Food Business Review

Importance Of Alternative Proteins

Food Business Review | Saturday, January 29, 2022

Alternative proteins are plant-based and food-technology alternatives to animal protein.

FREMONT, CA: The consumer has growing awareness and interest in alternative proteins in rich countries. Meat has been the principal source of protein in developed markets for years, and there has been a higher appetite for traditional protein in developing markets in recent years. Still, changing consumer behavior and interest in alternative-protein sources—due in part to health and environmental interests as well as animal welfare—have made space for growth in the alternative-proteins market.

Various entrants in the alternative-protein space are already unrolling new technologies and ingredients, and some are endeavoring to solidify their place in the market. Innovative food companies can mirror the customer experience of eating Meat to a much greater degree. This is compared with strong social media marketing campaigns to obtain traction for their products. Beyond Meat lately had a high-performing IPO, which signaled to investors that there is opportunity ahead in the alternative-proteins market. And many fast-food chains announced deals with alternative-protein producers to provide vegetarian options for popular menu items.

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This rising shift could explain why the aggregate intake of meat-based proteins worldwide is increasing, but the overall growth rate is anticipated to decline by half. Plant-based food (the greatest source of alternative protein) sales rose 17 % in 20183, and the food additive using alternative protein in customer products is expected to continue growing.

Presently, the market base for alternative proteins is approximately $2.2 billion compared with a global meat market of approximately $1.7 trillion,4 making the growth rate of alternative proteins marginal to the overall meat market.

While there is important headroom for consumer-packaged goods (CPG) companies and food manufacturers in the alternative-proteins market, many don’t have the required production capabilities to capture this market opportunity, nor do they know where to concentrate their efforts.

In reply to these market forces and consumer concerns, industry leaders are unrolling a range of products and ingredients using distinct plant-based proteins (soy, pea), new animal sources (insects), and biotechnological innovations (cultured Meat or fungal protein). A 2015 McKinsey survey of dairy-industry professionals revealed that 21 % of respondents believe the nondairy alternatives market, comprising plant protein, is “sizable and will continue to grow.”5

For CPG companies and food manufacturers to gain market share in this fast-rising segment over a long duration, they must invest in the capabilities necessary to develop and manufacture the most promising alternative-protein products.

Evolving consumer and market trends

Interest in alternative proteins grew gradually up to and including 2007, only accelerating over the past decade. Many factors contributed to this evolution: heightened consumer interest in health, price, and ethical considerations (for example, where Meat is sourced from and animal welfare) around various types of protein. In addition, global populations and ethnic communities vary significantly in the amount and types of Meat consumed. In the Middle East and much of Asia–the Pacific, for example, most protein comes from legumes and seafood, while Chinese consumers mainly rely on beef, pork, and poultry. In China, approximately 50 % of animal protein calories come from pork, compared with the Middle East reports minimal protein calories but nearly 50 % from dairy and eggs.

An analysis of consumer search found that the most popular food-and-beverage product search was for vegan products, with a 16 % compound annual growth rate (CAGR). In addition, dairy-free products (products free of milk proteins) drew increasing consumer interest, growing at a 22 % CAGR. These findings are persistent with McKinsey’s 2018 Dairy Survey, which showed that 73 % of millennials and members of Generation Z reported buying a dairy-free alternative in the past 12 months.

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