Can the next generation of alternative proteins drive long-term growth in a reimagined food system?
By 2050, it’s estimated that we’ll have added 7.3 billion more people globally than we had a century ago. From the postwar prosperity of the 1950s through the ups and downs of the economy, one constant has remained at the American dinner table (and others around the world) — the prominence of animal-raised protein in the forms of meat, milk and eggs. But as the population grows and with global meat consumption expected to reach 661 billion pounds by the end of the decade, not to mention the magnitude of resources required for commercial livestock farming continuing to exact a toll on a suffering environment, it’s likely that alternative protein sources can play a significant role in meeting future consumer and planetary needs.
Alternative proteins have been commercially available for more than 25 years, but over the last few, the category has seen gains as startup producers and brands have found success and it has joined a broader movement in alternatives with categories like milk, sugar, flour, etc. As a result, we’ve seen increased investment: extensive product and brand proliferation by producers in the plant-based category and more innovation in fermented and cultivated alternatives. While these advances indicate value-generating potential, there’s recently been a marked slowdown in commercial growth, raising questions for investors. Are climbing inflationary pressures, shortfalls in product performance and supply chain woes leaving a bad taste with producers, consumers and potential investors? It may well be that the honeymoon period for alternative proteins has ended, where relying strictly on marketing spend and partnerships is no longer enough for success. Investments in product and supply chain innovation will be critical to meet consumer demands for healthy, sustainable alternatives with a better product experience and a price point that can sustain rather low consumer elasticity. The larger question now becomes: How, when and, even, will these much-needed breakthroughs happen to spur the market forward? We believe the answer lies in the hands of those organizations that continue to invest in innovations, capabilities and portfolios to meet consumer demand and accept the challenge of not just helping to reimagine the food system but also becoming leaders of the change.