Cell-based kangaroo, vegan filet mignon, milk from micro-organisms – the alternative proteins industry seems to have no lack of creativity in what it has been cooking up in recent years.
What are the common themes behind the new innovations? And what are firms hoping to get out of pumping hundreds of millions of dollars into research and development, in a time of slowing sales amid a lacklustre global economy?
Eco-Business speaks with two industry insiders – Mindy Leveille, senior global marketing manager at Kerry, and Jennifer Morton, corporate engagement specialist at Good Food Institute APAC, a think-tank – on the upcoming trends, challenges and opportunities in the alternative protein food industry.
Tune in as we discuss:
- Key trends of research and development in the alternative protein industry
- Consumer expectations and how firms are responding to them
- Challenges and opportunities for the sector
[Alternative proteins] are more sustainable, but being a win-win for the planet and for health does not necessarily mean that they sell.
Jennifer Morton, corporate engagement specialist, Good Food Institute APAC
By now, we are no stranger to plant-based patties in supermarkets. Many people have tried them but not everyone is returning for more. The alternative protein industry is now trying to solve this by racing to dish up the next big innovation.
This is the Eco-Business podcast and I’m Liang Lei. As part of a series of podcasts in association with taste and nutrition firm Kerry Group, we’ll be talking about what’s happening in the laboratories and test kitchens of alternative protein companies.
Meat analogues have been around for a few years, but the industry is far from mature, with new technologies and new products in the pipeline.
Why are alternative protein firms diversifying into new directions? What can be expected in the years ahead? And how should we view all this in light of both a slowing world economy and the slowing growth of alternative protein markets?
Joining me on the podcast are Jennifer Morton, corporate engagement specialist at Good Food Institute APAC, as well as Mindy Leveille, senior global marketing manager at Kerry. Great to have both of you with us.
Thanks for having me.
Before we dive right in, I’d like to ask about a pretty recent and I think pretty big development – that the US Food and Drug Administration (FDA) cleared a cell-based chicken product for human consumption. What does this mean for both the industry and for consumers? Mindy, do you want to start?
Thank you. I think this is this milestone is very promising. We need to diversify the pool of alternative proteins, and we can see that the market and legislation are setting up a landscape that enables innovation in this space.
We are all conscious that cultivated meat is a very promising way of addressing many of the ethical and environmental concerns associated with conventional meat production. We can also see that regarding the sensory and texture properties of cultivated meat, versus animal-based meats, the categories are showing similar results, which is very promising. With plant-based meat, there are challenges regarding taste and texture, so it is good to see that cultivated meat may be a good alternative here. For sure, food manufacturers would have to focus a lot on communication and positioning to increase consumer acceptance with that category.
Consumer acceptance – I’m sure that will be a theme as we talk about diversification. Jennifer, the US is a huge market. From the Asia Pacific perspective, from where you are in Singapore, what are the implications of this development for the region?
Singapore, where I am, is an interesting place. It has been the only country in the world that has approved cultivated meat for commercial sale for the last two years. I see the US development working in tandem with two important trends in Singapore.
The first is food supply resilience. Singapore is investing in alternative proteins as a pillar of its food security strategy. The success of the alternative protein industries, like cultivated meat, is another tool within Singapore’s diversification toolbox by which to increase its food security.
Second, Singapore is not a low-cost manufacturing hub, but a global innovation hub. From that perspective, Singapore is not going to be where the manufacturing happens. Instead, it can help to level-up the industry in areas that still need research – such as production inputs, growth factors, cell lines – all the things that the industry needs to grow and develop. Singapore could have a role in exporting these kinds of cultivated meat solutions to the world as that innovation hub.
Diversification is almost like a buzzword in the alternative protein sector now, from production to products and different technologies. Jennifer, what does diversification mean for the industry, and what are the key trends?
I think of diversification on two levels. The first is at the macro level, the story that is bigger than alternative proteins. When we are looking at where we are in our current agricultural system and our supply chains, we have very few commodity crops, which are very high yielding, a lot of that is cycled through livestock, to produce our food. Seventy-five per cent of our land is used for livestock, but to produce less than a third of our protein supply.
