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Alternative Protein
Where We Are, Regulatory Blockers, Capital Intensity, and Consumer Acceptance
Mark Brunjes
October 16, 2023
Farms of the Future
In a world increasingly concerned with sustainability, health, and ethical consumption, the alternative protein industry is emerging as a transformative force. Plant-based meat and lab-grown proteins are reshaping our understanding of food production and consumption. This article dives into the various facets of the alternative protein industry, exploring the distinctions between plant-based and cultivated meat, the regulatory landscape, intellectual property considerations, capital intensity, and consumer acceptance.
Key Takeaways
The alternative protein industry is growing, with venture capital increasing from roughly $1 billion to $5 billion from 2019 to 2021.
Regulatory complexities in the industry and strict safety standards, limit growth but keep the public safe.
Two companies, Upside Foods and Good Meat, have received USDA approval to start producing cell-based proteins in the U.S, the first cultivated meat to come to market.
Global plant-based meat sales reached $4.2 billion in 2022; consumer acceptance is rising, especially in the USA.
Current State of Alternative Protein
Alternative meat proteins, including both plant-based and cultivated versions of animal proteins, are gaining traction in the food industry, a growing understanding of where this industry is today and where it is headed will help to increase the industry’s speed of adoption.
The Difference Between Plant-Based Meat and Cultivated Meat
Plant-based meat is made from plant-derived ingredients such as wheat, peas, and soy. It aims to replicate the taste and texture of traditional meat without using animal products through processes like binding, texturizing, and flavoring.
On the other hand, cultivated or lab-grown meats are produced by growing animal cells in a controlled environment similar to tissue culture techniques. These cells can be taken from an animal directly or grown with starter cultures.
While both provide alternatives to animals raised for food production, hence reducing further dependence on livestock farming and slaughter, they each have their unique advantages and disadvantages regarding cost efficiency, safety standards compliance, and sustainability benefits.
Regulatory Landscape in the Alternative Protein Industry
The alternative protein industry as a whole is navigating a complex regulatory environment. Recently, two companies, Upside Foods, and Good Meat, have received approval from the U.S. Department of Agriculture (USDA) to start producing their cell-based proteins. Good Meat, owned by plant-based egg substitute maker Eat Just, announced that production is starting immediately. The recent regulatory hurdle cleared is called a "grant of inspection," issued by the USDA's Food Safety and Inspection Service, following a rigorous process assessing the firm's food safety system.
This clearance follows a series of previous approvals, including receiving a "no questions" letter from the Food and Drug Administration (FDA), stating satisfaction with the product's safety. Good Meat and Upside Foods also received approval for labels for their products from the USDA. The developing cultivated meat sector is being overseen by both the USDA and FDA, reflecting just some of the complexity of the regulatory landscape.
Labeling laws, quality control, and traceability requirements must be meticulously adhered to. The terminology used in describing these products can lead to legal disputes, necessitating close collaboration between manufacturers and regulatory bodies. All of these challenges are there to keep consumers safe and to ensure that proper due diligence on all food products is done before being released to the public.
Intellectual Property, Environmental Compliance, and Global Considerations
The alternative protein space also grapples with issues related to intellectual property protection, environmental regulations, and international trade. Protecting innovations is vital for growth, but it presents a long list of lengthy hurdles which take time for companies to pass. Compliance with environmental regulations, including waste management, water usage, and emissions controls, is mandatory, which ensures the industry's commitment to sustainability.
International trade adds yet another layer of complexity, with varying standards and approval processes across different countries. Ethical considerations and animal welfare regulations must also be observed, adding even more to the multifaceted nature of the industry. All of these challenges, along with regulatory uncertainty are hindrances to investor interest and from one vantage point can be seen as growth limitations. However, they are all in place to protect the public interest and to ensure the products being released are safe and reliable for the mass market.
Capital Intensity
Capital intensity refers to the amount of fixed costs such as machinery and equipment investments needed for companies to produce their goods. The alternative protein industry is a rapidly growing sector, with venture capital invested in the space increasing from $1 billion to nearly $5 billion from 2019 to 2021 respectively, according to the Good Food Institute.
These costs include developing technology platforms capable of cultivating meat substitutes that are similar enough in flavor profile and texture compared to conventional animal-based proteins, as well as securing customized cleanroom facilities and bioreactors necessary for cultivating large batches of cellular agriculture.
At present, the alternative protein industry occupies a modest share of the market, yet its expansion is pivotal in the fight against climate change and the preservation of biodiversity. Transitioning from traditional animal-derived meat to plant-based alternatives has the potential to diminish greenhouse gas emissions by an impressive 90 percent, all while utilizing 99 percent less land and water resources, according to a 2022 report by the Boston Consulting Group. Similarly, the adoption of cultivated meat can lead to a reduction in emissions by 92 percent, coupled with a 95 percent decrease in land usage and a 78 percent reduction in water consumption. This underscores the transformative role that alternative proteins can play in fostering a more sustainable and environmentally responsible food system.
Consumer Acceptance
According to a study posted in the National Center for Biotechnology Information in 2022, plant-based meat retail sales reached an impressive USD 4.2 billion globally, marking a 24% growth compared to the previous year. This growth signifies a shift in consumer behavior and an increased willingness to explore alternative protein sources.
In the USA, consumer preferences still heavily lean towards conventional animal protein, with 74% of respondents choosing it over cultured meat options. However, the consumption of plant-based alternatives is on the rise, with 65% of respondents having consumed them at least once in the previous year and 20% consuming them on a weekly basis. Interestingly, 45–55% of European respondents never consumed plant-based meat, and 19–21% consumed such products at least once a week in the previous 12 months.
Conclusion
The alternative protein industry represents a complex, dynamic, and multifaceted sector at the intersection of technology, sustainability, and consumer behavior. As it continues to evolve, it offers promising solutions to environmental conservation and ethical consumption. However, the path forward is challenging, marked by regulatory hurdles, intellectual property considerations, capital intensity, and the ever-changing landscape of acceptance.
Continued investment in research, innovation, and public education will be essential in realizing the full potential of alternative proteins, paving the way for a more sustainable and health-conscious future. It is an important space to untangle with safety and care and it’s still in its infancy. Navigating the complexities of this maturing field will require collaboration, creativity, and commitment, but the potential rewards—a healthier planet and a more ethical approach to food production—are well worth the effort.