The report by 3A Business Consulting highlights the growing need for dairy groups to stay on top of the consumer demand for products with added-value nutritional benefits.
The findings suggest that the market for ingredients such as whey protein concentrate could experience three per cent to five per cent annual growth to 2010.
However, the largest gains for the market will be made from advanced value-added forms of whey, such as fractions and derivatives, which could grow potentially as much as 20 per cent per year, according to the analyst.
The market for ingredients like whey protein fractions will post the highest growth, though renewed research into applications for lactose is expected to drive interest in lactulose, lactitol and galactooligosaccharides (GOS).
Last year, the market for whey products reached $6bn in sales globally, while lactose-based goods over the same period were valued at around $3bn, the report added.
The findings suggest that growing demand for whey and lactose is a result of their continued use in everyday processed foods. However, future growth is expected to be led by the industry's increasing focus on nutritional products, particularly in the dietary, sports and clinical segments of the market.
A spokesperson for 3A told DairyReporter.com that the emerging market of China was showing significant growth in demand for whey powder and lactose.
The spokesperson added that generally the dairy industry continues to be fragmented in comparison to other ingredients markets like sweeteners and probiotics, which has hampered overall global growth.
With a growing influx of multinationals like Fonterra, Arla, Campina and Friesland Foods Domo entering the food ingredients market, whey and lactose sales could challenge more mature commodity markets, according to the research.
The growth is reflected in the growing number of strategic alliances between companies designed to combine more traditional dairy goods with the latest advances in additives, the report adds.
Prominent examples of this trend include the partnership between Friesland Foods Domo and Warrnambool Cheese and Butter, as well an agreement between First Milk and Danisco
With continued raw material declines and market barriers facing processors, this trend toward joint partnerships could become even more pronounced over the next few years, the report says.
