Sports nutrition suppliers have been hit by a sudden rise in whey protein costs just as the government slaps VAT on the category at the standard rate of 20%.

The cost of WPC 80 - the whey protein concentrate used in sports nutrition - has leapt 15% to 25% over the past quarter to up to €9/kg, according to suppliers.

As the ingredient typically accounts for 70% of the cost of goods, the size and speed of the increase would be a huge blow at any time. But the timing of the hike is particularly poor as it comes after VAT was slapped on sports nutrition products from the start of this month.

“We’ve taken the decision to swallow the current increase this quarter,” said Jason Oakley, MD of Ultimate Sports Nutrition. “We can’t ask consumers to pay for it on top of VAT.”

Mark Langley, general manager of GSK Maxinutrition, added that the industry would probably hold off passing on the higher costs until the first half of 2013.

The latest hike in WPC 80 costs is the result of a big increase in demand from the US, which has been looking to EU markets to make up for domestic shortages.

“Sports nutrition has become mainstream in the US, where products are used by sports people and ordinary consumers,” said Arla Foods Ingredients category director Brian Petersen. WPC 80 now costs 50% to 60% more than it did two years ago, he added.

With very limited extra supply entering the market, rising demand from sports nutrition suppliers and infant formula producers has resulted in higher prices.

“The market is growing and manufacturing capacity is not keeping up,” said Langley. “I can’t see any light at the end of the tunnel for one or two years.”

In the UK, the sports nutrition market grew by 14% to £230m in 2011 [Euromonitor Sports Nutrition Report 2012].