In today’s grocery stores, cartons of plant-based milk dominate the “dairy” aisles and are only increasing in popularity. Products such as soy, almond and oat milk have built alternative milk into a $2B market that currently makes up ~14% of total milk sales in the United States. These products have become mainstream ingredients in recipes and coffee orders like the Oat Milk Latte.
The plant-based milk industry originated when the Food and Drug Administration publicly stated that soy foods were heart-healthy and a good source of protein in 1999. Fast forward 17 years later and Danone, a multinational food-products corporation, acquired WhiteWave, a plant-based food, beverage, and organic produce company for $10B — this kickstarted a wave of new investment. Thereafter, a flood of new startups entered the market, which nearly doubled in the following 2–3 years.
The alternative milk market may hold lessons for where the booming alternative meat market is headed. The Good Food Institute’s State of the Industry Report includes market research from Nielsen Insights indicating that the demographics of plant-based milk consumers are similar to those who purchase plant-based meat. This year’s Beyond Meat IPO represents an inflection point similar to Danone’s acquisition of WhiteWave, which led to significant sector growth. Currently, plant-based meat products only account for ~1% of total sales within the wider meat category. If alternative meats can reach a meaningful share like plant-based milk, this represents a huge investment opportunity.
The notion of alternative meat isn’t a novel concept, but up until now it hasn’t been mainstream, like alternative milk. This is largely because plant-based meat alternatives such as tofu or tempeh are perceived as less tasty, attracting only a small group of US consumers (mostly vegans and vegetarians). However, with some of today’s most advanced biotechnology innovations, meat alternatives can be produced that are comparable or even superior to animal protein products — imagine a pound of steak with perfect marble and a lower cholesterol component. Exciting technology areas that show great promise in creating that perfect steak include cell cultivation, precision fermentation, and various new techniques that mimic the complex structures of meat. Whether the products are made of plant, fungi, or lab-grown meat cells, they fall into the emerging category of “alternative protein” or “clean meat”.
This emerging category is only accelerating due to COVID-19, which triggered a concerning amount of meat shortages across the country. As more workers at meat processing plants became infected with COVID-19 and farmers faced limitations in selling their livestock, three main inefficiencies bubbled to the surface: the dire consequences meat production has on the environment, yield issues around animal farming, and the logistics of processing meat, and transporting it from where it is produced to where it is consumed.
The inefficiencies of conventional meat production and consumption are inherent. Farmers must dedicate a vast amount of land and water to feed their livestock — and in order to ration out one T-bone steak, an entire cow must be slaughtered. Meat is one of the top three items wasted in the United States, caused by the loss incurred during the transportation and storage process. While COVID exposed critical flaws to our meat supply system, it has raised public awareness on the current state of the agricultural and food industry today and presents an opportunity for continued traction and momentum for alternative meats, which lend themselves toward distributed production near end-markets (i.e. cities), and a more resilient food system.
Ultimately, the acceleration of alternative protein is an inevitable part of food and agricultural evolution. It is human nature to continue innovating and learning how to feed the world in a healthier and more efficient way. As we approach 2021 and beyond, we are nearing an inflection point where alternative meat technology will significantly shift the food industry. This is great news because alternative protein can make our future cleaner, healthier, and more accessible for billions of people around the world.