit when lower cost alternatives and new capacity bring prices down?

This is where Revenue Management Labs takes a customized, hands-on approach. A cost spike tempts companies to premiumize quickly and price every product the same way. Lasting pricing starts with knowing where consumers see real value, by product, occasion and segment, and where they do not.

Recommendations also need to reach the teams that set prices, manage packs and sell to retailers. A pricing strategy only creates lasting value when teams understand where the value sits, can explain it, and can measure whether it is working.

The bottom line

Protein has a real functional benefit, and demand for it is real. But a cost spike is not a licence to add protein to everything and charge more for it. Companies that push it past where consumers see value will find price increases hard to hold. Once every product carries the same claim, the premium disappears. Something cheaper than whey will likely arrive and reshape the market again. Companies need to know where their value sits before that happens.

What this means for your pricing capability

The episode reinforces how RML structures its own work: a pricing capability that lasts is built from three connected pieces, not one quick answer.

A trend-driven cost spike tests all three. Direction depends on knowing where consumers truly value the ingredient, tools need to show which products and packs can carry a price increase, and lasting results come from teams that can hold price when the trend cools.

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