How to profit from the trend of high-protein foods

Investment opportunities seem to be being created by a widespread obsession with protein, as evidenced by the rise in whey prices and the recent popularity of cottage cheese

Nowadays, it's difficult to browse the grocery store without seeing items high in protein.

Foods high in protein are in high demand. According to online grocery store Ocado Retail, sales of cottage cheese increased by nearly 85%, while searches for lean steak, high-protein granola, and high-protein granola increased significantly over the previous year. A large portion of the change is being driven by younger consumers, as evidenced by the explosion of protein-focused recipes and wellness content on TikToks.

According to Andy Crossan, head of insight at the food and beverage market research firm Lumina Intelligences, the recent interest in protein is more the result of several changes in consumer behavior than of a single factor.

Minimally processed protein-rich foods, such as yoghurt and cottage cheese, seem like a safer option to consumers due to health concerns, rising living expenses, government regulations, and growing distrust of highly processed foods, he said. Dairy products, snack bars, chicken, and peanut butter are all being repositioned around their protein content to satisfy a number of consumer demands for simplicity, value, and nutrition.

Current IMG Videos According to IMG Crossan, people are choosing real proteins from natural sources over artificial ones as a result of mindful eating and the clean label movement, which lists food ingredients with identifiable names instead of synthetic additives.

Investing in culinary fads.

The need for protein is no longer limited to bodybuilders and professional athletes; people are becoming more and more aware of its advantages. These shifting consumption patterns frequently support a number of megatrends or demographic themes that investors can profit from.

Preventative care is becoming more popular as the world's population ages, according to Jeneiv Shah, portfolio manager of the Sarasin and Partners Food and Agriculture Opportunities Fund.

Although older groups were catching up, he attributes this trend to Gen Z's love of wellness and gym culture, as well as their inclination to follow influencers and look for health-conscious recipes.

According to him, younger generations are hoping to prevent future issues earlier and Baby Boomers are becoming more conscious of the importance of protein in maintaining bone strength.

Shah also brought up the popularity of GLP-1 weight-loss medications. Higher protein intake is increasingly seen as complementary to these treatments as users and clinicians become more concerned with maintaining muscle mass during weight loss.

According to research by Lumina Intelligence, 5% of adults in the UK are using GLP-1 weight loss medications, and another 5% are thinking about doing so while in the US, J. The P. According to Crossan, Morgan predicts that up to 30 million people will be using them by 2030, indicating a long-term need for a diet higher in protein rather than a passing trend.

He also draws attention to how politics affects our purchasing decisions. Concerned about childhood obesity, the government implemented regulations on foods and beverages high in fat, sugar, or salt (HFSS) in 2022, limiting their visibility on store shelves and their marketing.

According to Crossan, this led to the emergence of healthier snack options that could occupy more prominent shelf space, such as protein bars.

To what extent are there investment opportunities?

Protein sources have varying demands. Shah highlights the subtlety that lies within the larger protein trend of healthier and less expensive white meats, fish, and dairy products surpassing overly processed foods, even though many health and environmental advocates will voice concerns about excessive consumption of red meat.

Global market research firm USD Analytics projects that, in contrast to a stagnating broader cheese category, the global cottage cheese market will expand at a compound annual growth rate (CAGR) of 5.5 percent from 2025 to 2034.

Whey, whose prices have skyrocketed this year, is another disruptor. The process of making cheese involves treating milk to cause it to coagulate and separate into two parts: liquid whey and solid curds, which are used to make most cheeses.

In the past, whey was mostly used as animal feed or fertilizer. These days, it's probably concentrated, filtered, and powdered to create a high-protein component that can be added to various foods. Whey is shifting from a by-product to a strategic ingredient with standalone demand, according to analysts, and as manufacturers add more protein to cereals, snack bars, and dairy products, prices have risen to all-time highs this year.

Sarasins Shah clarified this range of possibilities.

"This is about more general demographic trends, like health and aging, rather than just dietary preferences."

He identifies two businesses from the portfolio that offer intriguing approaches to the theme.

Novanesis, a Danish company listed, has "strong relationships with all the leading fast-moving consumer goods (FMCG) companies, like Danone" and provides cultures and enzymes used in high-protein dairy products. Shah claimed that the market undervalues the company's consistent growth trajectory.

GEA, an industrial company listed in Germany, is another.

"In addition to being utilized by dairy farmers who raise livestock, its equipment is also found in Danones factories."

The French multinational food and beverage conglomerate Danone, which has a portfolio of brands that includes Activia, Alpro, and Actimel, is also on the team's watchlist because it has the potential to generate consistent growth rates across its regions at the same time and can last longer than the market anticipates.

Shah continued, "We were keeping an eye on it because there are early indications that we are getting close to that situation."

How can you fund the theme of proteins?

This expanding consumer trend may provide some focused investment ideas for investors who support the strategy of purchasing what they love.

However, Malcolm Steel, a chartered financial planner at Edinburgh-based Mearns & Co., cautions against letting the story take precedence over the principles.

Recalling the suffering of investors who supported Beyond Meat, he claimed that identifying a cultural trend and profiting from investments associated with it were two very different things.

The plant-based, meat substitute business serves as an example of the peril of chasing an engaging story. The stock later lost about 98% of its value due to slowing sales, overcompetition, and valuation issues after soaring after its 2019 IPO.

However, a conglomerate with exposure to the theme through a wider portfolio of brands or products bears far less concentration risk than a single stock.

In keeping with the theme, Steel also cites Danone as an example of a more well-known business with a significant presence in the yoghurt and higher protein dairy categories.

"Maybe it's more sophisticated investors who favor these themes they want to exploit, which may explain the popularity of specialty ETFs as sophisticated DIY investors tend to be more cost-conscious," he continued.

However, you would like to believe that an active manager with a well-resourced team could give you an advantage similar to the specialized thematic investment houses if you're looking to access a particularly niche theme. Obviously, though, these will cost more. Because why wouldn't you simply purchase the index if you wanted to access a wide market?

Despite their short-term underperformance, Steel mentions Sarasins Fund and Pictet Nutrition on the active side.

He said, "I believe investors looking at these funds would need to have a higher risk tolerance and a little bit of patience."

The VanEck Sustainable Future of Food (LSE: VEGB) and Rize Sustainable Future of Food (LSE: FOGB) are two pertinent ETFs.

Timeframe might be a factor, but a relatively new theme might conflict with a long-term investment horizon. Steel added that other businesses may find it more difficult to draw in investment due to the recent obsession with extremely profitable US megatech.

How can you determine whether the popularity of high-protein foods is sustainable?

Shah stated that in order to evaluate a long-term structural trend as opposed to a transient fad, he looks for three factors: consistent corporate investment, shifting consumer behavior, and encouraging healthcare trends. These factors all provide evidence that the protein shift will be long-lasting rather than a fad.