As sales of many traditional dairy products have stagnated or declined over the past several years, dairy producers have increasingly embraced innovations from entrepreneurial brands as a means to drive growth in the category. Where trends such as ultra-filtered milk, grassfed and functional protein drinks have already given dairy a needed boost, national co-op Dairy Farmers of America (DFA) is helping new brands to move ahead with its 2020 DFA Accelerator, which announced its class of nine companies last week.

As the food and beverage industry continues to follow a north star of sustainability, many of the brands in the incubator told BevNET they have turned to milk byproducts as a means of disrupting existing categories such as sports drinks and spirits.

This year’s edition of the accelerator features five food and beverage brands, including whey hydration drink maker Superfrau, milk-based sports drink GoodSport, premium spirits brand Wheyward Spirit, “chilled dairy snack” maker Yaar Nordic Quark Bar and snack company Chank’s Grab-N-Go. The 90-day program began this month and features one-on-one and team mentoring, as well as on site visits and virtual training programs.

Boston-based Superfrau launched in independent retail accounts last year with a line of flavored upcycled whey hydration beverages. It was co-founded by CEO Melissa Martinelli and her husband Michael Hagauer, who grew up in Austria where whey beverages are a mainstream category. While most U.S. consumers associate whey as an ingredient in protein shakes, she said Superfrau is meant to be a light, refreshing beverage with added nutrients that can be used as a post-workout recovery drink or for anytime hydration.

“We really feel like we’re filling a gap for somebody that would otherwise buy a sports drink but doesn’t because of the unhealthy ingredients or because it’s not really marketed towards them,” Martinelli said. “All of the packaging [in the category] is super masculine oriented. We’re not necessarily trying to just go female-oriented, but I do think there’s a huge market of women that are athletes, who exercise, or who are just dehydrated sitting at their desk that would go for this.”

The company is preparing to launch the brand this fall with a new formulation and updated packaging that will “better protect the contents,” Martinelli said. A pilot run of the product intended to gauge consumer interest was pulled in October when the company discovered the drink would separate and suffer flavor loss when exposed to the LED lights in supermarkets and has since been reformulated.

The company is currently working with DFA to develop supply chain and manufacturing solutions and is also participating in the PepsiCo Greenhouse Accelerator program. In addition to disrupting sports drinks, however, Martinelli sees Superfrau as a sustainable brand. Roughly 90% of the milk used while making cheese becomes whey — the watery residue left after curds form — and the vast majority of it that isn’t used for protein powder goes to waste, Martinelli noted. While Superfrau partners with local farms in New England, the potential for whey-based beverages could open up new revenue streams for dairy farmers across the country to capitalize on would-be waste.

“There’s so much opportunity to really look at the overall carbon footprint and do something about it and empower consumers to do something about it as well,” she said. “So I think Dairy Farmers of America is really smart to see the trend and want to support it and learn from it. I think they’re encouraging the industry, through our companies and their own employees, to think innovatively.”

Superfrau isn’t the only whey innovator in the accelerator, however. Oregon-based alcoholic beverage producer Wheyward Spirit also uses the byproduct as its core ingredient and promotes sustainability in its marketing. Founded in 2018 by food scientist Emily Darchuk, the brand has been on the market for over a year with a distilled clear liquor that is positioned as a sustainable and more flavorful alternative to traditional spirits. According to Darchuk, Wheyward Spirit can be consumed straight or in a cocktail and has an “oaky flavor” with “hints of vanilla cream” and “warm spice notes rounded out with a subtle pear aroma.”

“My background as a food scientist in the natural food industry shaped the development of our product as well as our mission to give consumers who care about transparency, quality and sustainable sourcing an authentic option in spirits,” Darchuk said, “To me, a mission-driven and naturally flavorful spirit was something I thought was missing in the market and with the early support we have seen from consumers, we have hit on a big opportunity with our unique offering.”

Beyond whey, Illinois-based GoodSport is an early stage sports drink made from milk and has naturally occurring electrolytes and vitamins. The company was not available for comment.

In addition to food and beverage brands, the program also includes four international ag tech startups — Armenta which is developing an antibiotic treatment for bovine mastitis; Capro-X, which aims to create sustainable solutions for whey byproduct; manure treatment tech company Livestock Water Recycling and fashion company Mi Terro which uses milk to make t-shirts.