In a long-term view, it is very brittle and risky. We saw that with Covid and the Ukraine crisis. And now the big umbrella, of course, is climate change. We need different guiding principles and different production systems to give us a system that is more intentional about how it uses resources, and those innovations are fuelled by diversification.
Then when we dig a level deeper and go into alternative proteins. These products are more sustainable, but being a win-win for planet and health does not necessarily mean that they sell. So these products have to be as tasty, nutritious, accessible and affordable than their conventional meat, eggs and dairy counterparts in order to sell. There is no silver bullet solution on how to get there.
There are a couple of ways of diversification within the sector. The first is ingredient sources, so this is mostly within the plant-based sector, which is the biggest pillar of alternative proteins at the moment. At the moment, we’re relying on soy and wheat as protein sources, but we need to diversify beyond these. The climate is changing, sometimes those crops aren’t going to grow in those places that they’re growing now.
We need more regional solutions. For example, soy is not grown in Asia but mung beans are. There are different crops that can be used as protein sources that we really have not explored. It is something that we need to do a lot more work on, which is already going on in the industry.
The second bucket is production systems. One of them is plant-based, and there are two others, which are very important. The second is fermentation. We are looking at how to use that in new ways for plant-based meat, eggs and dairy. One is using microorganisms to produce large protein quantities very quickly, in a process called biomass fermentation. We are looking at using fungi and algae.
Then we have precision fermentation. That is where you take microbes, it could be a type of yeast, and encode them with certain genetic sequences for a protein that you want to create. You can basically replicate animal-based protein but in a different source, so not using an animal.
The third pillar is cultivated meat – cultivating meat directly from cells.
Finally, we need to see diversification in products. We have a lot of beef burgers and chicken nuggets in the plant-based sector, but in Asia, we need pork buns and shrimp dumplings other localised products that fit eating occasions here. All this diversity needs to happen. All these different avenues have to be put together.
Awesome, that was a great overview of the sector. I would love to dig deeper into some of the points. Mindy, in terms of the production and ingredients used, what do you see in the industry, what are the hot topics in these areas, where is the money going to? And are there any blind spots?
I think Jennifer summarised very well the different strategies in terms of diversification in the alternative protein sector. But there are also additional opportunities that will drive further technological innovation in the space, in addition to cultivating meat and fermentation. For example, we talk also about 3D printing, shear-cell or spinning technologies.
The thing is, for these technologies, scalability is the main challenge, and it is essential for making them successful and being able to reach the level of other technologies, such as cultivated meats or fermentation.
In terms of blind spots, it is the ability to combine technologies to enable endless combinations of textures and flavour profiles. Technology combinations can also enable the hybridisation of alternative proteins. This is an area that needs more attention for sure, in my opinion.
You mentioned scalability as one of the reasons driving diversification, or at least innovation. I’m wondering how big a consideration that is, because when we look at scalability it seems like something to consider after the experiment stage, when we are looking at expanding production. I’m wondering whether it is a case now where scalability is a big factor even at the start of the R&D stage?
Yes, in my opinion, scalability is should be a key point to take into account in the innovation channel, because there are a lot of technologies that have a lot of potential, but our main goal with alternative proteins is being able to feed people sustainably and at scale. So it is true that scalability is key, to be able to bring these innovations to scale.
Also, scalability is also one of the key challenges for some of these technologies to be able to get the attention and the funding that they need. For all of the new upcoming technologies, scalability really needs to be taken into account, to make sure that they can be sustainable, long-term innovations.
Jennifer, Mindy has also talked about hybridisation. It sounds like a recent development to me. In fact, my colleague at Eco-Business recently wrote an explainer about ‘hybrid meat’, where companies mix conventional meat products with alternative proteins, or plant-based and cultured meat. I’m just wondering, what is in store here? Why do this hybridisation – is it something that will get the consumers interested? What does it mean for them?
It is important to start with the ‘why’. Because when we add a cultivated ingredient into a plant-based product, you’re probably going to add cost. So why are we adding this other tool to the toolbox?
We have to do it to allow plant-based products to inch closer to biomimicry – replicating the eggs and dairy that they’re trying to replace. And I’ll talk about plant-based ingredients integrating with a fermentation-derived ingredient or a cultivated ingredient, as this is where we see a lot of development in. Sustainability is the big benefit of alternative proteins. But it is not something the consumer easily sees, so it all has to be about the product. There are a few things that happen when we add, say, a cultivated ingredient to a plant-based product.
