LP skepticism of plant-based protein boom dismissed by early adopters

Institutional investors are wrong to think of the current consumer and investor interest in plant-based proteins as a fad, panelists at the Agri Investor Chicago Forum 2019 have said.

Speaking on a Chatham House Rule panel analyzing the long-term prospects of the nascent sub-sector, one panelist said: “They’re wrong – this is not a fad and I struggle with the word ‘trend’ as well.”

“It truly is a lifestyle change that people are making internationally. There’s growth in the US, Europe, Australia, New Zealand and Asia is starting to heat up. This is not something that’s going to fade away and die. It’s something that’s only at the tip of the iceberg and it’s going to grow exponentially.”

Another panelist likened the nascent stage of the market to that of the early e-commerce boom, which was ultimately found to be full of company valuations that were wide of the mark. The e-commerce concept nevertheless transformed how the world purchases goods and services, that panelist added.

“Where we’re at is this amazing period of nutrition and food science around how you can take core ingredients and derivatives of plants, to produce functional food in a way that wasn’t possible 10 years ago,” said the panel participant.

“Nobody owns all the tools. Is anyone going to corner the market? Probably not, it’s food – everybody needs to eat. Big players are getting involved – the ABCDs are in. How this all fits together is not clear but what is clear is there’s just a huge amount of tech and innovation going into it, not just at the molecular level, but the whole value chain is being reordered right now.”

This undoubtedly creates investment opportunities, the panelist added, which is compounded by the need to create reliable supply chains for the core ingredients plant-based protein products require.

“The ingredients in these products are not your typical core ingredients. Some of them are using soybeans but others are using mung beans – how many people have heard of mung beans?” asked the panelist.

“There’s a core opportunity all the way down to the farm gate for farmers to think about rotation into different kinds of products. Canada is a huge producer of pulses but the US is not that big a player in that category today. As you see this rotation to plant-based proteins, there’s going to need to be some degree of rotation even in the US farm system – it can’t just be corn and soy beans.”