The Future of Food: Navigating the Alternative Protein Landscape
Over the past decade we have all stumbled upon on a menu, heard a friend mention, or curiously picked up in the grocery store some kind of alternative protein (most likely plant-based protein). The $1+ trillion-dollar meat industry hasn’t seen any real threat of disruption until the 21st century. As studies have continued to come out surrounding the environmental and health impacts of the meat industry, alternative forms of protein have grown in popularity and become well-known across the developed world. Over the past two years alternative protein companies raised over $8 billion in venture capital funding.
I could write an entirely separate post about the benefits of alternative protein on our greater society, but I’ll instead refer you to this fantastic post by the Good Food Institute that keeps it short and simple. TLDR; the meat industry is one of the main culprits of climate change, environmental destruction, and antibiotic resistance in humans. We need to find sustainable alternatives ASAP for the sake of Earth’s life-supporting ecological systems and our future generations.
What do consumers want?
As many of you have probably noticed, the current portfolio of plant-based protein products on the market has lost momentum. The world is questioning the staying power of plant-based protein as consumers’ palates have evolved since the initial releases of Beyond Meat and Impossible Foods ground meat products. Today’s products just aren’t cutting it in the eyes of the consumer. The industry is at a critical juncture, and consumers are in the driver’s seat leading brands towards the next generation of products. When compared to their real-meat counterparts, the average consumer wants an alternative that has…
1. Same taste and texture: Current plant-based products have been unsuccessful in creating a true one-for-one replacement that cooks and tastes like real meat.
2. Price parity: According to Nielsen data, plant-based meat on a per-pound basis is currently twice as expensive as conventional beef, three times as expensive as pork, and four times as expensive as chicken.
3. Nutritional superiority: Current plant-based products contain fillers, added sodium, and are higher in saturated fats. To sway those who prefer real meat, alternatives will need to show proven nutritional benefits.
4. Sustainable production practices: The next generation of alternative protein companies will need to design production facilities and processes that are sustainable and leave a smaller eco-footprint than current manufacturers. Not only are customers demanding to see the proof, but recent government-established ESG standards require more transparency from manufacturers.
I always refer back to the Gartner hype cycle chart (shown below) when the question of the staying power of alternative proteins is brought up (shout out to this great post from Insa Mohr at Mooji Meats). As Insa mentions, almost every disruptive technology went through a hype cycle that drums up initial excitement (ChatGPT and other AI technologies are at the beginning stages of this cycle right now), which then transforms due to consumers’ preferences evolving over time (alternative protein is at the beginning stages of this phase), and then the “final form” of the product reaches wide consumer adoption. The plant-based industry is currently trending downward, which is propelling a wave of innovation that is forcing companies to adjust product formulations and production methods to achieve the above demands from consumers. I believe we will eventually see a leveling out that will produce a handful of key winners in the space over the long-term.
What’s next?
Although plant-based proteins have dominated the narrative thus far, the alternative protein industry is going to see an enormous amount of innovation over the next 15–20 years. I liken the evolution of alternative protein to the evolution of the internet. In the most basic terms, Web 1.0 was static content available to a limited number of people, Web 2.0 was dynamic content available to the masses and allowed for interconnectivity between users (i.e., social networks), and Web 3.0 is envisioned to be a decentralized version of the internet where people have control over their own data (I’m not an expert in Web3, so apologies for this way-to-simple of a description). Plant-based protein is the equivalent of the 1.0 version of the internet, consumers have tested it out, enjoyed their initial experience but are now eager for the next breakthrough in innovation.
