With production and consumer appeal goals that mirror those of traditional food companies, the alternative protein sector is showing signs of maturity, the CRB Horizons: 2023 Alternative Proteins report found.
Lower production prices, capital improvement plans and readiness to scale up chart a “promising evolution” for the sector, compared to when it was last surveyed two years ago, the report states.
The 97-page report was built from anonymous responses to surveys sent out to about 150 companies in the alternative protein space in the United States — both those based here and those planning to make the U.S. their primary market.
Two-thirds of companies who participated said they’ve seen an increase in sales volume since 2021.
Companies participating in the study — which range from new startups to CPG giants including Conagra Brands and Nestlé — were given a list of issues that influence their business, ranging from finding appropriate manufacturing labor to e-commerce. They were each told to choose their top five. There was a three-way tie for the top choice: 52% said sustainability, labor availability and inflation were in their top five. The next three were changing product demand (50%), supply chain constraints (49%) and achieving price parity with traditional proteins (48%).
Other than the price parity piece, “the rest look a lot like a traditional food and beverage business,” said Tony Moses, a product innovation fellow at CRB.
While the investment market is currently tight, access to capital was a top concern for 32% of the companies, meaning that most of them have a plan to be able to go forward without needing large additional sums, Moses said.
Sustainability was seen by many as an important factor for customer attraction and retention. But only 35% put it in the top five to demonstrate to consumers. Most of the top factors also mirrored those that could be seen at traditional food and beverage companies. About 59% said having a clean label or certain ingredients was their most important aspect for consumers. The second top factor was packaging convenience, at 41%, and selling price came in third, with 38%.
Plant-based and mycelium meat analogs
Analogs that are already on the market — from plant-based proteins and mycelium — have seen quite a lot of advancement, Moses said.
“We think that the plant-based protein market is really rapidly evolving for commercial success,” he said. “I think they've been there from a technical standpoint, but [from a] commercial standpoint, it's really made tremendous progress. The same with mycelium based. We did not anticipate how rapidly that industry has evolved, especially in the U.S., I would argue two years ago, it wasn't even on the map.”
Being able to drive production costs down has been helpful to this end. The average cost per pound to produce plant-based or mycelium meat analogs is $3.32, the survey found. Just two years ago, the average production cost per pound was $3.52. Moses said that there could be many reasons for the drop — better economies of scale, new technologies, or even a better handle on distribution costs.
More capacity for mycelium meat analogs is likely to come online soon as well. About 46% plan to add bioreactors with volumes of 10,000 liters to 19,999 liters by 2027. Another 18% are looking to add bioreactors that have volumes of between 20,000 liters and 49,999 liters.
While there is no cultivated meat on the market in the U.S. just yet, the report also looks at the companies in that space, their progress and their costs. The survey asked companies when they expect to get regulatory approval to sell and serve their products. A total of 98% said within five years — 15% within one year, 54% within two years, and 29% in three to five years.
However, production costs in this space have gone down considerably in two years, the study found. In the 2021 report, CRB found it cost about $100 for a single cultivated meat burger. Costs have fallen to an average of $3.76 a pound, according to the study. A total of 83% can make cultivated meat for $4.80 per pound or less.
Major capital projects ahead
Cultivated meat companies also have major projects planned. More than a third said they plan to spend $26 million to $50 million annually on capital projects in the next two years. These kinds of investments could create the kinds of production facilities needed to produce cultivated meat at a scale to obtain regulatory approval and make enough to serve in a small capacity. And about half plan to bring bioreactors with volumes of 5,000 to 9,999 liters online through 2027. Only 22% are planning on larger bioreactors, which Moses said means that at least in the beginning, cultivated meat will be a more niche product.
More than half of cultivated meat respondents said facility construction and equipment was one of their top three places where they are trying to save money now. Just a third put raw materials in their top three, which Moses said is indicative of where the companies are right now.
“It's more about just getting their foot in the door and getting in business. And then once they've got that market and figure that out, then they'll stop start optimizing,” he said.