In 2020, plant-based sales reached a record high of $4.2bn globally. As the internet and the latest technologies advance, consumers have more options and access to information when it comes to their food. Newer generations are calling for more sustainable food practices as climate change becomes increasingly apparent. One could argue that meat substitutions are growing in Western markets because of it. COVID-19 also increased awareness surrounding the connection between public health and meat consumption and the plant-based market is now expected to reach a whopping $95bn by 2029.
The rise in demand for alternative protein isn’t that surprising due to recent events and the many benefits that come along with it. Some attractive benefits of plant-based eating for consumers are environmental health, boosted immune systems, reduced inflammation, fiber, and overall better health among others.
Challenges with consumer acceptance of alternative protein
Despite the growing interest in plant-based, vegan, and vegetarian diets, there are still some challenges that come with producing more sustainable foods.
With food prices going up due to inflation, alternative meats pose the threat of even higher food costs because of the lack of cost efficiency associated with these products. This poses a significant challenge for the emerging and developing market. According to the paper Meat Protein Alternatives: Opportunities and Challenges for Food Systems’ Transformation published by the Organisation for Economic Co-operation and Development, or OECD, the cost of alternative proteins is significantly higher compared to regular animal protein. This paper analyzed three main types of meat alternatives:
- Plant-based alternatives
- Insect-based alternatives
- And, cultured meat
All three types are costly to consumers due to higher production costs, but those numbers are expected to decrease as production scales up and optimizes.
The nutritional composition of alternative protein poses another challenge. For example, plant-based burgers studied in the OECD report contained five times the amount of sodium compared to a beef burger. The elevated levels of sodium is a result of the processed nature of plant-based burgers. A potential solution to this would be potassium chloride - a salt substitute that can help with sodium reduction. One of our partners, Cargill, is a leading supplier of potassium salt to the food industry, which can be used in alternative protein.
As the focus on health and wellness has grown, it begs the question of how agricultural business will evolve. According to a recent Forbes article on alternative meats bringing an uncertain future for cattle farmers, many farmers believe protein alternatives would have a negative impact on farm income. While an alternative meats future would be good news for livestock and the environment, this means it could also displace hundreds of thousands of farmers and meatpacking workers.
The future of sustainable food production
As Plug and Play continues to source the most disruptive startups in the food industry, we've encountered those that are innovating a way for consumers to have access to a variety of food options. Kyomei is a UK-based startup focused on next generation meat proteins. The company mimics animal proteins by using plants as bioreactors to develop a protein production platform for the alternative meat industry.
Another startup, Chirp Chips, introduces insects to the Western diet as a sustainable food. The company plans to eventually introduce more products with the hope of bringing insect meat onto store shelves in direct competition with beef, pork, and other meats.
In addition to connecting with game-changing entrepreneurs, Plug and Play has also contributed to the Center for Digital Technology and Management, or CDTM's, Sustainability Landscape 2022 report to predict the future of sustainable food production. Based on research, CO2 impact, investment capital, and emerging markets, we helped identify seven areas of investment opportunity, including Food, Agriculture, and Forestry. In the area of Food, Agriculture, and Forestry, our investment hypothesis (developed along with five other VCs and CDTM) was driven by:
- Carbon removal
- Alternative proteins
- And, alternative packing and circular economy
To learn more about our investment hypothesis in this area among others, view the full report here.