The first is taste and this is usually why such hybridisation happens in the first place. Plant-based products have gone through immense development. They are tasting better every day, but there is also a lot of room to further develop it. What cultivated ingredients can do is level-up the taste, texture and smell. And because it is really coming from animal cells, it has the starting points of all the things we love about meat or eggs or dairy.
The second part is nutrition. If it is relevant to a certain product, you can bring in, say, a cultivated ingredient to better match the nutritional profile of the product that the company is trying to replace. For example, a company can say, since bluefin tuna is one of the best products for omega fatty acids in the world, over time, we hope to add more omegas into our cultivated fish product. You can introduce cultivated ingredients to say, plant-based products, to improve its overall nutrition quality too.
The third benefit is around affordability. Cultivated products typically will be closer with biomimicry, but they are very far away from scaling in a way that can become everyone’s evening chicken. So when you add a cultivated ingredient to a plant-based product, you get some of the benefits while saving cost.
Mindy, is such hybridisation something Kerry is looking at? One more question – when you put plant and animal-based products together, are there more regulatory hurdles that you then have to cross before the product goes to market?
Yes, for sure, hybridisation is a hot topic in terms of innovation in the alternative protein space, and this is something that Kerry is looking at, from a global perspective. Globally, in different markets, there will be some regulatory challenges and differences. That is a very exciting space, there is a lot of reasons to explore that hybrid space, as Jennifer mentioned, and this is something that Kerry is looking at because there is a lot of potential, especially as today we have a lot of challenges in terms of price, taste and texture. Bringing all these technologies together is going to bring much more potential in this space.
Awesome. And Mindy, just stay with you for a while more. We also talked about diversification in the end-products. Looking across the geographies that Kerry operates in, what is the next meat product or food product that is ripe for replacement with alternative proteins?
I wouldn’t pinpoint the next product, it is more about diversification. We had a first generation of plant-based meat products, which were like the sausages and the meatballs – reformed meat, specifically.
Today, we see that consumers are increasingly looking for localised products and more choices in their alternative meat products. There is a need to bring more options in the supermarket shelves, to make sure that this category keeps growing and is still attractive to consumers.
I wouldn’t say a specific type of product will be the next winning product, but it is more about bringing more diversification in general, having an array of choices such as mussels, seafood and deli meat. At the moment, fish and seafood are the trendy applications, we are seeing more launches on the market globally.
We will witness many other food applications coming up in the shelves in the following years. But I think it is all about creating local products, or products that people are already eating, in the form of alternative proteins.
One of the more interesting applications I came across recently is companies trying to develop plant-based filet-mignons, with all the sinews and textures and what not. But what about the existing products on the market? Most of the products, as you mentioned, they are plant-based burger patties and sausages – do you see them being phased out with the newer innovations, or is the market big enough to accommodate them?
In my opinion, there is space for both to coexist. Just as we are seeing these products coexisting with regular meat, I think there is also the same opportunity among alternative protein products. It is all about offering more choices and always working to improve the texture and sensory experience.
Why the diversification drive now? It seems that right now, the global economy isn’t doing too well, analysts are saying that there is a chance of recession next year. To me, it seems like in such environments, firms may want to hunker down and focus on what is already working. But of course, when we talk about alternative proteins, that is also the issue of slowing sales with the products we have to date. I’m wondering, Jennifer, if you’re able to take us through the key driving forces here with the trends we are seeing.
It is important to confront reality, in terms of what is going on. What we have seen is that retail sales are flat in certain developed markets, especially in the US. In Asia, emerging markets are still growing, but from a much smaller base. And we do see strong performance in food service, in the quick-service restaurant channels.
The industry is thinking about how it can succeed in such an environment. The answer comes back to the product. The inhibitors that we know are taste, price, access and increasingly, health. Resolving these inhibitors should be the focus of the industry. One of the most promising avenues for that is hybrid products. That is why we see that sector growing, especially now.
Alternative proteins have not been around for very long. The sector is very much in its infancy, it is a tiny percentage of the global meat market, which has been around for decades. It is important to double down on products and level-up solutions. I think hybrid products, although it is a difficult time for the industry, really has to be an avenue, for its levelling-up potential.
