In a first-of-its-kind report, food tech, alternative protein venture capital firm Blue Horizon and Boston Consulting Group provide detailed forecasts and growth potential of the market for alternative plant-, microorganism-, and animal cell-based proteins that can directly replace conventional animal protein.
The Food for Thought: The Protein Transformation report is based on survey results and more than 40 interviews with industry veterans, researchers, and startup entrepreneurs.
It goes into what is needed for production technology and key investment themes along the value chain.
It answers questions posed by all stakeholders, including farmers, incumbent food companies, start-ups, investors, and consumers:
- how will parity determine the future growth of the market?
- what will be required to bring each type of alternative protein to parity, and when will that happen? and
- how can investors both support and benefit from its growth?
Blue Horizon talks about dominos that need to fall for plant-based proteins to gain parity with animal meat.
The first domino is consumer concern for the climate and sustainability. Combined with the fact that 85 per cent of investors now incorporate environmental, social, and corporate governance criteria into their investment strategies, that will generate enough consumer demand and investor interest to time over the second domino.
That is,refinement and scaling of existing technologies to unlock parity, when the taste, texture, and price of alternative proteins closely match those of animal proteins.
Blue Horizon says that just those first two dominoes are all that is needed to allow alternative proteins to capture 11 per cent of the global protein market by 2035. That is its base-case growth estimate, the report said.
It asks, so what if the industry can generate even more momentum?
One of the report’s authors, Boston Consulting Group senior consultant Friederike Grosse-Holz said step changes in alternative protein technology, by existing food companies or start-ups, which is supported by public or private investment, could lead to rapid gains in production efficiency, better taste and texture, and lower cost. That would be the third domino, which would result in earlier parity and an increase from the 11 per cent base case to 16 per cent by 2035.
The final domino comes in the form of regulation. Increased taxation on carbon emissions and greater support for farmers to transition from animal to alternative protein agriculture could boost the base case to 22 per cent by 2035, Grosse-Holz said.
The flip-side of that projection, is that Europe and North America would reach “peak meat” by 2025. Meaning, in as little as four and a half years, the consumption of animal protein in those markets will start to decline.
The report estimates alternative protein revenues will reach $290 billion in 2035, with profits spread across the value chain. But beyond the financials, achieving the base case 11 per cent will save more than 1 gigaton of CO2 emissions - or imaging Japan being completely carbon neutral for a whole year. That plant-based consumption level would save enough water to supply London for forty years.
Making Bolognese with plant-based meat avoids the greenhouse gas emissions of a brand new car driving 10 kilometres.
The full report can be downloaded here.
Australian alternative protein think tank Food Frontier released its State of the Industry report into plant-based meats earlier this month.
Listen to Food & Drink Business editor Kim Berry talk with alternative protein experts on the Food & Drink Business Podcast:
Episode 10: Food Frontier head of industry engagement Karen Job
Episode 9: ProForm Foods CEO Matt Dunn
Episode 7: Pure Foods Tasmania CEO
You can listen via the links above, or subscribe on your preferred podcast platform:
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