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Butter is Better: Keto is driving resurgence as a premium product

After years of being shunned as an ingredient, fat is back thanks in large part to the popularity of the keto diet. The market for keto products is growing steadily with the global value of this category forecast to reach $15.6 billion by 2027, according to data from Irish ingredients producer Kerry.

As a diet that promotes low-carb, high-fat combinations, butter has become a preferred ingredient. But not just any butter will do. While traditional butter has seen a surge in sales as the pandemic prompted more people to cook and bake at home, this animal fat has also seen a fair amount of innovation in recent months — particularly in the premium category.

Keto Krisp bars by CanDo recently released its seventh flavor to its bar line up in a Butter & Salt with Collagen flavor that is positioned as a functional snacking option that is keto-friendly. This butter-laden bar is also combined with collagen to create a protein-rich bar with a low ratio of net carbs and sugar. The premiumization of butter as a functional bar ingredient has helped lift the CanDo brand’s sales by 570% year over year.

Other brands are also looking to butter as an ingredient to drive growth. Garden of Life has a grass fed butter powder that is sold as a supplement for those that are looking to integrate additional healthy fats into their diets. At $40 for 300 grams of powder on online retailers, this product clearly positions butter as something better than an accompaniment to toast. And premium grass fed butter has even found its way into coffee beverages like Bulletproof Coffee.

While this interest in butter is nothing new, it is one that is proving to stand the test of time. In 2019, one in six launches with a fat-related claim and healthy fat content carried a keto diet claim, a nearly 300% growth from 2017, according to data from Innova Market Insights. In particular, meal replacement and powdered beverages led the pack for products where healthy fats like butter and ghee are growing rapidly. Bars were another category where healthy fats have a significant presence. According to CanDo, which cited data from SPINS, keto bars propel 65% of the overall growth of the bar category.

Despite the demand for butter that the keto diet is driving, butter has recently seen significant price increases. For the week ending Dec. 11, 2021, butter prices increased 40% as compared to a year prior, according to an analysis of USDA data by IndexBox. At the same time, the amount of butter available decreased. In 2021, butter production declined by 2.8%.

While this does not spell disaster for product innovation, it is worth noting that while butter is a popular ingredient for those on the keto diet, it is not the only healthy fat choice available. MCT oil, coconut oil, and animal fats like bacon are also sources that could potentially replace this star ingredient if the market continues to push up the price of this particular commodity.