One of the major breakthroughs I see as a consumer is, a few years ago, when we had the Beyond Burgers and the Impossible Burgers coming up with realistic plant-based beef patties. I thought that was a pretty big breakthrough. I’m wondering, in the current drive, when are we going to see the next big breakthrough that really resonates with customers? And what would that look like?
With the environment that we are in, I will say it is a product that is going to meet all of consumers’ expectations for the category. Today, there are a few main reasons why the category is slowing down and not growing as fast as we were expecting. First of all, price parity is key. We have to make sure that all of these alternative products have a price that is similar to meat, because today, with the economic crisis and inflation, products that are more expensive are going to be the first ones that consumers will have to stop buying.
The next reason is sensory experience. Most consumers who are driving the alternative proteins category are flexitarian, so we still have to work on bringing that sensory experience that we are have with regular meat. This is something that Kerry is focusing on.
The last reason is the lack of clean labelling – which depends on the market.
I just wanted to add two things, picking up on what you both said. You mentioned the Beyonds and the Impossibles. Impossible is a hybrid product, it has haemoglobin from soy, from a precision fermentation process.
And while certain parts of the industry are slowing, Impossible claims that its growth is up 70 per cent this year. So we are not so far away from hybrid products. They are already on the market and they are doing well. If you look at the price of Impossible products in Singapore, they are now more or less equal to organic meat. So they’ve come down significantly.
I want to pick up on a really good point that that Mindy made, that the most interesting question on inflation is not only what is happening to alternative proteins, but what is happening to conventional meat, eggs and dairy. Progress on price parity is obviously not only affected by what is happening in the plant-based sector, but what is happening in terms of the products that people are comparing it to. Evidence does suggest that the road to parity is being partly driven by inflation. There was a report by the FAIRR investor network recently that found the average price per unit of plant-based meats has increased by 3 per cent this year compared to 6 per cent for conventional meat. There have been headlines around the world, in the Netherlands for example, that certain plant-based products have now reached price parity or even surpassed conventional meat.
We have yet to see that happen in Asia, we are still more expensive in most countries. But the inflation question is going to be very interesting. Hybrid products can become cheaper, like Impossible has with scale.
Based on what we’re discussing now, it seems like a lot of innovation stems from whether something is technically feasible, whether something is scalable, whether it meets consumer preferences. What about climate, and the initial premise of alternative proteins about being climate-friendly, biodiversity-friendly and lower on the pollution scale? Do you see them as being priorities, Jennifer?
There is absolutely no doubt that all of these pillars of alternative proteins are drastically more sustainable than the conventional meat, eggs and dairy that they’re trying to replace. You talked about climate, there was a report by BCG which shows that when you assess impact in terms of market value, in terms of avoided carbon dioxide-equivalent emissions per dollar for mitigation solutions, alternative proteins has the highest emissions savings of any dollar of invested capital, in any sector. Three times greater than other high-emitting sectors. So alternative proteins as a climate solution is just enormous, and what we at GFI want to see is the sector being matched with the dollars that it deserves. So on the climate point, there is really no debate, you can maybe debate other things, you know, taste, health, whatever. But with sustainability, it is really a given that we need these solutions to transition.
On top of what Jennifer mentioned, reducing food waste, improving yields and also working on circular economy are going to be key focus areas as well.
Looking at the next few years, what’s the biggest challenge and biggest opportunity of the alternative protein industry?
The biggest challenge is affordability. Especially as these new technologies emerge, while these technologies are very exciting, how do we scale that? That is where we need a lot more investment, not only in downstream innovation at the product level, but also in the supply chain.
If I were an alternative protein company, I would be obsessed over the customer. So really segment, segment again, understand the value proposition, understand what your product brings, communicate that, really understand your niche and what you’re trying to give them. These are areas where I think we need to get a lot more granular. When we unlock that customer, that is when the products will scale.
Consumer acceptance is going to be both the main challenge and opportunity. For sure, with all of the different technologies and innovations that are coming our way, we have to make sure that manufacturers are communicating to consumers in a very clever way. So we have to try to understand these consumers and if our positioning is right, to make these products successful.
Thank you so much, Jennifer and Mindy, that was a great conversation. Thanks for coming on this podcast.