Although the alternative protein sector still lags conventional meat and dairy, the GFI, a body working to support the development of alternative proteins, said it was hugely encouraged by the sector’s growth last year.
Among the highlights of its report were that Western Europe is now the largest regional market for plant-based meat at $1.8 billion, making up 43% of the global plant-based meat market. The region grew 17% compared with 2019. Global retail sales of plant-based meat hit record highs in 2020, reaching $4.2 billion, up from $3.4 billion in 2019.
More capital was raised during 2020 than in any single year in the industry’s history, the reports claimed. Around $2.2 billion was invested in the plant-based space, making up almost half of all capital invested in the industry since 1980. New unique investors in the plant-based space increased by 44% from 2019 to 196.
In 2020, fermentation joined plant-based and cultivated proteins as the third technological pillar of the alternative protein revolution. Although fermentation has been used to make food and beverages for millennia—everything from beer to kimchi—2020 was a major inflection point in its range of applications and possibilities for use in the agrifood industry.
Investment in fermentation technology skyrocketed in 2020, according to the GFI’s reports. Fermentation companies raised $587 million, a greater than twofold increase from 2019, which represents 57% of all-time sector funding. Thirteen startups dedicated to the use of fermentation for alternative proteins launched, along with new suppliers focused on fermentation-enabled alternative protein ingredients.
Activity in precision fermentation increased, with nine of the 13 new companies focused on precision fermentation, three on biomass (an area with significant activity in 2019), and one on traditional fermentation, the research noted. Fifty-one known companies are now dedicated to fermentation-enabled alternative proteins, an increase of 16% from 2019, and more than 30 others have a business line in alternative protein fermentation.
Investment in the nascent cultivated meat sector topped $350 million in 2020, the GFI added, nearly double the previous cumulative investment in the industry. 2020 saw the industry’s first Series B funding rounds as well as the first substantial public-sector R&D funding in both the United States and the European Union. For example, BioTech Foods, a Spanish cultivated meat start-up and the leader of the Meat4All consortium, received a $3.2 million grant from the European Union’s Horizon 2020 program. Meanwhile, Iceland's ORF Genetics secured a $3 million grant from the European Commission’s Grant Management Services to accelerate development and commercialization of its growth factors for cultivated meat.
Within the alternative protein sector (which includes plant-based and fermentation segments), cultivated meat accounted for 14% of overall annual private-sector investments. 23 new cultivated meat companies launched in 2020 – a year-on-year increase of 43%.
Liz Specht, director of science and technology at the GFI, said activity in the alt protein space would continue to grow and evolve. “In 2020, the plant-based sector showed that it is gearing up to tackle more-sophisticated, whole-muscle products (think steaks and fillets, not just burgers and sausages) with a number of prototypes using novel structuring methods. It will be fascinating to see which of these platforms can achieve scalability in the next couple of years. We will increasingly see the lines blurred between plant-based products and the other key pillars of the alternative protein industry: fermentation and cultivated meat. The most fruitful terrain for innovation is likely to be found at the intersection of these platforms.”
Alt proteins enjoy only a small fraction of the market
However, while the reports show that while year-on-year growth continues to trend upwards, the market share of plant-based and cultivated meat, and other proteins remains just a fraction of the trillion-dollar global meat and dairy industry. The GFI called on governments to fund “basic R&D as they’ve done for other climate-friendly innovations”.
But the environmental credentials of alternative proteins remain up for debate. Julian Mellentin, director at food analysis at New Nutrition Business, in a podcast, said over-elaborate supply chains blight the plant protein sector, along with challenges including highly processed and long ingredients lists, price, and poorer taste nutritional profiles compared to animal sources, especially in terms of the amount and quality of the protein they provide. "At the moment, the idea of creating something which perfectly mimics what animal protein gives you so you can get the same benefits but avoid eating the animal - that's not possible right now and it’s going to quite a road before we can get anywhere near that point," he explained.
He further complained that investment wasn't going to companies looking to produce more 'natural' plant products. Referring to the $500 million in funding enjoyed by both Beyond Meat and Impossible Burger in the US, he said: “I get the impression if you turned up to the private equity people and venture capitalists with a business plan saying ‘I'm going to produce a highly processed, multi-ingredient meat substitute’ they'll throw money at you because they believe that's a kind of competitive advantage. But if I say I'm just going to make a burger that's made out of plants, nuts, seeds… they don’t seem to put any money behind that."
Speaking on the podcast, plant protein expert Paul Hart added: "Why is it that the market is all about meat substitutes, rather than really good plant-based protein bringing together really high quality protein from different plants to give you a balanced amino acid profile and serving up a dish of those? I suspect that's because natural products is not an area where vast amounts of money is made.”