Alternative Proteins: Cultured Meats and the Buzz about Bugs
Alternative and sustainable proteins is a fizzing sector in the agriculture & food industry at the moment, and over the past months CTG has tried to measure the froth. The protein cycle is complex, and while there are many interesting areas of innovation across this supply chain, we have focused in on three: cultured products, plant-based alternatives, and insect-based alternatives. Below is our quick overview of what we are seeing in terms of innovators and investors, but for a closer look please get in touch at research@cleantech.com.
What are alternative and sustainable proteins?
Cultured products
Cultured products are animal protein-based products grown in a cell structure outside of the animal. Meat and other animal products such as leather are grown in bio-reactors. The process is similar to that used in regenerative medicine. Examples of innovators include:
Plant-based alternatives
Plant-based alternatives fall into two groups. The first consists of well-established consumer choices such as tofu, seitan, Quorn, and others. The second group is at a much earlier stage of development, and consists of plant-based alternatives that attempt to be indistinguishable from animal products. Examples of innovators in this latter group include:
Insect-based alternatives
Insects have been a source of protein as long as animals and fish have been hungry. While some countries and cultures still eat them, this has been much reduced in recent times. Insect use in the human food chain is, by our estimation, not about to take a great leap forward, but insect alternatives to animal and fish proteins used in animal feed and other industries is indeed going through a period of growth. Examples of innovators include:
Why is CTG talking about this?
Corporations with substantial market share across the food supply chain are beginning to understand the investment risks implicit in animal protein-heavy industries. Meanwhile, investors are seeing the opportunities that those risks create. Beyond this, there are larger issues promoting change in the protein cycle, which are likely to influence the pace and path of innovation.
For instance, a study by the Oxford University Martin School found that by 2050 “food-related greenhouse gas emissions could account for half of the emissions the world can afford if global warming is to be limited to less than 2o C.” Furthermore, for human consumption, there are four main sources of protein: farmed animals and seafood, wild-caught seafood, plants, and alternatives including algae, fungi, and bacteria. Complications arise as 50% of plant-protein is fed to animals, and as much as 2kg of wild caught fish is used to produce just 1kg of farmed fish. Finally, this is becoming a public health issue. The WHO reclassified red meat as a carcinogen, and China has stipulated that it wants to reduce meat consumption by 50% to avoid an obesity and heart disease epidemic.
Who’s interested?
We have seen a real increase in corporate venture capital engaging with innovative start-ups in agriculture and food in recent years. As we reported earlier in the year, steady growth in venture capital numbers has resulted in the Agriculture & Food sector claiming a spot as a one of five $1 billion cleantech sub-sectors in 2016. In the alternative protein markets more specifically, the non-animal-based proteins market was valued at $22 billion in 2015, and the global animal feed market is estimated to turn over $400 billion annually.
Much of this is due to increased corporate engagement in the open innovation space. Monsanto, Tyson, and General Mills, all set up venturing units in 2016 (General Mills’ 301 Inc. was actually formed in late 2015, but who’s counting), while Bayer, Dow, Whole Foods, and others have been active for a little longer. VC investors such as Kleiner Perkins Caufield & Byers have been investing in the space since 2012 (an undisclosed investment in Beyond Meat), and investors such as New Crop Capital are finding enough bandwidth within sustainable proteins to make it central to their investment theses. Finally, family offices and private wealth are finding an outlet in this space, as can be seen in the recent participation in AgriProtein’s 2016 funding round, which featured an undisclosed number of Forbes 500 individuals.
Other sector stakeholders are also getting organized. Having highlighted over 20 investment risks in the agricultural sector, FAIRR recently prioritized sustainable protein sources as a central risk, and began organizing a consortium to tackle the issue. It currently has $1.1 trillion in commitments from a global network of stakeholders in agriculture and the protein supply chain.
Rare, medium, or well-done?
If this feels a little undercooked, be assured that we have more content and depth available on this topic. As well as engaging with key innovators and investors in our network on this topic, you will find coverage has expanded in our i3 platform, including our kick-off in the February edition of our CTG Insights publication. Once again, if interested in this topic please get in touch at research@cleantech.com.
