Asia’s alternative protein start-ups are in their infancy, but industry watchers are already predicting that they will overtake United States and European brands. China is set to drive the industry’s growth, and the ongoing coronavirus and other public health fears could serve as catalysts, they said.
The bold prediction is based on the sheer size of Asia’s population, its tradition of plant-based meat products, and the rise of its middle-class—a portion of whom will turn to healthier and more earth-friendly protein options, said a new report released last month.
The Asia Alternative Protein Report 2020: New Decade, New Protein is the first in-depth look at the continent’s alternative protein industry. Published by Hong Kong’s Green Queen Media, which advocates for social and environmental change, the authors interviewed or consulted nearly all founders of alternative protein start-ups in Asia.
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Of the 22 alternative protein start-ups in the region, four are cultivated or cell-based protein companies making meat, seafood and dairy: Shiok Meats and TurtleTree Labs from Singapore, Hong Kong’s Avant Meats and India’s ClearMeat. The remainder make plant-based products.
The report did not cover insect protein because the harvest of insects involves killing the critters.
Role of public health scares
China is likely to drive alternative protein growth in Asia because of start-ups such as ZhenMeat, which are tailoring products to suit local flavours, said the report’s authors Mackenzie Dion, Sally Ho and Sonalie Figueiras.
There is also the success of Omnipork, a plant-based offering of Hong Kong-based social venture Green Monday, which is selling over a million dumplings a week following its launch with Taiwan’s biggest quick service restaurant chain, Bafang Yunji.
A lot of the changes towards plant-based food is driven by the younger populations, at least in America and Europe.
Andrew Ive, managing general partner, Big Idea Ventures
Recent public health events will also lend a significant push, said Andrew Ive, managing general partner Big Idea Ventures, an alternative protein venture capital and accelerator firm.
Asked about the Asia Pacific landscape, Ive told Eco-Business that two months ago, he would have said growth in alternative proteins would be led by the key metropolitan cities of Hong Kong, Shanghai, Beijing and Singapore.
But with “shocks to the system” in the form of the novel coronavirus Covid-19, avian flu and African swine fever, which wiped out a quarter of China’s pigs, Ive said: “I’m starting to believe that the Chinese government will push much more aggressively towards plant-based food and plant-based innovation.”
Covid-19 is believed to have jumped from market animals to humans, and China banned the trade and consumption of wild animals last month.
Ive added: “And if the Chinese government really does decide to change its strategy and get more into innovative plant-based proteins and alternative meat, then it’ll be really interesting to see whether that leads to even faster adoption than (demand driven by) consumers and thought leaders (such as celebrity chefs) in other places.”
Health and transparency are at the top of many consumers’ minds in this region and products have to deliver on those, in addition to taste and texture, to be successful, said Dan Riegler, co-founder of start-up Karana, which uses jackfruit as a key ingredient.
Karana, which started in May 2018, had a small commercial run of its beta meat-like product at a few Singapore restaurants such as Cloudstreet and Grain Traders over the last six months. It will launch a new product range, which includes ready-to-cook dumplings and baos (buns), this year.
Investors playing wait-and-see game
Are investors putting their money where it matters?
“We believe current events such as swine flu and coronavirus are already increasing the feeling of urgency (among investors) to support an industry that can improve food security and health issues,” said Riegler.
But the industry sentiment is that investors are playing the wait-and-see game in Asia, said the report’s authors and Ive.
Big Idea Ventures, whose US$50 million New Protein Fund includes investors such as Tyson Foods and investment firm Temasek, invests US$125,000 cash and US$75,000 in-kind in each start-up under its accelerator programme. In exchange, it takes a 7 per cent stake in the start-up, Ive said.
The first batch of accelerator start-ups—five in the Singapore cohort and eight in the New York cohort—began their five-month programme late last year and are learning about pitching to investors, among other things.
According to Green Queen Media’s report, other accelerators in Asia include Brinc (Hong Kong), Bits x Bites (Shanghai), GROW (Singapore), Innovate 360 (Singapore) and Space-F (Bangkok).
Most Asian start-ups are in the pre-seed or seed funding stage, with only a handful having announced major funding rounds or investors. Cell-based protein company Shiok Meats leads among Asian start-ups with US$4.6 million raised in seed funding in April 2019.
While the alternative protein investment landscape in the region is at a more nascent stage than the US, Ive said many investors he has met in Asia seem almost to be waiting for a guarantee of success.
“Obviously, most investors don’t get a guarantee,” he said.
With the right technology, you can make plant proteins just as good, or even better.
Dalal Al Ghawas, programme director, Big Idea Ventures
Big Idea Ventures hired two food scientists in recent months to ensure it invests in businesses with the most innovative products. Dr Matthew Zhao, whose PhD is in food technology, used to help local and multinational firms with product development at his previous workplace. At Big Idea Ventures, he will help start-ups scale their products from the benchtop, to pilot- and manufacturing-scale.
His colleague, programme director Dr Dalal Al Ghawas, has a PhD in food science and food biotechnology, and was previously based in Hong Kong, where she helped establish its first foodtech accelerator.
Dr Al Ghawas said she has noticed the trend of alternative protein investors and accelerators hiring more specialised scientists. Food scientists can help start-ups improve the formulation, processing and packaging of their products, and help them understand food traceability and the validation of health claims, she said.
On when investments might generate returns, Ive said this typically happens when the start-up is between 12 to 18 months, or when it is in its third or fourth year, when revenues hit US$5 million to US$10 million.
When will alternative protein reduce demand for meat?
The all-important issue, however, is whether these companies will help lower the consumption of animal protein and, in the process, reduce the environmental strain that animal agriculture has on the planet.
Ive expects meat consumption to increase for “some time” in Asia as it is an aspirational food, but said the increase in demand could slow down.
Millennials and the younger generation could drive a greater shift towards plant-based protein, as they do not have the same aspirational desire to consume meat, he said. “A lot of the changes towards plant-based food is driven by the younger populations, at least in America and Europe.”
The nutritional profile of alternative proteins will also improve over time, said Dr Al Ghawas.
Animal protein is superior in its composition of essential amino acids, whereas different plant protein extracts have to be mixed to ensure a complete amino acid profile. Alternative protein products also need to ensure concentrations that are high enough so that people are able to absorb enough protein.
“With the right technology, you can make plant proteins just as good, or even better,” she said. “Maybe the first versions (of plant-based burgers) out in the market are not so complete nutritionally, but with time, they will get better.”