Alternative proteins, such as plant-based foods, initially targeted only vegans and vegetarians. But as technology develops in the field experts predict that there will be tasty choices for everyone, including die-hard meat eaters, and that can open up a massive market for investment.
“The field is only seven to 10 years old when it first started, but we have seen rapid advancement in the last couple of many years.” explained Amy Huang, university innovation manager at nonprofit think tank Good Food Institute, which supports the development of safe and sustainable alternative proteins.
“And this time, it’s targeted at the 97 percent of people who eat meat,” she explained. “As as a result, there is ample opportunity for further innovations.”
The majority of consumers are concerned about the current meat production processes, as well as the increasing trend towards eating healthier, are already seeking alternatives to meat. It’s despite a negative impression of their texture and taste experts suggest. The market for alternatives to meat eggs, dairy, eggs and seafood is estimated to hit at minimum $290 billion by 2035, based on research conducted by Boston Consulting Group and Blue Horizon Corp.
While it’s possible that alternative proteins are trending, Decker Walker, Boston Consulting Group’s head of agriculture but isn’t quite ready to label it a bubble for the moment.
“It can be in certain areas because the technologies are decades off,” Walker said. “Investment-wise the situation is difficult to assess because it was a very slow-moving industry up to about five years ago. But, it is evident that our future will have more alternative protein.”
Huang describes the alternative protein as being direct substitutes for meat, eggs and dairy, which are derived through three ways that include cell-culture, plant-based or by fermentation.
She says the future viability for these protein will depend on synergies that exist across all three of the platforms. She anticipates that the innovations will come in waves with the first being plant-based proteins and the next being those produced by Microbial fermentation — the newest platform. Third will be proteins produced by cell cultures as a technology that is more advanced she added.
“There is also a huge amount of research whitespace,” she added. “If you look at the whole area, there’s a lot of fundamental questions to find out: What are best raw materials? Soy, wheat and peas are dominant in plant proteins, but soy and wheat are byproducts and not intended for human consumption. Can we diversify plant proteins to look beyond these three?”
Traditional fermentation employs intact live microorganisms to process the plant material, whereas biomass and precision fermentation, two areas Huang predicted are likely to fuel the next wave of alternative protein innovation that utilize microorganisms on a different basis. Cultured meat is derived from cells that are harvested from animals through a process which, according to advocates, doesn’t harm animals. These cells then get warmed and fed with nutrients that help to build muscle and fat.
The effects of microbial fermentation are evident through the use of the ingredient leghemoglobin, which is in Impossible Foods’ flagship burger. The new technologies allow the meat industry made of plants to produce products that are created to closely resemble the meat of animals in terms of texture, smell and taste, Huang said. In addition, there is researchers at the forefront of academic research and startups that are working on cutting-edge cuts of chicken and meat alternatives, as well as fish substitutes.
For the sector to advance, some of the technology is still in need of improvement which includes the manufacturing techniques for extruding, texturing and extruding proteins, but there are many other promising techniques. Redefine Meat, for example utilizes 3D printing technology, while Rival Foods is experimenting with shear-cell technology to create whole meat cuts from plant-based proteins, she added.
Despite growth in the competition for the production of cultured meat and the food supply chain industrial-scale facilities and lower prices for these technology is in the next 10-15 years away, Huang said.
“Progress is being made, and there is early evidence of these areas being able to be worked on,” she added.
An investment that is strong
Many alternative proteins investors are eager to grab a forkful of alternative protein-based startups. Since 2016, venture capitalists invested around $4.2 billion to 363 well-known global investment opportunities in this area, according to Crunchbase information.
In 2020, less than $2 billion was invested in companies that were backed by venture capitalists in the area, with the majority of that coming from Impossible Foods’ total raise of $700 million from Series F as well as Series G rounds last year. That was an increase of 101 percent funding from 2019 to 2020 as per the database.
This year is already quite busy with $602 million of venture capital doled out in 39 transactions, which includes separate $200 million rounds for LIVEKINDLY as well as Eat Just in March.
Even though big players received massive chunks of capital Sean O’Sullivan, managing general partner of early-stage investment firm SOSV, said 2020 was an excellent year for businesses that raise funds in the early stages of their development, including for companies that haven’t yet hit the market with products yet. There are also a number of $100 million deals in the works for the year ahead, he added.
Cellular meat is at the “birthing process,” he said, but alternatives to protein are now commercially viable.
“Plant-based is already here and in your refrigerator like foods that are formulated around a specific protein like milk protein” he said. “With cell-based meat products, Memphis Meats is going for the whole burger and will be selling it in shops and restaurants, except for regulatory issues.”
