Vendor serving vegetarian burger

How the next generation of alternative proteins can drive long-term growth

Alternative protein can be an essential component of a reimagined food system. Innovations are crucial for the next generation.

Three questions to ask:

  • How are consumer preferences impacting the approach to the next generation of alternative proteins?
  • How will investments in alternative protein innovation generate much-needed product and price parity?
  • What steps can be taken to start establishing yourself as a leader in the next generation of alternative proteins?

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.

Alt proteins graph

Six market dynamics will impact the future of alternative proteins

EY research estimates the overall protein market could be somewhere in excess of $150 billion potentially as soon as 2040, but the opportunity for generating value won’t be without challenges. Alternative protein production is entering a new era, where the criteria for success are changing. Six important market dynamics will shape both opportunities and challenges ahead and must be considered as companies, with intentions to lead in the market, begin to build innovation and investment strategies for the next generation. Those that can navigate the significant headwinds and understand tailwind opportunities will be best positioned to bring to market and scale the next generation of alternative protein products, driving breakthrough adoption beyond trail.

Drivers that could impact the future of alternative proteins


Shifting consumption


Improved product


Reaching scalability



Trade policies & federal approval processes


Global climate
action policies


Ability to meet capital

1. Consumer preferences

Consumer perception, belief and behavior remain the most significant drivers of the reimagined food system. Taste, texture and affordability are still paramount for consumers, and this doesn’t change in the alternative proteins category. Although advances have been made, the current consumer value proposition is not enough. Innovation breakthroughs are needed to address the most crucial questions regarding buying motivations: Does it taste good? Does it have an acceptable texture? Is it affordable? Is it healthy? Without significant progress on all fronts, the category will face considerable growth challenges.

However, there are opportunities that exist to become more consumer centric. Focusing on the differentiation of value propositions by consumer segment and production method could be the key to unlocking growth. For example, 25% of consumers in a recent EY Future Consumer Index study are committed to seeking healthier foods with more plants on the plate. This, on top of the proliferation of purpose-based purchasing criteria, such as sustainability motives with the Gen Z segment, will provide some tailwinds for plant-based alternatives with some permissions for premiumization. In markets where traditional meat is costly due to the lack of local resources, cultivated protein could become a popular alternative if scale can get to or below price parity. Fermentation could emerge as the dark horse of the category, with the potential to scale quickly without a ton of current market hype. As food and beverage manufacturers continue to revisit their portfolios and align with consumer preferences, protein additives could be a popular addition into many future ingredient stacks.

2. Technology and innovation

There are currently some 1,000 alternative protein startups in the United States, joining a category that has seen the establishment of high-profile consumer brands and attracted traditional animal protein producer collaborations. The pace of investment in technology from plant-based to lab-grown and fermented products far outstrips anything seen in years. According to the Good Food Institute, 2021 saw a record $5 billion invested in alternative proteins, a surge of 60% beyond 2020 — a year that attracted more investment alone than the 10 prior years from 2010.

It’s unlikely, given the cost of capital, slowdowns in capital placement and valuation challenges experienced by some well-known commercial alternative brands, that investment will continue at this pace. As market pressures, product performance and price sensitivities continue to slow consumer adoption, the next leap forward in growth will require breakthrough technology to improve production efficiencies and manage costs while also improving taste. This may take the shape of multi-platform innovations that lead to efficiencies at scale and speed adoption.

3. Supply chain and manufacturing capacity

Currently, protein production facilities are geared overwhelmingly to more traditional processing. If market dynamics shift favorably, alternative protein offers an opportunity for change, diversification and value generation for the future. At the commercial farming level, that could mean diversification to source ingredients, such as wheat, soy and peas. For production at scale, alternative protein supply chains will need to shift both crop diversification and production processes in manufacturing. The rise of cultivated and fermented proteins, which are far more reliant on processing than traditional proteins, will also require innovation in products and processes. As all of these dynamics unfold, the category will need to transition to smart, efficient processing; collaborations; and hybrid production models to capture an increased market share. 

4. Geopolitical and regulatory environment

While the ongoing conflict in Ukraine has closed global shipping routes and contributed to an already constrained global supply chain, many executives see future scenarios where globalization is retreating, with a trend toward localization. Alternative proteins’ potential to be less land dependent could promote more localized production. These products could play a cornerstone role in future food security strategies for countries around the world. At the same time, increased government involvement and regulations on sustainability goals, reporting and standards will continue to reshape the adaptation of alternative sources of proteins.

