Alternative protein market to rocket to $10 billion by 2028
Recent market analysis by Market Watch shows that the alternative protein sector is currently valued at US $6.59bn and is set to reach US $10.7bn by 2028
It’s a dynamic market with new developments happening weekly. Drivers range from a global move towards sustainability and younger consumers who are increasingly choosing plant-based diets. With meat production accounting for more than half of all food production emissions (57%) according to a major study in 2021 by the University of Illinois, there is some urgency to bring developments forward and into the mainstream.
So what are the main alternative proteins available, who are the biggest players, and what are the key challenges that will need to be overcome?
Plant-based meat substitutes
Plant-based meat substitutes continue to be a popular alternative to traditional meat, with new companies entering the market and existing companies expanding their product offerings. One of the latest developments in the plant-based meat market is the emergence of products made from alternative proteins, such as fungi and algae.
One example is the California-based company Prime Roots which recently launched a line of plant-based meat products made from koji, a type of fungus used in traditional Japanese cuisine, while Israeli company Algalife has developed a line of plant-based meat products made from algae.
Established players including Impossible Foods and Beyond Meat have been offering their plant-based burgers, sausages, and other products for a few years, and their success so far is demonstrating that there is an appetite for plant-based alternative proteins.
Impossible Foods, in particular, has done well over recent years, partnering up with U.S grocery and drugs retailer Kroger and it’s meal kit brand Home Chef in 2022. With this deal, the two companies, (along with Custom Made Meals, which is also part of the set up), say they further threaten closest competitor Beyond Meat.
Lab-grown meat, also known as cell-based meat or cultured meat, has continued to attract investment and attention from consumers and investors alike. In 2023, several companies have made significant progress in developing lab-grown meat products.
Another company making strides in the lab-grown meat market is Future Meat Technologies, an Israeli startup that is developing a cost-effective method for producing lab-grown meat. In 2023, Future Meat Technologies announced that it had raised $186 million in funding to expand its operations and continue developing its technology.
Mosa Meat is a Dutch startup that was one of the first to develop lab-grown meat in a lab setting. In 2023, Mosa Meat announced that it had raised €55 million in funding to scale up production and bring its lab-grown meat products to market.
Other alternative protein sources
In addition to plant-based and lab-grown meat, there are a variety of other alternative protein sources being developed. One promising area of research is the use of microbial fermentation to produce protein. This approach involves using microorganisms such as yeast or bacteria to convert plant-based inputs into protein-rich products.
One company exploring this approach is Perfect Day, a US-based company that is using microbial fermentation to produce dairy proteins without the use of cows. The company recently raised $350 million in funding to scale up production and expand its product offerings.
Another alternative protein source that is gaining attention is insect protein. Insects are a highly sustainable protein source, as they require much less land, water, and feed than traditional livestock. One company that is developing insect protein products is Beta Hatch, a US-based company that is using insects to produce protein for animal feed.
Along with the heavy investment into the development of alternative protein products, and the clear opportunities, there are a number of significant challenges and barriers that could hamper growth. These challenges can be divided into four broad categories – cost, regulation, consumer acceptance, and supply chain.
Many alternative protein products are currently more expensive than traditional meat products, which can make them less accessible to consumers. In order for alternative proteins to become more widely adopted, they need to become more cost-competitive with traditional meat.
According to a report from McKinsey & Company, achieving cost parity with traditional meat is a key challenge for the alternative protein industry. While production costs are expected to decline as companies scale up production and improve their technologies, it could take several years before alternative protein products become cost-competitive with traditional meat.
Where regulation is concerned, the framework and various legislations around lab-grown meat are still being developed. For example, the U.S. Department of Agriculture and the Food and Drug Administration are working together to establish a regulatory framework for lab-grown meat products. However, the process has been slow, and it is unclear how long it will take for a regulatory framework to be established.
Another big barrier to lab-grown meat and insect-based protein, is consumer acceptance. Many remain squeamish about the idea, or are skeptical about it. Italy has even proposed a ban of all cell-cultured meat, to preserve its meat industry.
In addition, a survey conducted by the market research firm Mintel found that only 14% of consumers in the United States have tried plant-based meat substitutes. Additionally, some consumers are wary of lab-grown meat products, with concerns around their safety and environmental impact.
Education and marketing will be key to increasing consumer acceptance of alternative protein products.
Despite these challenges, the alternative protein market remains a promising area for innovation and growth, with the potential to transform the food industry in a sustainable and ethical way. And the benefits should outweigh any foreseeable drawbacks.
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