SOSV is investing in Memphis Meats at its pre-seed stage and said the firm is working closely with U.S. Food and Drug Administration as well as the U.S. Department of Agriculture to figure out how to identify its food products so that they are safe to sell commercially.
In addition, O’Sullivan expects more capital to be invested in infrastructure to enable the scale needed to produce the huge amount of food production required to feed all the people in the world, but it will require time.
“Billions will be invested in the coming five years to expand across all three capabilities. In addition, a new layer of infrastructure companies will emerge to manufacture the products,” he added. “Food is a multitrillion-dollar industry therefore to completely revamp it will take years.”
Food makers
Eat Just’s new funding round was announced just a few months ago. It declared in December the use of their cultured chickens, which it claims as real chicken meat to make chicken bites was accepted to offer in Singapore -the first nation worldwide to offer cell-based meat products, co-founder and president Josh Tetrick said in an interview.
“It’s real chicken that is not a product of plants and it’s the first time the technology has been developed and made commercially available,” he said. “There is no distinction from a taste or nutritional standpoint. In fact, surveys among people trying it in Singapore affirm that it’s as superior or even better than the conventional chicken that they’re accustomed to eating. the majority of people report feeling better after taking it in.”
The San Francisco-based company’s products Egg alternatives Just Egg, and the chicken brand Good Meat, are available in greater than 220 distribution points across the U.S. and Canada.
The company’s beginnings were in 2011, when the firm was known as Hampton Creek and had launched its first vegan food lines, which included Just Mayo, an egg-free mayonnaise alternative, and Just Cookie Dough, an egg-free, dairy-free cookie dough.
The company began with the egg, and then discovered an egg-like plant that scrambled as an egg. It then tried to make several products using the plant, but the study was focused on getting the point where consumers could pour egg-like product from an egg plant into a cooking pan, and get it without cholesteroland using less land and water, Tetrick said in an interview.
“We realized there are more than 350,000 plants around the world , but we did not know if any could create an egg.” he said. “We discovered the mung bean that works like an egg and developed the business model and technology around it. That was the first obstacle first, and the second one was commercializing.”
However, the company’s achievements weren’t without its challenges throughout the process The company was a victim of mislabeling claims in 2015, then in 2017, product safety claims prompted Target to remove its products off the shelves. The FDA eventually cleared the company of the assertions and Tetrick refused to comment on past issues.
Meanwhile, Berkeley, California-based Climax Foods that raised a $7.5 million seed round last September, is using proprietary data science to create organic foods, starting with alternative plant-based versions of seven most-sold cheeses that aim to mimic the taste, texture, and flavor of dairy-based alternatives.
Climax Foods CEO Oliver Zahn said to Crunchbase News the company has completed about 100 tastings for its cheese products. the response was positive and some were unable to distinguish between the Climax Foods products and dairy-based cheeses.
“If we can manage the flavor and texture of this cheese and we are able to control the texture, flavor and taste of this well, then we,” he added. “Once you’ve figured out how fermentation works for one type of cheese it is possible that you only need to tweak a few parameters to create the other.”
With the promising results, Zahn added that the business is looking to raise a smaller bridge round before seeking a Series A round specifically towards its target market.
Future food is in the hands of Food
Tetrick expects to see more startups and multinational companies working on technology to make alternative proteins and the capital required to follow.
“My main goal is to ensure that when my niece graduates from High School — she is 2 years old at the moment and we’ll be able to provide eggs each day, chickens in the evening, and beef without killing animals,” he added. “The problem is scaling. It’s not enough to meet the needs of the U.S., but for everywhere. Also, we must keep reducing the price so everyone can afford it.”
Then there’s the problem of perception. While consumers are open to new flavor profiles and experiences Foods that are created require to be something someone wants to eat, said Boston Consulting Group’s Walker.
Alternatives that are made of plants are growing particularly in foods where they aren’t the main action, like lasagna, where the tiny quantity of meat doesn’t alter the overall flavor of the dish. But in the case of steak — where dining is about mouthfeel and texture as much as taste — there remain a variety of technical challenges the food industry must over come, like the cost as well as the fact that the majority of products are processed, Walker stated.
“You don’t have to solve the constraints all in one go to make adoption possible however, for rapid adoption, you’ll need to improve the quality of protein crops,” he said. “Heme which imparts meat with a bloody flavor is a costly process. That will need to come down in cost. Texturization can be accomplished on an individual basis, but the technology is not there yet to do it in a mass way.”