A Booming Alt Protein Market Can Achieve Nutrition & Sustainability
A Booming Alternative Protein Market Can Help Achieve Both Nutrition and Sustainability
Karuna Jain
Feb 15, 2022

With rising disposable incomes and increasing awareness around fitness and wellbeing, the world is seeing an increase in protein consumption. Since 2000, global protein intake has increased by 40 percent. It is expected to double by 2050, with India and China alone accounting for 50 percent of global consumption. However, as diets become protein-intensive, the adverse impact of their production on the environment is clearly felt.

The challenges of conventional protein

Proteins are more highly concentrated in animal-based foods – meats, eggs, seafood, dairy – though there are also some good plant-based sources, such as pulses, whole grains and green vegetables. However, producing these protein-intensive foods is taxing on the environment. Various studies[1] place the contribution of global agriculture and food systems to total annual GHG (greenhouse gases) emissions between 20 and 40 percent. Further, animal-based foods alone account for 60 percent of all food-related GHG emissions.

Animal-based foods also occupy more than 80 percent of all farmland. This is simply because producing animal-based foods takes exponentially more space than plant-based foods; for instance, producing a gram of protein from beef or lamb requires 100 times more land than that required for producing a gram of protein from tofu. And yet, animal-based foods contribute only 37 percent of the world’s protein.

The impact of this lopsided equation is two-fold. Firstly, it has substantially reduced availability of arable areas for all other crops, severely hampering global food security. Secondly, it has led to expansion of agricultural land, often at the cost of forests, mangroves and other crucial ecosystems, and damaged global biodiversity and environmental balance.

Further, the conventional meat industry has elicited serious concerns about the ethical treatment of animals and the health hazards caused due to contamination and use of antibiotics in the meat production processes.

The rise of alternative or ‘smart’ protein

There is increasing focus on development of alternative proteins globally to satisfy the increasing demand in an environmentally efficient manner. These foods, also called ‘smart protein’ due to their positive implications for the planet, are meant to replicate the taste and experience of animal-based foods but without their negative impacts. Plant-based proteins form just ~1 percent of the global meat market today but are slated to grow 10x to ~10 percent in just four years, by 2025. They are followed by fermentation-derived and cultivated (or cell-cultured) protein foods. Similarly, demand for alternatives to dairy is also gaining momentum; popular foods such as soy milk, oats milk and almond milk, now a common sight at urban supermarkets, have already captured 15 percent of the US retail market, and when McKinsey surveyed dairy professionals back in 2015, a fifth of them already believed that the non-dairy alternatives market was sizeable and promised growth.

At the global level, the alternate protein market has already grown to USD 15 bn since 2017. Investment in this space has gathered an impressive speed with USD 3.1 bn pouring in in 2020. Especially, Covid-19 led to shifts in consumer behaviour and lockdowns and virus outbreaks shut down meat processing factories, leading to breakdown of meat supply chains and rise in meat prices. This reduced demand for meat and opened doors wider for alternative proteins.

Since 2019, fermentation and cultured meats too have been drawing strong investor interest. Between 2010 and 2020, alternate protein start-ups have raised almost USD 6 bn in funding and start-ups such as Impossible Foods, Beyond Meat, Perfect Day and Oatley went on to become unicorns and recently, public listed companies. Many of them are also targeting restaurants; Impossible Foods has tied up with 20,000+ restaurants across five countries, including big names such as Burger King and Starbucks, while Beyond Meat has bagged partnerships with McDonald’s, KFC, Pizza Hut andTaco Bell.  

Source: https://gfi.org/investment/

Large FMCG companies, especially those established in the meat sector, are rapidly catching up as well. Sensing the emerging competition from alternate protein companies, many of them are looking to acquire the latter which would enable them to expand their product lines as well as across geographies. Prominent examples are of Unilever acquiring The Vegetarian Butcher and Nestle acquiring Terrafertil SA in 2018. Between 2016 and 2020, more than 50 acquisitions took place in the alternative protein sector.

Varun Deshpande, Managing Director at the Good Food Institute Asia, outlines the promising growth of alternative protein, globally as well as in India: “Smart protein is a generational opportunity to align planetary stewardship, public health resilience, and economic growth. As hundreds ofstartups enter the space, FMCG and agri giants make deep investments, government agencies provide key support, and venture capital flows into the sector over the next decade, it will become apparent that upgrading our protein supply ranks alongside renewable energy as a pillar of India’s green economy.”

