Dairy producer Fonterra is looking to stem slumping milk sales by deconstructing the components of this dairy beverage and promoting its animal protein building blocks as an addition to applications catering to beauty-from-within and better-for-you trends.

Under the New Zealand company’s NZMP brand, the company sells milk phospholipids, which are complex lipids Fonterra says are clinically proven to help manage the effects of stress. Additionally, the dairy producer sells milk protein and whey protein concentrate.

“By extending our portfolio into the mental wellness space, were helping food brands tap into new consumers needs, such as mood-enhancement and cognitive performance under stress — issues that have recently amplified due to the pandemic,” said Charlotte Ortiz, global marketing and communications manager at Fonterra in a release.

So far, NZMP’s ingredients are in over 10,000 growth category products globally. The company is focusing on promoting the profiles of its ingredients as high-protein, low-lactose ingredients that can assist in sports recovery in addition to promoting its probiotic-laden proteins that are geared toward the promotion of gut health.

Tapping into growth categories within the better-for-you segment has become a popular tactic for many legacy companies that are positioned in slow growth categories. Despite U.S. consumption of dairy increasing from 539 pounds in 1975 to 653 pounds in 2019, per U.S. Department of Agriculture Data, the majority of that growth does not stem from milk. In fact, milk has had essentially flat growth for several years and these sour sales have led to the dairy conglomerates Dean Foods and Borden Dairy declaring bankruptcy.

However, while liquid animal milk is losing ground to fast-growing plant-based alternatives, the protein market remains a surging segment. According to data from Grand View Research, the U.S. market for whey protein, which is derived from animal milk, was at $8.7 billion in 2019 and is expected to expand at a compound annual growth rate of 9.8% from 2020 to 2027. Part of this growth is attributable to the use of whey protein as supplemental protein. An article published by the Institute of Food Technologists in 2019 found nearly 55.0% of consumers in the U.S. agreed that high protein content played a pivotal role in their food purchasing decisions.

Whey protein is an advantageous ingredient for food manufacturers not only for its protein content but also for its ability to replac high fat and costly ingredients such as milk, butter, cream cheese while maintaining the same flavor, texture, and appearance as that of original formulations. Another use of whey protein is in personal care products due to its skin-hydrating and hair conditioning properties.

But Fonterra has gone beyond just protein and has innovated to introduce milk phospholipids. Marketed as a functional ingredient, these phospholipids target consumers that are concerned with the contribution of their food to their overall health and wellness, and Fonterra is selling this functional addition in the form of nutritional bars, ready-to-mix powders, and supplement sachets.

With more and more consumers interested in the functional benefits of food, and the pandemic prompting an even greater focus on the role of diet in maintaining physical and mental well-being, Fonterra’s new products place them directly in the path of growing categories.