The alternative protein landscape has been evolving rapidly, driven by technological advancements, policy changes, shifting consumer preferences and buying behaviours towards sustainable and healthier choices. For investors, this presents a unique opportunity to benefit from a growing industry that has the potential to create significant societal culinary transformation.
The companies at the forefront of this charge look like attractive investment opportunities today.
Here, we explore the five trends which will revolutionise the alternative protein investment landscape and drive further growth.
- Policy-driven market expansion – The global policy environment increasingly supports alternative proteins. For instance, the European Union’s Green Deal and the US government’s investments in sustainable agriculture signal strong support for this sector. The global market for alternative proteins is projected to reach $27.05bn by 2027, growing at a compound annual growth rate (CAGR) of 11.8% from 2020. This robust growth is driven by increasing consumer demand and supportive policies.
- Election year dynamics and bipartisan support – The political climate in 2024, especially in the US, will significantly influence the alternative protein sector. Historically viewed as a bipartisan solution for food security and economic growth, the industry is well-positioned to navigate political changes, ensuring continued support and investment. With US government agencies investing over $3bn in sustainable food systems, the sector’s importance is underscored.
- Start-up maturation and investment shifts – The sector is maturing, with startups moving beyond their nascent stages. Companies are de-risking their technologies, leading to more stable and strategic investments. The global market for plant-based meat alone is expected to reach $35.1bn by 2032. This shift promises sustained growth and reduced volatility in valuations.
- Cultivated meat diversification and regulatory approval – Significant expansions in the cultivated meat sector are expected, with new product approvals in key regions like the US, Singapore and the EU. The cultivated meat market is anticipated to grow at a CAGR of 15.7% from 2021 to 2030. This will enhance product diversity and safety, driving consumer acceptance and reducing production costs and environmental impacts.
- Culinary innovations and consumer engagement – The collaboration between alternative protein companies and the culinary world is set to deepen. IFF, for example, has invested in Coperion’s high-moisture extrusion technology, improving the sensory attributes of plant-based meat alternatives and enhancing their market appeal. This trend will help integrate alternative proteins into mainstream cuisine, aligning with broader sustainability goals.
Highlighting key investments
There are a number of different firms which are pioneers in the alternative protein space – but the following three companies are, in my view, the top investment opportunities over the next few years.
International Flavours & Fragrances (IFF) – IFF has opened a new co-creation centre in Wageningen, the Netherlands, enhancing its capabilities to drive research and innovation in alternative proteins.
Their investment in Coperion’s HME technology aims to improve the texture and appearance of plant-based meat alternatives, addressing key consumer preferences and enhancing market penetration.
Novozymes – Novozymes specialises in bio-innovation, playing a crucial role in improving production efficiency for alternative proteins. Their enzyme and microbial solutions are essential for developing sustainable and cost-effective protein alternatives.
Novozymes has been focusing on expanding its solutions to reduce environmental impacts and enhance the nutritional profile of alternative proteins, making it a pivotal player in the industry.
Balchem Industries – Balchem Industries provides essential ingredients that enhance the nutritional profile and sensory attributes of alternative proteins.
Their investment in new solutions to meet the increasing demand for plant-based and cultured proteins positions them as a key player in this sector.
The alternative protein sector stands at a pivotal juncture, shaped by a dynamic blend of policy, investment and consumer engagement. Investors should consider the alternative protein market due to its strong growth potential, driven by supportive policies, technological advancements, and changing consumer preferences. Companies like IFF, Novozymes and Balchem Industries are leading the way with innovative solutions, making them particularly exciting investment opportunities in 2024.
Buoyed by strong tailwinds, the alternative protein market looks set to swell and early investors keen to gain exposure to the sustainable future of food stand to benefit from the potential returns this sector promises.
