If I say that plant-based is not doing great, that would be almost an euphemism. Sales are still going down, and let’s not talk about funding. If you remove plant-based milk deals, it’s almost like the ecosystem has vanished. But then, what’s next? Is it the end for plant-based foods? I don’t think so, nor do the industry and the innovation ecosystem. Let’s look at what we could call the “beacons of hope” for plant-based.
Indeed, in the past months, we have seen significant funding in three categories (at least):
- Whole cuts startups: startups seeking to create pieces of meat or fish with the same texture as the real thing through innovative technologies replacing the traditional extrusion used for most plant-based alternatives. Recently, Novameat (Spain) raised €17.4M for that. Among the big names in this space are Umiami (France), which raised €32.5M a year ago, and Juicy Marbles (Slovenia), which wants to launch in the US next year.
- Mycelium and biomass fermentation to create a new source of proteins. Following the lead of Quorn, a “legacy” player in this space, many well-funded startups are scaling up their production. Mycelium has the double benefit of naturalness (much less transformation and ingredients) and texture. Just this week, two startups, Ecovative (MyBacon) in the US and Matr in Denmark, raised a combined $50M for that. Earlier, Meati in the US raised $100M to commercialise its meat alternatives.
- Hybrids: As discussed in previous insights, there is a growing appetite for hybrid products. Even Quorn is planning to venture into this space. Hybrids could help make alternative proteins more accepted by consumers.
One question remains: will these solutions solve plant-based problems? When we analyse the plant-based (meat) market, it is faced with a set of 4 challenges.
- Price & scale: It’s too expensive for consumers. Production needs to be scaled up to lower costs, but for that… you need stronger demand. The solutions presented above will help drive demand, notably in the foodservice industry. This should lead to growth in the medium to long term and then to a slow drop in the “plant-based premium” (the gap between plant-based foods and what they replace).
- Taste & texture: this is where we expect the above innovations to create some change. Current products are still massively judged as lacking in taste and texture compared to animal ones.
- Nutrition & health claims: if mycelium products have some strong claims in terms of naturality, they may still appear as highly processed products. The industry as a whole has not yet found solutions to counteract this. One solutions could be for plant-based products to become “better than their alternatives”, notably through the addition of better-for-you ingredients. But here, regulation will certainly play a role, changing the outcome depending on the region in the long-term.
- Acceptability: Here lays the biggest unresolved challenge. Plant-based meat and fish products are still lacking strong public and private endorsements. Their adoption will be hard without strong public health messages on the benefits of a more plant-based oriented diet, both from an health and an environmental point of view. However, this will not be a global movement, and will depend on the political evolutions of each region/country. As we have already slightly different starting points, we expect a growing divergence.
This is a framework we work with clients to analyse if, how, and where to play on alternatives. The graph above is obviously just a birds eye view focused on plant-based meat alternatives. However, it shows that the current solutions bring hope to this ecosystem.
