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  1. #1
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    Question protein shortage / huge increase in price coming?

    Just read this on another forum, SORRY if this is a repost.
    ___________________________________________

    This is from Bruce, VP at Gaspari Nutrition:

    "Guys,

    I am pretty well plugged into the global commodities market for dietary supplements and sports nutrition. Even folks who might not care too much for me will tell you that I am "juiced in" pretty deep in Asia as well as with the protein vendors in NZ, Australia, etc.

    There is a very big whey protein shortage brewing that will probably see the price of most protein supps (especially lower end stuff made from WPC 80 and caseinates) get really pricey in the next couple of months and soar through the winter. I am not sure how this will effect bigger companies that have contracts locked in for MT amounts per month but the smaller (and in many cases, the stupider) companies that spot buy WPC/caseinates are going to be pushed out of business. Ultimately, your choice as a consumer is going to be limited I would imagine unless you're just in it to buy REALLY high end stuff. Anyone who knows anything can tell you the price of WPC 80 and the caseinates went up about 30% since the start of the year. Yesterday I got a notice that for as of June 1st, a protein I buy for Gaspari is going up another 11%.

    So what's going on? Two things.

    First, the Chinese are buying up a motherload of the lower end whey for their own domestic market to make baby formula and "liquid food supplements" for sick people. With a bigger middle class, Chinese can now afford not to breast feed and they are buying baby formula at a monster rate. Since the melamine "issue" most Chinese who can afford to choose not to buy their own domestic whey - but they are gobbling up a ton of the stuff from India, Australia and New Zealand.

    Second, two of the large soda companies (need I mention who?) are rumored to be coming out with their own RTD's that are WPC 37 and 80 based. The rumor is that between the two of them, they cornered much of the spot market buy buying HALF A BILLION KILOGRAMS of whey proteins of all sorts. That is an incomprehensible amount.

    So what I have seen in the last few month is a large run on WPC's and caseinates and since the price of these up shifting upwards, I am seeing people who would not normally buy isolates go after them because the price differences between a lower end isolate and a medium concentrate or caseinate is becoming non-existent. And an isolate has a better margin/premium which allows for more profit/ability to discount than a concentrate where the mark up is (and I am not BS'ing you guys here) at best 30%-40% over cost. At some point it will become economically unviable for many smaller companies to put out WPC/caseinate products because they will not be able to make any money at all on it.



    The larger protein companies should not be affected for another 6-9 months until their current supply contracts come up for renewal. You pay a little premium to "lock in" a price for 90-180 days and many times it turns out not to be needed this "protein insurance policy."

    This time, those of us who were smart enough to play the "options game" with protein will be in good shape - these are the bigger companies. Most smaller companies can't buy 10 MT of protein at a whack (the minimum needed to lock in a contract typically). They are going to get bent over.

    In the end, you will still be able to buy whey protein. You might see a huge increase in the price and "discounts end." Or you might see a sudden burst of isolate and hydrolysates on the market and concentrates/caseinates become scarce (with the excuse that companies want to sell a "better protein" which is indeed true - but not the real reason).

    My sources tell me that they think the big beverage companies making RTD's are really overestimating the market for products like this (I think they have too) and are going to be stuck with a ton of expensive finished stuff nobody wants because it will be loaded with a ton of carbs to make it taste good for the masses.

    Regardless, expect the remainder of 2010 and most of 2011 to be a bad stretch for people looking to purchase finished products that contain whey protein concentrate and caseinates for the most part (there will be exceptions of course - those of us who have contracts are good for at least another 90-180 on price).

    Because of this, I am no longer giving out free samples of Intrapro or any other protein based product Gaspari Nutrition makes (Real Mass, Myofusion or Intrapro - I will still give out SizeOn samples because this uses a high end, expensive WPH that is pretty much predigested into di-tri peptides and not affected by the market spike in the price of other proteins).

    If it were me and I liked a smaller companies cheap-o protein I would get it now while you can.

    Good luck folks,


    BK"


    BK"
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    most places already raised the 5lb'ers a couple bucks others have contracts to keep the price locked in ,they raised it 3 yrs ago because of "dairy" and "gas "prices went up well they went back down but the protein didnt so the price will continue to increase until people stop spending money on it
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