ELOHI STRATEGIC ADVISORS

The foodservice industry experts

Part Two: Growing Population and a Global Market for Alternative Proteins

Question: Is alt protein just a thing for middle-class America? We drive our gas-guzzling SUVs and feel good about ourselves for going to the gym and eating a plant-burger? Is it just another kind of American gimmick? Another example of our self-congratulatory BS?

Stephanie: Well, yes and no.  There’s an American market to look at, and then there’s a world-wide market to look at.

Right now, there’s a lot of money going into the alternative meat space, and it can seem like that’s just because of increased demand in America and the global west. Certainly we’re seeing lots of start-ups in all kinds of areas — pea and soy proteins, mycoproteins and fermentation-based proteins, cell-based meats. Some exciting innovations have happened and continue to happen in alternative seafoods, cheeses and other dairy products, and eggs. So we’re not just looking at plant-based hamburgers and hot dogs, but real variety for middle class consumers in America and the west.

We’re also moving out of the vegan or even vegetarian niches and into a more flexitarian mainstream. Sometimes analysts point to this as if it means a less committed market, and of course you want repeat buyers, but you also want a larger target addressable market. Ultimately, everybody in America can be the market and is becoming the market as we speak.

It’s also important to remember that alt proteins have started showing up in other categories besides grocery stores. 51% of eating occasions in North America are in food service, so we’re not just talking about retail.  Vegetarian and alternative meat menu options help restaurants and other food service venues overcome the veto vote.  For a lot of families choosing where to get their gyros, the black bean option available at Food Truck A gives it an advantage over Food Truck B that only offers beef and lamb.

A growing population and decreases in arable land mean that alternative proteins can play a huge part in feeding people into the future.
A growing population and decreases in arable land mean that alternative proteins can play a huge part in feeding people into the future.

So yes, the meat analogues thing is an American thing, a western hemisphere thing, a capitalist, money-making thing.

And that takes us to where the answer is no, it’s not just a bunch of Americans, but a bunch of national governments investing in food tech and ag tech so that they can feed their populations in the future.

Pew Research says we can expect a 38% increase in the world’s population by 2050, to nearly 10 billion people. How are we going to feed that many people? I mean, holy shit, that’s a lot of people. It’s going to come down to them or us, cows or people. There’s not enough room and resources for both.

In places where less than 1 or 2% of the land is arable, governments already feel the pressure to feed people.

In Singapore, for instance, about .8% of the land can be used for farming. No wonder its holding company, Temasek, defines itself as a generational investor, and strives to act with the future in mind. They’ve invested over US$8 billion in the global farm-to-fork value chain since 2013 and plan to continue to increase investments in things like vertical and indoor farming and all kinds of alternative proteins — mycoproteins, plant and cell based proteins – into the future.

In the Arab world, even in places that are oil-wealthy, feeding people has always been difficult, and alternative proteins present some answers. Oman, Saudi Arabia, United Arab Emirates — these are places that can’t grow enough food to feed their populations. So they’ve started to build partnerships and to invest in food tech and innovations that help their environmental public image, diversify their economies, and improve their food security.

Some parts of Africa are breadbaskets. Some countries, though, don’t have water resources, or land, or sometimes just the transportation infrastructure to feed everyone. The truth is that hungry people are angry people, and angry people do things like foment revolution and overthrow their governments. Investing in innovative ways to feed people makes sense for governments and rulers, and so that’s what they’re doing. It’s in their interests.

When push comes to shove, we’re all on this one planet, with limited clean water and limited space. The inefficiency of producing animal protein means that everyone, from individual consumers to national governments, has an interest in alternative proteins.

To recap: We all benefit from sustainability, whether it’s by making healthy food more convenient for Americans or by making food production possible for people in places with less food security.  The industry’s growth is fueled by increasing markets and consumer demand, and by sovereign funds and national governments planning for secure food sources into the future.

Next time we’ll talk about economic convergence — it’s not just ordinary middle-class consumers who are waiting for and willing to buy meat substitutes.

The future is coming and it’s up to us to build it. Lots of people trying to make a difference and improve the world, so buying, selling, business to do. Giddyup!

Already Covered — Part One: Alternative Protein for People of All Ages
Coming up next — Part Three: Economic Convergence and the Future of Alt Protein