Protein Boom Fuels Dairy M&A as Whey Gains Value

A wave of dairy acquisitions is gathering pace as soaring consumer demand for protein increases the value of whey, once seen largely as a byproduct of cheese production.

Brazilian dairy companies including Piracanjuba, Tirolez and Italac have struck deals over the past year, seeking exposure to higher-value products and new regions. The growing market for whey protein is adding another incentive for consolidation.

“Whey is increasingly becoming an important source of revenue for dairy companies that produce cheese,” said Valter Galan, a partner at MilkPoint, one of Brazil’s leading dairy consultancies.

Whey powder fetched $1.88 per kilogram (9.54 reais) in July, up almost 35% from a year earlier, according to data compiled by MilkPoint.

The trend extends beyond Brazil. In January, Dutch dairy cooperative Royal FrieslandCampina acquired US-based Wisconsin Whey Protein, a company focused on the ingredient.

In a statement, FrieslandCampina said 71% of consumers now actively prioritize protein intake, up from 59% in 2022 and 67% in 2023. The company expects the whey protein market to grow 6.6% annually through 2030.

Cheese adds to appeal

The rising value of whey is also making Brazilian cheese assets more attractive, reinforcing longer-term trends that were already drawing investors to the industry.

Brazilian cheese consumption stands at about 7 kilograms (15.4 pounds) per capita annually, according to Abiq, Brazil’s cheese industry association. That compares with about 12 kilograms in neighboring Argentina and higher consumption levels in European markets such as France and Greece.

The Brazilian market also offers room for producers to shift toward higher-value products. More than a third of domestic cheese consumption consists of commodity varieties such as mozzarella, which generate Ebitda margins of about 4% to 6%, according to MilkPoint.

Specialty cheeses typically command higher margins and are attracting investors. Piracanjuba’s January acquisition of Minas Gerais-based Básel Lácteos is one example, said Carolina Reis, an associate partner at M&A advisory firm IGC.

“Specialty cheeses — including burrata, Gruyère and provolone — have been attracting attention, particularly from foreign investors that don’t yet have a presence here,” Reis said.

Rising incomes could provide another tailwind because cheese consumption tends to increase as household income grows. Consumers’ focus on health and protein is also creating new occasions for eating cheese, including as a snack, Reis said.

Fragmented Market

Brazil’s fragmented dairy industry provides another catalyst for consolidation.

“There are many regional players,” Reis said. “The five largest companies don’t even account for 50% of milk collection. That long tail is what fuels M&A.”

Acquisitions can also give dairy companies access to milk-producing regions where they have little or no presence. When a large company acquires a regional producer, it typically retains the local milk procurement team and makes few changes to relationships with suppliers, Galan said.

Brazil’s biggest milkshed are in the South and Southeast, but the Northeast has emerged as a fast-growing production region and is drawing interest from companies based elsewhere in the country.

Between 2014 and 2024, the Northeast was the only Brazilian region to post significant growth in milk output, according to IBGE, Brazil’s national statistics agency. Production surged 65% to 6.4 billion liters (1.69 billion gallons), while nationwide output was nearly flat, rising 1.7% to 35 billion liters.

The expansion reflects producers’ efforts to overcome the region’s more challenging farming conditions, Galan said. Growing grain production in Matopiba — an agricultural frontier spanning parts of Maranhão, Tocantins, Piauí and Bahia states — has helped, alongside greater use of irrigation and compost-barn systems for dairy cattle.

Demand is another draw.

“The Northeast is probably Brazil’s biggest dairy consumer market after the Southeast, and it has a large production deficit,” Galan said.

Northeastern milk production rose 14% in 2025, with increases in almost every state. Even so, the region’s dairy trade deficit widened by more than 10%, according to a study by researcher Kamilla Ribas Soares for Banco do Nordeste.

“We’ve been hearing from buyers interested in entering the region to diversify their supplier base and gain greater bargaining power with customers,” Reis said. “Adding new products ultimately gives you a stronger presence on supermarket shelves.”

This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.