5. Environmental, social and governance (ESG) agenda

With increased interest from investors in ESG transparency and more stringent reporting requirements around carbon dioxide emissions and sustainability initiatives, organizations are looking to add credible, tangible ESG initiatives to meet their reported goals. Consumers, too, are favoring brands and producers that have stated ESG targets and are producing foods with less environmental impact and more sustainable production models. In short, organizations that can capitalize on consumer interest, the regulatory landscape and the potential for ESG-focused funding could be well positioned to build market share ahead of a post-recession economic uptick.

6. Macroeconomics and access to capital

Despite record private sector investment and government funding for alternative proteins in recent years, the macroeconomic outlook and availability of capital look mixed. While federal funding for alternative protein startups and producers is favorable and supportive, the probability of a global recession in 2023 is slowing category optimism. Private investors may look with greater scrutiny at alternative protein investment opportunities, and the likelihood of a global recession is driving up the price of capital. However, given the recent slowdown of the category, the environment could be ripe for market consolidation and portfolio proliferation. 

How can your company be a catalyst for the next generation of alternative proteins?

Four areas that we believe will guide market leadership

It is now clear that forward momentum at scale will require a noticeably different set of operational capabilities and forward-thinking investment priorities. If we are going to realize a major market and product shift, industry catalysts will need to take some calculated risks and innovate to speed the production, support and broadscale adoption necessary to drive the next generation. We have identified four areas where you can focus your strategic priorities if your company is looking to take a leadership position in both the near- and long-term growth of the category.


Industry consolidation and convergence – through production model collaborations and synergies and capability-led M&A

  • As the alternative protein industry matures, we expect the three pillars of production methods (plant based, cultivated, fermentation) to converge as the industry moves to blended technology solution development and smart collaborations in traditional and alternative protein production models.
  • Look to a “portfolio” approach to production by placing calculated bets across the three production platforms as a tactic for future growth.
  • Additionally, the industry may begin to consolidate around key elements of production capabilities, commercial channels and value chain nodes with a wave of M&A activity. We expect this activity to stem from existing industry players and new entrants alike.

Scaled production – to achieve unit cost reduction and economies of scale

  • The industry focus will increasingly shift toward manufacturing capacity and the ability to achieve unit cost reduction through economies of scale while preserving the highest possible quality standards. This may drive much of the fundraising activity in the coming years.

Core technology innovations – addressing consumer demands and product/price parity

  • Perhaps the most significant area to monitor will lie in the impactful innovations to come in the forms of upstream materials, manufacturing processes and end products.
  • Innovations in materials and processes may be the two largest drivers of both industry consolidation and the ability to scale production as certain ingredients and methodologies become established as industry gold standards.
  • The next generation of plant-based protein will certainly require new ingredients and production process innovation to address consumers’ taste and product preferences.
  • Future technologies in fermentation and cultivated proteins may create breakthrough potential in new ingredients, increasing product functionality and lowering cost, and possibly enabling new platforms to leapfrog current ones.

Scenario planning and agility – operational capabilities to respond quickly to market dynamics

  • Multiple dynamics will shape the market, including governments and regulation, technology developments, consumer behaviors and actions by competitors. Companies wanting to drive growth and success must monitor, understand and respond strategically to these shifting dynamics.

As dynamics play out in 2023 and beyond, assess the role that your organization could play in advancing alternative protein innovation, as well as how your portfolio can help shape the reimagination of the food system. Opportunities exist across R&D, production, supply chain, technology, commercial and marketing organizations to bring capabilities, specialties or capital to the table.


Is your innovation agenda focused on helping evolve the food system for future needs? Do you have the right ecosystem of partners across your value chain to meet consumer, financial, governmental and sustainability requirements? Can you organize, negotiate or manage better channel penetration and commercial collaborations for protein producers? Are you able to realize scale within your portfolio to drive new demand or improve operational efficiencies to increase profits? Ask yourself these questions and more as you decide whether it will be you or your competitors that seize leadership positions in the next generation of alternative proteins.

Nathan Ramsey and Lauren Chupp have contributed to this article.


Opportunities exist for leaders of a reimagined food system to propel the alternative proteins market forward again. The key lies in consumer-led innovation to capture demand beyond trial. Companies must focus on delivering product and price parity by improving operational capabilities and scale, focusing on smart collaborations and navigating investment priorities. 

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