Market for alternative proteins rise to $290 billion by 2035

Impact Investment | Hec Advice

Consumption of animal proteins will begin to increase as the economy and income of the world’s population expand. According to a recent study by Boston Consulting Group and Blue Horizon Corporation, the demand for alternative foods, eggs, dairy, and seafood products is expected to hit at least $290 billion by 2035, as customers fuel unprecedented growth in plant-, microorganism-, and animal-cell-based substitutes.

As indicated by the paper, Food for Thought: The Protein Transformation, the interest in alternative proteins will ascend from 13 million metric tons each year to 97 million metric tons by 2035, representing 11% of the entire protein market in a base case situation. Accelerated technical development and full regulatory help should dramatically beautify to 22% of the market by 2035. At that point, Europe and North America will have hit “peak meat” by 2025, and animal protein consumption will genuinely start to decrease.

So, by 2035, what would happen to ensure that customers incorporate alternative proteins into their buying and eating habits? The following prerequisites, according to the report, are fundamental:

  • One crucial prerequisite has been present for some time: widespread concern about the environment – and, more generally, about sustainability. Many consumers want to reduce their animal protein consumption, mainly if they can do so without compromising the food’s flavour or cost. ESG (environmental, social, and corporate governance) requirements are now used in 85% of investors’ investment strategies.
  • It will require refining and scaling of current industrial processes to make it mainstream. This is needed to deliver cost-effectively while still achieving critical parity. Alternative proteins will only be able to capture 11% of the global protein market by 2035 if their flavour, texture, and price are comparable to those of animal proteins.
  • Regulation is another important factor in achieving rapid development. Higher carbon prices and incentives for farmers to turn from animal production to alternative proteins could raise market share to 22% by 2035. At this point, Europe and North America will have hit “max meat” by 2025, and intake of animal protein will continue to decrease.

Alternative protein revenues are expected to hit $290 billion in 2035, which is more than Finland’s GDP in 2020. That means big profits for start-ups and existing food companies producing alternatives, upstream companies providing the industry with the requisite inputs and resources to unlock those revenues, and investors eager to fund those efforts.

A critical component in combating the climate crisis

Aside from the financial benefits, the protein transition will make a significant contribution to fighting climate change. According to the report, switching to plant-based protein would save more than one gigatonne of CO2-eq by 2035 in the best-case scenario. This is equivalent to Japan being fully carbon-free for a whole year. Simultaneously, enough water is saved to supply London for the next 40 years.

Alternative proteins, on the other hand, enable individuals to contribute to the climate crisis. For example, each serving of Spaghetti Bolognese made from plant-based meat saves the same amount of greenhouse gases as travelling 10 kilometres in a new car.

For all of these promising implications, the issue of how much the prices will be for customers inevitably emerges. And the positive news is that it is unlikely to necessitate any financial compromise. Alternative proteins can be directly substituted in nine out of ten of the world’s most common foods, from pizza to burritos to dim sum, until they equal animal proteins in flavour, texture, and price. These solutions do not necessitate the development of fresh foods, do not modify the flavour of what people enjoy eating, and are inexpensive. Making Bolognese sauce with substitute meat is just as easy, tastes just as fine, and won’t break the bank.

Source: BCG and Blue Horizon report Food for Thought: The Protein Transformation.