Tech breakthroughs hold the key for alt-proteins market

Every 10th portion of protein consumed on Earth could be alternative by 2035, says Boston Consulting Group. Strategically placed investors may be in sight of very handsome returns.

The Boston Consulting Group published research at the end of March that predicted the alternative protein space could grow to take as much as 11 percent of the overall protein market by 2035, from its 2 percent share today.

Depending on how rapidly the industry can overcome certain inherent limiters and receive the support of external accelerators – such as tech breakthroughs, regulatory support and carbon emission taxes for animal proteins – alternative proteins could claim as much as 22 percent of the total protein market share over the same period, the report predicts.

BCG split the alternative protein space into the three groups of plant-based, microorganism fermentation-based (fungi, bacteria and yeast-based proteins grown in a bioreactor) and animal-cell derived cultured meat products.

Of the three, plant-based alternatives could reach price parity with conventional animal-based proteins as early as 2023, while microorganism-based products could hit the mark in 2025, with cultured meat potentially following in 2032.

These milestones are still several years away – or more than a decade away in the case of cultured meat – because the extraction tech needs to be further refined while the texture, feel and taste of the final product needs to also be honed, BCG head of agribusiness Decker Walker told Agri Investor.

“For plant-based, heme is a good example because in some instances you’ll have a yeast that’s either genetically modified or altered in some way to produce heme, which is a h

Hemoglobin and gives blood its flavor and ultimately makes it [plant-based meat] taste like a burger,” Walker said.

“Right now, that heme is relatively complex and expensive – is there a simpler and cheaper way of producing that?”

Similarly, for the microorganism fermentation and cultured meat subsectors, increasing the metabolic efficiency – the rate at which microorganisms convert their feedstock into protein – will be crucial to making them competitive, says Walker.

“How do we increase the metabolic efficiency to the point where the unit of biomass that goes in is as small as possible, relative to the units of biomass that come out? Then there will need to be some further innovation around low-cost feedstocks.”

The realization of these and similar breakthroughs, added Walker, could present the biggest opportunities to generate outsized returns for investors.

The likes of GV (formerly Google Ventures), Canadian pension CDPQ and Louis Dreyfus’s venture unit are all known to have backed Benson Hill, a start-up specializing in producing plants with specific productivity, nutrition or taste attributes, which could prove to be very useful for plant-based protein companies and was directly cited by Walker as a potential key innovator.

Elsewhere, Temasek-backed microorganism fermentation start-up Perfect Day received a direct $50 million investment from the Canada Pension Plan Investment Board, as it seeks to bring its dairy products to market.

If the capital continues to flow – alternative proteins deal value grew from $1 billion in 2019 to $2.3 billion in 2020, according to AgFunder – tech breakthroughs are made and consumer trust is secured, every 10th portion of meat, eggs or dairy eaten around the world may well be alternative by 2035.