Alternative proteins entered the market a decade ago. Their emergence was seen as revolutionary by experts: in terms of taste, products made from alternative proteins are nearly indistinguishable from traditional meat, and their production is significantly more environmentally friendly. Despite this, alternative proteins have not gained much popularity among consumers, according to experts from The Boston Consulting Group (BCG). Currently, plant-based meat accounts for only 1% of meat sales in the USA. Many startups focused on alternative proteins are struggling with inadequate funding.
BCG experts believe that the widespread adoption of alternative proteins is crucial for reducing the environmental impact of food production. Livestock farming is responsible for approximately 15–20% of all greenhouse gas emissions globally. This is more than the combined carbon emissions from cars, motorcycles, and other vehicles. If alternative proteins occupied half of the global protein market, including dairy products, annual carbon dioxide emissions could decrease by five gigatons.
To realize their potential, alternative protein producers need to learn from the electric vehicle market players. The success of the latter, according to BCG analysts, has been made possible by the tremendous efforts of all stakeholders. Electric vehicle manufacturers have achieved the highest quality of their models in a short period. Governments have provided generous subsidies to consumers for purchasing eco-friendly cars, and investors have eagerly financed electric vehicle production.
According to the International Energy Agency, governments provided their citizens with about $40 billion in direct subsidies for electric vehicle purchases in 2022. This is significantly more than the $635 million in government support that the alternative protein industry received in the same year. Such government interest in electric vehicles has led to an incredible surge in sales: while in 2012, electric vehicle sales accounted for less than 0.2% of total new car sales, by 2023, they made up 18%.
The parallels between the electric vehicle industry and alternative proteins are clear, BCG maintains. Both technologies are groundbreaking and challenge consumer habits. Both alternative proteins and electric vehicles provide opportunities to significantly reduce global greenhouse gas emissions. Thus, the adoption of these technologies is vital in the fight against climate change.
Another commonality between the two technologies is the skepticism with which consumers initially received them. Electric vehicles were initially a source of several fears: unexpected battery fires, insufficient range, and lack of charging stations. Additionally, concerns were raised regarding the battery production technology that harms the environment. As for alternative proteins, they have faced criticism from consumers for being products of complex technological processing.
The similarities between alternative proteins and electric vehicles do not end there, according to BCG. Both industries faced early challenges in scaling production. Both had to spend considerable time convincing investors of the viability of the new technology. After a surge of private investments in alternative protein production from 2019 to 2021, funding for the sector has slowed. Overall, companies focused on alternative proteins attracted one-eighth of the investments made in the electric vehicle industry from 2017 to 2023.
This situation surprises BCG experts. It is well-known that investing in alternative proteins provides the highest CO 2 savings per dollar of invested capital. However, investors may be deterred by legislative uncertainty regarding labeling alternative protein products and the complex registration process for such products.
Governments, however, are increasingly supporting alternative protein producers. The USA, Denmark, Israel, Singapore, and South Korea have established a legislative framework for "growing" meat. Israel and Singapore have approved the production process for fermented animal protein. But for the economic, environmental, and food security benefits of the alternative protein industry to be fully realized, governments need to enhance their support, BCG notes.
The record $635 million that governments invested in 2022 for the development and production of alternative proteins is just a small fraction of the funding needed for the industry to fully mature. A BCG analysis from 2021 indicated that just building the infrastructure for producing artificial sausages, patties, and other meat products requires investments of $41 billion.
Alternative proteins are an excellent substitute for industrial livestock farming, according to BCG. Experts are confident that despite the challenges, they have a bright future ahead. Today, it is more important than ever to make efforts to reduce the agricultural impact on the environment. As the world's population consumes more meat, producing alternative proteins is a step towards food security for the planet. Their integration into daily life will take some time (electric vehicles also did not win consumer hearts immediately), but it is on the horizon.
Adaptation: Arslan Akanov