As competition between Beyond Meat and local competitors in China picks up, the alternative protein market out east is set to boom. We break down the subsectors, market sizes, and emerging players.
👋🏽 Hello, I’m Daniel and welcome to Macro Media Lab! Twice a month I tackle some of the largest trends in emerging markets and break them down so you can understand how the world is changing.
This weeks report is on the alternative meat market.
Beyond meat…in Asia? I didn’t think there was a big market for plant based or lab grown meat in Asia, but I was wrong.
The alternative protein market was $2.2 Billion in 2019 and estimated to reach $290 Billion by 2035. At their current growth rates, AT Kearney estimates that 2040, regular meat’s share of the market is expected to fall from 90% of the market to 40%. That means that of all the meat consumed in the world, the majority of it will be plant based, lab grown, or some other alternative.
This trend started in the west, but is quickly spread out east. Singapore has set aside $144M for investments into urban farming and alternative protein. China has also invested heavily with their plant-based protein market expected become $14.5 billion in 2025.
Bigger brands are seeing the opportunity and starting to enter the market. Beyond Meat recently opened its first manufacturing facility outside the US in Shanghai, Impossible Foods is already in Chinese grocery stores, Unilever and Cargill’s food groups have also started expanding to the east.
While these companies fight for market dominance, the real innovation is going to come from local startups.
Most startups in Asia focused on alternative protein are at the Seed to Series A stage, with funding rates starting to grow exponentially. In 2018, alternative protein companies in Asia raised $9.8M. In 2019, $33M. Last year in 2020, they raised $200M. The industry is picking up steam and focusing on foods that have a long cultural traditions like seafood, pork, and chicken. A stark difference from the beef-dominated landscape of west that Beyond Meat and Impossible Foods are accustomed too.
Lets dive in and break it down:
What are the different types of alternative proteins that we should be paying attention too?
Great question. While there are a number of different subsectors within alternative proteins, these are the four most interesting ones with the highest growth potential. We’ll go into each of them, outline the market size, and highlight the emerging players.
Cultured meat: growing real muscle tissue from cultured cells
Fermentation based protein: Using bacteria and microbial organisms to make proteins and meat like flavors used in food.
Insect protein: Crickets and mealworms, some of the best protein on the planet.
Plant based meat: Created by extracting and reassembling proteins from plants
Cultured (Cell-based) Meat
Cell-based, cultured, or lab grown meat is a piece of meat that has been grown from animal cells in a lab.
The process of making cultured meat involves taking animal stem cells, transforming them into muscle and fat cells, and growing them. These labs use a nutrient-rich solution, called a growth medium, to help the cells divide, multiply and develop. Eventually they merge together and arrange into strands that can be layered together to produce a final product, such as a burger patty or a piece of chicken.
As you can imagine this is a pretty expensive and intricate process. It’s also stunted by regulation (you can’t sell lab grown meat directly to a consumer yet). Because of that, the cell-based meat market is currently small, but is expected to grow exponentially once the barriers around cost and commercialization are overcome. Sitting at $15.5M today, this market is expected to hit $630B by 2040, making up 35% of the global meat supply. Purely because of its indistinguishability from meat and the minimal materials needed to create it.
Globally, more than $500M of funding has gone into cultured meat startups, with seed-rounds ranging between $2-5M. There are 55 known cell-based meat and seafood startups around the world.
Here are 5 emerging players to watch that have been funded in Asia the last few years.
Shiok Meats – Singapore, Focuses on Seafood (Series A Stage, $17M raised)
IntegriCulture – Japan, Chicken & Foie Gras (Series A Stage)
ClearMeat – India, Chicken (Seed Stage)
Joe’s Future Food – China (Seed Stage)
Avant Meats – Hong Kong, Seafood (Seed Stage)
Currently the biggest challenge for this market to overcome is cost and scalability. For example, Shiok Meat’s cultured shrimp costed $5000/kg in 2019 (500x more than regular shrimp), but they estimate to reduce that to $50/kg by 2022. If they can hit that goal, you can expect this market to start getting major attention as a viable meat alternative.
Fermentation Based Protein
Fermentation has been around for centuries, commonly known in the process of making beer and wine. But more recently, researchers have been using a similar process to make plant-based ingredients like starch and sugars or even carbon dioxide into proteins used in food production. This market is already $3.5 Billion and is estimated to grow 8% a year between now and 2026.
It has a different few parts to it:
Traditional fermentation: using bacteria and other microorganisms to convert plant derived ingredients into different food products. This is how fermented tofu and other soy-based products are made.
Biomass fermentation: using the fermentation process to harvest biomass. An example is growing fungi or algae into large amounts of edible matter. This is big in the animal feed industry but has applications for humans too.
Precision fermentation: inserting specific DNA sequences into bacteria or other microorganisms to create specific proteins. This is already a core part of drug development, but also has huge applications in food production. An example is how Clara foods (based in the US) uses bacteria to produce the protein found in egg whites that is later used in food production.
