New wave of cleaner, healthier, and tastier alternative proteins, report predicts
With 25% of global greenhouse gas emissions caused by the food value chain, the shift to alternative proteins may be the most capital-efficient and high-impact solution to addressing the climate crisis. Alternative proteins will save 3x the emissions for each dollar invested compared with the next-best tool in the box—decarbonizing cement—according to a forthcoming report from Boston Consulting Group (BCG) and the impact investor Blue Horizon.
The report, The Untapped Climate Opportunity in Alternative Proteins, is based on a survey of more than 3,700 consumers in seven countries (China, France, Germany, Spain, the United Arab Emirates, the United Kingdom, and the United States) regarding their reasons for trying alternative proteins and the inhibitors that keep them from buying even more.
Three-quarters of survey respondents cited a healthier diet as their primary motivator for consuming alternative proteins, while more than 30% of consumers would fully switch their diets to alternative proteins if they believed doing so would have a major positive impact on climate.
Across all markets surveyed, consumers view alternative proteins positively: 76% are aware of the category, and approximately nine out of ten said they like at least some of the alternative-protein products they have tried. While consumers in China and Germany are the most willing to pay close to parity with protein equivalents, no consumer in any region is willing to pay a premium for alternative proteins that match meat for taste, texture, and nutrition.
“Pivoting away from animal-based proteins will lead to shorter, more resilient, and potentially more local supply chains,” said Ben Morach, a BCG managing director and partner. “Widespread adoption of alternative proteins can remove the risk of supply chain disruptions and play a critical role tackling climate change, with consumers playing a key part in propelling this transition.”
Bjoern Witte, CEO of Blue Horizon, added: “The products consumers are seeing on the shelves today will be followed by a wave of cleaner, healthier, and tastier alternative proteins, as technology allows for increasing innovation. We've seen the fast-paced development of these technologies in our own portfolio as well as the wider food-tech industry, leading to an overall better consumer product range. This is great news for today's consumers, but we're just at the beginning, really. Future generations will benefit greatly from the demonstrable impact this will have on the environment, as shown through our analysis of climate data. This is the second report from BCG and Blue Horizon confirming that protein transformation is the most capital-efficient way to avoid emissions. If we reach 11% market penetration by 2035, which is our goal, we could save more carbon emissions than decarbonizing 95% of the aviation sector. The positive impact is absolutely massive, and secular drivers have never been stronger—the time to invest is now.”
An acceleration in funding
Capital invested in alternative proteins rose at an annual rate of 124%, from $1 billion in 2019 to $5 billion in 2021, with investments in fermentation and animal-cell-based companies leading the way. Investment in alternative proteins is increasingly global. Middle East funders, which tend to focus on animal-cell-based investments, made up 11% of worldwide investment in alternative proteins last year while APAC investment, fueled by plant-based deals, increased by 92%.
For investors, a key finding of the report is the fact that investments in plant-based proteins are more CAPEX-efficient with regard to carbon dioxide and methane emission reductions than in any other industry. Plant-based protein market penetration as forecasted in the Food for Thought I base case would save 0.85 gigaton of emissions by 2035. This savings potential is equivalent to decarbonizing a majority of the aviation industry. Investing in plant-based proteins has the highest emission savings per invested capital—at least twice as effective as investments in cement, iron, steel, chemicals, or transport.
Big opportunity or big niche?
What’s the true scale of the market opportunity for alternative proteins in Europe, however?
Retail sales in western Europe rose 19% to a record €2.4 billion in 2021, according the Good Food Institute, an NGO. Vegetable and plant-based alternatives were equivalent to 4% of total meat sales in 2021, worth around £1.5bn. Research from ProVeg and the Good Food Institute respectively show that 40% of European meat eaters are planning to eat less meat in future, and that almost half of European flexitarians want to see a greater range of plant-based options. Meat sales are rising too, however. Fresh and processed meat sales rose to a value of €360.20 billion in 2021.