How Alternative Proteins Can Win Consumers Over
We've come a long way since the introduction of the first veggie burger in the early 1980s. Today, innovation has spurred a plethora of meat alternatives, but consumer skepticism and startup economics are still barriers to parity with real animal protein.
But I believe we are on the precipice of a major shift. Millennials and younger generations are acutely aware of the consequences of global warming (and how cattle contribute to methane emissions) and they are using their purchasing power to support sustainable-first brands. Additional long-term demand drivers include global food insecurity and the shrinking availability of affordable, arable land. While conscious consumerism helped usher in the first wave of products, it didn’t turn the tide. That’s because many options have fallen short of expectations in taste and texture, stunting the category’s overall growth.
We’re now entering what I consider the second inning. I expect the next generation of products to win consumers over with their improved taste, cleaner nutritional profiles, and wider appeal to people with dietary preferences or restrictions. Below, I lay out three important ways in which the industry is evolving to put alternative proteins on par with meat.
1. Alternative Protein Evolution
Consumers now know about plant-based products. It was three years ago that Burger King rolled out the plant-based Impossible Whopper nationwide. The majority of products are derived from soy or pea and in the form of burgers, nuggets, sausages, and meatballs. We’re starting to see additional options such as mycelium — an emerging ingredient and superfood that absorbs flavor well, mimics meat texture, and allows for cutlet and filet forms. The progress goes beyond just plant-based proteins. For example, cultured animal cells involve taking a small number of cells from living animals and growing them in a controlled environment to create food. Microalgae, a sustainable substance rich in health benefits, is another promising area of development. Future approaches will require serious investment in IP, technology, and R&D but at the end of day, what will continue to matter most is taste.
2. Achieving Price Parity
Price not only drives buying decisions, but it also impacts how a consumer feels after the purchase. The price of beef is rising in the United States. Cattle inventory is shrinking as farmers battle labor shortages, supply chain issues, rising temperatures, and droughts. The shrinking price difference between animal protein and meatless alternatives provides the opportunity for consumers to seriously consider a change.
Meatless meat companies can work towards price parity by using a simple, clean, readily available ingredient list. It’s an effective way to insulate production lines from larger supply chain issues. Over time, this can be a favorable differentiator relative to the meatpacking industry which has historically struggled with complex and broken supply chains. Last year, the White House published a blog post attributing half of the price increases at the grocery store to beef, pork, and poultry. I bet alternative proteins will achieve price parity in the next couple of years.
3. Educating Consumers on the Health and Moral Imperative
There is a significant opportunity to increase consumer education in this category. From a health perspective, it’s important to explain the nutritional value, educate on unfamiliar ingredients, and address the safety and long-term benefits or risks of eating animal protein. There is also an opportunity to explain what your product solves for and in this case, the list is long. Finding alternative sources of sustainable protein can help address the food supply crisis and global hunger, and reduce greenhouse gas emissions. Our country relies on factory farming to meet current demands and animal welfare has come under scrutiny. The damaging effects of fertilizer, used to generate food for livestock, can cause soil degradation, loss of biodiversity, and erosion. These issues can be difficult to broach with a customer, so finding a way to band together as an industry or partner with an established, trusted source might be the most effective.
While it’s still early days for alternative sources of proteins, the category holds tremendous promise. The total market is valued at around $10B today with the expectation that it will reach $210B globally by 2030. The food developers most likely to win over customers’ minds and taste buds will deliver products that are tasty, and better for our bodies and the planet. Most importantly, they must be unwilling to compromise on any of these fronts to drive customer adoption.
Fazeela Abdul Rashid is a Partner at Revolution Growth, a D.C.-based venture capital fund. She has over 20 years of finance and investing experience with a focus on growth equity in both the private and public markets.