That brings us to biomass and precision fermentation — the equivalent of the 2.0 version of the internet. Fermentation has been utilized by humans for hundreds of years and is the process of using microorganisms to break down carbohydrates and leaving behind a protein-based byproduct. These byproducts can be used as functional ingredients in today’s portfolio of plant-based products to improve the taste, texture, and nutritional profile, or can be manipulated and grown as whole-cuts of protein. These products have been proven to solve many of the issues of the 1.0 version of plant-based proteins. The one area — and quite possibly the most critical for commercial adoption — that has yet to be solved is the issue of price parity. The current production processes of fermented proteins are extremely costly. One of the primary reasons is a severe lack of global infrastructure (i.e., bioreactors and downstream processing equipment) to support the industry. According to projections from BCG, fermentation processes will account for fifteen megatons of alternative protein by 2030 and will require 10 billion liters of manufacturing capacity, which is 100x more than the world’s existing capacity supply. The graphic below does an excellent job of putting this into perspective. With such little availability, the costs to locate bioreactor capacity and produce 2.0 products are extraordinarily high. We’ve seen startups in this space raising massive rounds of venture capital (see funding rounds raised by Meati and Remilk) to build out commercial-scale production facilities, which can cost hundreds of millions of dollars. One fantastic resource to help in solving this issue is Capacitor. Capacitor was created by Synonym Bio, Blue Horizon, the Good Food Institute, and the Material Innovation Initiative as a free online database that has been called the “Yelp for biomanufacturing.” It documents 150+ facilities in 30+ countries with available bench-scale, pilot-scale, and commercial-scale fermentation capacity for brands. The next phase of innovation in this space will be technologies and processes that unlock the capacity issue and reduce costs by multiple orders of magnitude.
This brings us to the 3.0 version of alternative protein — cultivated (or cell-based) protein. Like the 3.0 version of the web, cultivated protein is just now beginning to be explored in depth and the features that it could offer could revolutionize its respective industry. Cultivated protein is grown in a lab using extracted animal stem-cells. This eliminates the need for slaughterhouses and other non-sustainable practices of the meat industry. Through harmless and non-invasive practices, scientists extract cells from living animals, develop the cell-lines, and then grow the cell-lines into whole-cuts of protein. This is literally the stuff of sci-fi movies come to life! There are dozens of hurdles yet to be cleared before we see cultivated protein hit retail shelves in the US; however, Upside Foods recently received GRAS (“Generally Recognized As Safe”) approval from the FDA for its chicken breast product. Upside Foods still needs to receive USDA approval, which is likely going to be a longer process as compared to the FDA process. However, FDA approval is still great news for the rest of the cultivated protein industry as they can use Upside Foods’ process of approval as a framework to fast track approval of their products. After final approvals, Upside will first serve its chicken breast product at a Michelin restaurant in San Francisco. This is due to the cost to produce cultivated protein right now is extremely high and Upside believes consumers at higher-end restaurants are more willing to pay the premium price. Similar to 2.0 products, cultivated protein companies are attempting to solve the issue of extraordinarily high production costs. Cultivated protein production uses similar equipment as 2.0 products (i.e., the use of bioreactor tanks and downstream processing equipment). However, not only is the infrastructure to produce cultivated protein at commercial scale extremely expensive, but the other inputs into the process, such as growth mediums (e.g., fetal bovine serum (“FBS”) — the blood of cow fetuses harvested by slaughtering pregnant cows, which is a clear unethical practice in itself) and cell-line development are extremely expensive. There are new startups popping up across the world that are attempting to solve or replace these limitations. The final hurdle after FDA & USDA approval and overcoming elevated costs will be changing the public’s perception of eating lab-grown meat. The concept may sound off-putting to the average consumer; however, these products will be the closest in taste, texture, and nutritional composition to real meat.
Although the current sentiment towards alternative proteins may be declining publicly, it’s worth noting that the alternative protein industry has only truly been around for a little over a decade. In comparison, the meat industry has been an established industry for hundreds of years and receives tens of billions of dollars in annual government subsidies. As with any great disruption in history, it will take time for companies to release products that will dethrone their predecessors in the future. I’m confident that with each iteration of innovation in this space, we’ll see greater consumer adoption that will lead to a more sustainable and healthier planet for us all.
