Challenges Faced By The Meat Alternatives Industry: An Interview With Good Startup
Monday, January 17th, 2022 | 815 Views
In an interview with Asia Pacific Food Industry (APFI), Mr Gautam Godhwani, Managing Partner of Good Startup, shares how Alternative meat companies continue to re-define consumer food choices worldwide.
By Weiqi, Assistant Editor
Managing Partner, Good Startup
How is the meat alternative industry progressing in offering alternative meat solutions?
The alternative protein industry is seeing rapid growth with several notable financings over the past year. It includes Impossible Foods ($500M), Perfect Day ($350M), Nature’s Fynd ($350M), Future Meat ($347M), NotCo ($235M), Eat Just ($200M) and their cultivated meat subsidiary Good Meat ($170M) to just name a few. Oatly (NASDAQ: OTLY) also had a successful IPO during the year.
The industry has also evolved and continues to innovate by utilizing various technologies to provide alternative meals solutions. For instance, companies today use plant-based (using plant ingredients), cell-based (growing animal cells) and even microorganism-based (fungi, microalgae, bacteria and other microorganisms) innovations to create food that closely mimics the taste and texture of meat.
The increased access to financing and evolution of technology is expected to accelerate the growth in this industry, with market size growing to 10x in 2030, reaching nearly $200 billion.
What are some of the challenges faced by the industry?
While there is increased momentum in the plant-based meal solutions industry, it will also face several hurdles on its path to reach the mainstream consumer.
Specifically, there are three areas of risk for the sector:
- Technology Risk: The industry needs to continue on its path to innovation to create novel protein products that can mimic the taste of meat and offer consumers additional alternatives. It will require new product formulations and significant advances in the supply chain with ingredient formulation and process optimization, thereby helping to bring down prices to rival conventional alternatives.
- Market Risk: Consumers must be educated and convinced that these new foods offer a compelling alternative to conventional animal products. Alternative proteins have the opportunity to be both more healthy and sustainable, which can create a convincing value proposition. In addition, to serve the mainstream market, significant investment and effort will be required to scale production. The industry will need to undergo massive capital expenditures along with innovation in this process to get there.
- Regulatory Risk: Whether its novel ingredients utilized in plant-based foods, offering GMO products or creating cultivated meat products, the industry is actively working with governments to ensure that these products are safe and adhere to current safety nutritional guidelines. Today, Singapore offers the most advanced regulatory pathway in the world, but other countries are expected to follow soon.
Ultimately, we’ll see a number of culturally-specific products that adhere both to local tastes and laws. Whether it’s the U.S. consumer’s desire to ground meat, Asia’s seafood consumption, or Europe’s sensitivity to GMO products, we will see global offerings catering to local demand.
What are the most important factors consumers look for when choosing alternative meat products?
The consumer decision process has gotten increasingly complex. Today, they look for various factors when choosing meat alternatives. But the primary considerations are:
- Taste & Price: With alternative meat solutions, taste remains the primary decision factor, followed by price. Consumers simply want to eat food they like at a great price.
- Nutrition: Alternative proteins already offer numerous benefits relative to conventional meat alternatives. They have a better nutrition profile along with fibre, vitamins, and minerals that are not found in meat products. In addition, consumers are now demanding “clean-label” products, which have an ingredient list that they can understand and usually coupled with an improved nutrition profile.
- Sustainability: Consumers increasingly look for sustainable products and are inclined towards options that have less impact on the climate and use of resources (land, water, energy), and also consider animal welfare.
More than ever, consumers want products they love to eat, which are also suitable for their health and good for the planet.
How have meat alternative companies managed to maintain investors’ attention?
The alternative protein sector is expected to reach USD 200 billion by 2030, nearly ten times its size today, which has attracted significant investor attention. Investors also see that public markets have been receptive to the IPOs of Beyond Meat and Oatly.
The industry has also been consistently innovating. Several players have utilized biotechnology, working with ingredients and at a molecular level. This has created a new wave of innovation, with companies creating unique products built on defensible technology. Companies such as Impossible Foods have designed products that consumers love after years of research and development, costing hundreds of millions of dollars. With the animal agriculture sector worth over $2 trillion today, disruptive technology has significant commercial potential, attracting investor interest.
How do meat alternative companies contribute to carbon-neutral ambitions?
Alternative proteins offer numerous benefits not just for climate but also in several other areas. Today, animal agriculture contributes 14.5% of global warming, more than the entire transportation sector. Alternative proteins have only a fraction of this climate impact. Some other areas where alternative proteins have a positive effect include:
- Resource Usage: Alternative proteins utilize 80% less energy, 90% less water and 99% less land.
- Human Health: Alternative proteins offer similar protein levels without cholesterol and lower levels of saturated fat. These products help combat the spread of zoonotic and chronic diseases.
- Animal Welfare: No animals or fish are slaughtered in providing alternative ‘meat’ to consumers.
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