India on the smart protein map

The alternative protein market in India is still nascent but there are a few things that seem to be working well for India:

Firstly, India is among the largest producers of plant-based protein foods such as lentils, pulses, beans etc. Indian agriculture enjoys a high level of biodiversity and also has robust agro-processing infrastructure. Hence it is in a strong position to research, develop and supply protein isolates and raw material to the plant protein sector.

Secondly, there is a huge domestic market for alternative proteins in India itself. India’s mammoth population with the majority being children and youth gives rise to high levels of protein requirements. In India, malnutrition of both children and adults is a significant problem and directly tied to poverty. Meat-based proteins are typically expensive and unaffordable for a vast section of the population, hence more affordable alternatives are the need of the hour.

Thirdly, India is a large dairy market and there is an increasing awareness around the need to substitute milk for healthier dairy substitutes as awareness about lactose intolerance and healthier alternatives increases.

Fourth, India has a deep-rooted and widespread vegetarian food culture. This further explains why non-meat-based proteins are key to improving the health of India’s population, and why guilt around the consumption of meat makes it more likely for an Indian meat-eater to try alternative proteins instead.

Finally, India’s land and ecological systems are under tremendous pressure of supporting and feeding a huge population. This has resulted in clearing forests, mangroves, grasslands and other crucial ecosystems for growing food for humans and further rearing and feeding livestock for producing meat-based proteins. A shift to plant-based proteins will free a substantial proportion of agricultural land from under livestock and curtail the onslaught on the environment.

Driven by both need and potential, India’s alternative protein market is already taking roots. India’s plant protein market was estimated to be the size of USD 374 mn in 2018 and constitutes 10 percent of the Asia-Pacific plant protein market. By 2023, it is expected to grow to the size of USD 565 mn at a CAGR of 8.6 percent between 2018 and 2023.  

Alternatives to dairy, such as soy and almond milk, have already entered Indian supermarkets and supply chains through multiple global and local brands. Indian brands such as Veggie Champ, GoodDot, Vezlay, Wakao Foods, Blue Tribe, Forever Flora etc. are emerging with alternative protein products that blend in well with Indian cuisine and appeal to the Indian palate. Indian consumers too have responded positively. As per a survey by Good Food Institute India, 77 percent of Indian consumers are willing to try out plant-based meat products. Research also shows that about a quarter of India’s young, educated and affluent population is actively seeking to reduce consumption of animal-based protein.

We believe widespread adoption of alternative protein in India will need price, taste and texture parity in that order. Ashish Korde, Co-Founder of Proeon, an India-based startup innovating in plant-based proteins, says, “Achieving taste & texture parity is key to adoption of alternative proteins. As the one-protein-fits-all approach doesn't work, at Proeon, we have built a basket of next generation plant protein ingredients such as mung bean, chickpea and amaranth proteins and are seeing strong interest from customers globally.”

Protein supplements and protein fortified foods’ segment will continue to see strong growth. We are already seeing some D2C brands gain a foothold in the plant protein space. We believe that D2C companies catering to Indian tastes and spending capacities will see strong growth.

Another exciting play is an India-to-global play across the alternative protein supply chain. Korde continues, “India's biodiversity makes us uniquely positioned to play in the alternate protein market. We need to collaborate with countries like the Netherlands and Israel and create a strong ecosystem in emerging sectors like alternate proteins where we have a natural advantage.” Alternative proteins also have simpler and cleaner supply chains which are more resilient to global shocks as apparent during the Covid-19 pandemic.

Alternatives to dairy and seafood demonstrating the same characteristics – Indian adaptability and global reach – also stand to gain traction. Another interesting segment is plant-based alternatives to pet food.

As the world hurtles towards a climate crisis, it should not have to choose between human health and saving the planet. Alternative protein is fast rising as a viable solution to the twin challenges of nutrition and sustainability. At the pace at which it is being embraced by companies and consumers alike, alternative protein certainly holds the promise of transforming our nutrition and our planet for the better.

[1] Emissions due to agriculture, Greenhouse gas emissions intensity of food production systems and its determinants, Food production generates more than a third of manmade greenhouse gas emissions – a new framework tells us how much comes from crops, countries and regions, https://insideclimatenews.org/news/10062021/agriculture-greenhouse-gas-emissions-food-production-climate-change-paris-agreement/, Agriculture's Contribution to Climate Change and Role in Mitigation Is Distinct From Predominantly Fossil CO2-Emitting Sectors

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