The change
The world is in the early stages of a protein transformation.
The world is in the early stages of a protein transformation.
Cultivated seafood from Lever VC portfolio company Avant
Plant-based chicken from Lever VC portfolio company Heura
The addressable market
Bloomberg Intelligence projects that by 2030 global retail sales of alternative proteins will quadruple, reaching USD 162 billion.
The world has tripled meat production and doubled dairy production in the past five decades, with continued strong growth projected. The increasing demand coupled with growing consumer discomfort around the health and sustainability impacts of conventional animal protein represents a massive opportunity.
Sales of alternative proteins have grown steadily for the past fifteen years. From 2018 to 2021 sales of meat alternatives in the U.S. grew an average of 20% per year, with similar growth seen across the globe—from the UK and Germany to China and Brazil. Dairy alternatives also continue to grow in market share, with plant-based milk now representing 16% of U.S. milk sales, 10-15% of sales in key European nations, and experiencing strong growth elsewhere. Credit Suisse projects the alternative protein market could ultimately grow to USD 1.4 trillion by 2050.
Increasing interest
Alternative proteins have a serious value proposition.
Data from the UN and peer-reviewed journals shows they generate dramatically lower greenhouse gas emissions and use significantly less land and water. Studies from the Stanford School of Medicine, Harvard School of Public Health and others show they also boost consumer health.
As a result, an increasing portion of “flexitarian” consumers are adding alternative proteins to their diet to improve their health, with some—particularly young consumers—also motivated by ethical concerns. This increase is part of a broader consumer shift toward products that are higher quality, safer and more ESG-friendly.
At the same time, an increasing number of governments—including the U.S., China, the U.K., India, Singapore, Israel and the Netherlands—have begun to directly support the industry in order to boost food security, advance technological development and reduce GHG emissions.
Plant-based protein bars from Lever VC portfolio company No Cow
Plant-based milks from Lever VC portfolio company Nude
Upgrading animal protein
These same consumer and policy shifts have also begun driving change in the conventional animal protein sector.
Consumers are increasingly demanding higher-quality products with a lower environmental footprint and improved animal welfare. NGOs and activist investors are pushing food companies to upgrade their supply chains. And governments in a number of countries are passing legislation penalizing emissions and requiring adherence to improved standards.
In response, new technologies and production practices are being developed to mitigate the downsides and risks of conventional animal protein production. As conventional animal protein is expected to retain at least 90% of market share in the decade and 80% over the next two decades, such animal protein upgrade companies represent an area of significant financial opportunity and important ESG benefits.
The opportunity
In short, the world is in the early stages of a protein transformation unfolding along two parallel paths.
First, the alternative protein sector—which encompasses plant-based, cultivated and fermented protein as well as related crop, ingredient and technology inputs—is growing steadily and projected to take progressively larger shares of the total protein market. Second, the conventional animal protein sector is beginning to upgrade to more sustainable and humane production practices.
Such broad shifts in the 1.5 trillion USD protein industry creates a significant investment opportunity, one reflected in the strong growth of capital deployment into the category. Discerning investors who can understand the sector dynamics, differentiate real opportunities from hype, and exercise valuation discipline are well-positioned to reap potential upside.