Globally, fermentation companies devoted to alternative proteins received more than $274m in venture capital funding in 2019 and $435m in the first seven months of 2020 from investors such as Bill Gates-backed Breakthrough Energy Ventures, Temasek and Horizons Ventures to major CPG and ingredients players such as Kellogg, ADM, Danone, Kraft Heinz, Mars and Tyson.
Most of the emerging players are in the US, but there are a few in Asia worth noting.
Sophie’s Bionutrients, Singapore (Microalgae R&D to create proteins for plant based meats and dairy).
More Foods, Israel (Yeast-based meats)
Soynergy, Singapore (non-dairy probiotic beverages)
One of the major factors in this industry’s growth potential is the sharp decline in the cost of DNA. The cost of a Raw Megabase of DNA has decreased from $10,000 in 2001, to less than 1 cent in 2020. This, in combination with a robust supply chain already set up by the pharmaceuticals industry, paints a massive opportunity lying in wait for precision fermentation once it gets past the R&D phase to create all kinds of alternative proteins.
Fermentation based proteins have had a long history in Asia, specifically in Japan with fermented soybeans. However, broader innovation in this market depends on consumer trends in Asia picking up. It will likely be tied to the growth of the alternative proteins industry as a whole. As the plant-based meat competition in China starts to heat up, more investment in technological R&D will start to occur in China, India, and all of their surrounding regions.
Learn more about this process here
Insect Protein
While this might seem strange, insects are a fantastic source of protein and have traditionally been consumed by over 2 Billion people globally. They require 500x less water, 12x less feed, and 10x less land than beef while also producing 613 times less greenhouse gases. Globally, the market for insect protein is under $1 Billion, primarily fueled by food for livestock. It’s mostly held back by the perception of consuming insects (in any form), but Barclays estimates this number to grow to $8 Billion by 2030 with a push towards human consumption.
Most insect farms are still operate at small scale with manual labour. In time and with industry growth and a few players that get traction, automation in feeding and harvesting will reduce costs further and enable this industry to grow rapidly.
The biggest obstacle preventing this industry from growing is perception. But that perception only exists in the west. There are 130 countries in South America, Africa, and Asia that regularly consume insects. With the right branding and form, this industry could change the way we eat and gain traction with niche audiences in Asia earlier than it does in America.
Here are the major players in Asia, many of whom currently specialize in animal feed but are starting to experiment with human focused products.
Cricket One, Vietnam (cricket powder)
Insectta, Singapore (raised $16M) – (specialize in Black Soldier Flys & mealworms)
Flying Spark, Israel (larval insect farming)
The Cricket Lab, Thailand (Cricket Farming)
Outside of Asia there are larger fundraises, better branding, and more traction. Ÿnsect (France) has raised over $200M. Exo Protein raised a $4M Series A led by AccelFoods and a number of celebrities. Hey Planet is based in the Netherlands and sells protein bars. Wilder Harrier is based in Canada and makes human-grade pet food. This industry has a ways to go. But given time, funding, and good branding – can definitely find its legs.
Plant Based Protein
By 2040 60% of meat will be alternative proteins, and 25% of that will be from plant-based meats. Beyond Meat was the first to bring this to the mainstream but now every food company from Tyson to Maple Leaf Foods (Canada) is getting into the plant-based protein market.
Players in Asia are smaller startups focused on niche foods like eggs, dairy, and seafood. But the technological sophistication of plant-based protein production is nowhere near the US yet. Because of this, governments are investing more into plant-based meats (China recently opened a alternative protein focused startup accelerator), and US companies like Beyond meat are pushing hard into Asia.
Here are some of the emerging players to watch
Goodmylk, India – Dairy
GoodDot, India – Chicken
Phuturemeat, Malaysa – Pork
Karana, Singapore – Jackfruit Meat
Zhenmeat, Beijing – Pork
China also has a few more established players like Omnifood that specializes in pork, and Qishan Foods fighting for restaurant shelf-space alongside Beyond Meat and Impossible Foods. As large plant based meat companies continue to make partnerships with China’s food giants, consumer demand will continue to increase impacting demand and the sentiment of alternative proteins in the greater region.
What next?
Consumer demand for alternative proteins in Asia is set to start growing quickly with large competition in China. Once it picks up, the industry will start to see rapid grown in all subsectors across South East Asia and India who have the majority of the worlds population and some of the largest food and agricultural markets. To recap, here’s a helpful table that summarized the state of the current markets.
To learn more about this industry, I recommend checking out the following reports
Food Tech: Alternative Protein Opportunities in Asia (Insead)
The Asian Alternative Protien Industry Report (Green Queen Media)
How will cultured meat and meat alternatives disrupt the food industry (AT Kearney)
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See you in a few weeks!
