The Future of Alternative Protein
The Full Conversation
Clare [00:00:03] Hello, this is cultivating conversations in the next half hour, we discuss the future of alternative protein, tapping into the expertise of New York plant-based proponent and investor David Benzocaine.
David [00:00:17] Every single time we sit down to eat or every single dollar we spend at the supermarket, you can make a massive difference on the planet, on your health, on the welfare of animals in so many ways.
Clare [00:00:29] From London, Catherine Tubb, an analyst whose report Disruption of the Cow, predicts the timeline when cultured cell-based meat could replace industrially farmed livestock.
Catherine [00:00:41] We're saying, Hey, there's technologies around that can just do this so much more efficiently than the cow. And that's both in terms of resources, so land and water and food inputs. Also, in terms of time.
Clare [00:00:53] and joining me from Brisbane, Australia, Chaseman Global's Asia-Pacific director Mark Cooper, adding insight into how the current agriculture industry is transitioning to meet growing demand and the surging global sustainability remit.
Mark [00:01:08] Chaseman Global is a Talent Search Agency. We basically have a very strong focus on agriculture and food businesses, particularly now within innovation from a sustainability point of view, and we really map the market globally for the best talent in the industry to drive innovation and growth through the businesses that we work for.
Clare [00:01:28] This is cultivating conversations. I'm Clare Nasir.
At COP26 in Glasgow, world leaders pledged to cut 30% of methane emissions and end deforestation by 2030. This decision no doubt has significant impacts across the livestock industry. The greatest driver of both methane, from human activity, and deforestation. FAIRR are a global investor network focusing on ESG risks in the food sector. In their latest Protein Producer Index report for 2021 to 2022, they conclude that 85% of the biggest meat, fish and dairy producers do not even measure their releases of methane. They also add that the sector has been too slow to act on deforestation linked to feed production, antibiotic use and the treatment of manure generated by the 70 billion farmed animals around the world.
Furthermore, and possibly the strongest statement in the piece reads,
The post COP26 era leaves large parts of the meat and dairy supply chain looking outdated and unattractive. Failures from methane to manure management underlined the growing sense in the market that cows are the new coal.
However, evidence of strong green shoots within food production are already delivering healthy non-meat and non-dairy options at a much lower environmental production footprint. That's been an impressive rise in the alternative protein space this past few years, a diverse and ever-increasing mission-aligned community. These innovators, investors, entrepreneurs, growers and leaders ooze drive and a desire to push the boundaries whilst holding firm to underlying principles of good environmental practice. Whilst currently only occupying a small market share, they are a force to be reckoned with and with good reason.
Here's Mark Cooper from Chaseman Global.
Mark [00:03:38] In 2019, there were $60 million invested in alternative proteins. In 2020, there was $1.3 billion invested in alternative protein. So that just shows you where we see a lot of funds that are obviously pivoting towards this, and we see a lot of focus as to how this is now something that is on the forefront of everyone's minds.
Clare [00:04:01] You're developing talent and putting big brains and clever people in the right positions to actually propel this further.
Mark [00:04:10] We love what we do. We have a great team. We have a great focus and we have an understanding of the market. But the best thing is the people, the talent and the people that we talk to and the passion within this whole sector and how those people are driving to a real mission to be able to do the right thing by sustainability, but creating answers to real problems as to how we're going to feed growing populations without taking up more land, without more deforestation and carbon footprint as well. So it's a really great place to be there some amazing people in the industry, and we really enjoy it.
Clare [00:04:44] Would you say there's less risk and uncertainty embarking on a career in this new sector than there was even two or three years ago?
Mark [00:04:52] Yeah, absolutely. It's been deemed as an essential service, which rightly so. Through COVID there was a lot of challenges, but a lot of these businesses have actually become busier than ever. It's a very different market now than it was before. Agriculture is a very technical industry now, right the way through, from sensors to robotics to automation to what we're doing within SaaS platforms and going online to obviously through technology that we're going to talk about. It is attracting the best and brightest minds in the industry. And it's something that when we talk to candidates, there's a real passion about doing something. The next generation is doing something for the greater good.
In China. In the 1960s the average person only consumed five kilograms of animal protein in a year. China today consumes 25% of animal protein. There's no doubt, and we're here to talk about all types of agriculture as well but focusing on this, there's no doubt we cannot continue, in my opinion, to just scale up what we've already done from a finite amount of resource on the planet. We have to look at other ways to get nutrition into people and feed the planet.
Clare [00:06:01] And that's where there is an obvious space for alternative proteins. But are people open to swapping their staples for meatless meats and dairy equivalents?
Here's David Benzaquen. As an advocate for plant-based eating, David has dedicated his career to advancing plant-based foods. He's launched new companies, acts as a strategic consultant for existing businesses, and invests in promising start-ups. To date, David has worked directly with over 150 plant-based companies.
David [00:06:32] I'm a co-founder of a company called Moonshot Collaborative, which is a consumer insights firm which studies the behaviours and beliefs of consumers who buy plant-based products based on the research we've done. We've found, and this has been validated by other resources as well, that health is the number one motivator for people choosing to eat more plant-based foods - In terms of values followed by sustainability and then way behind that is animal welfare.
When it comes to the actual decision to consume a particular product, taste and price have a massive impact on that, as well as convenience - access to those products. And I would argue that if you look at different categories, I'll use U.S. data as my benchmark just because it's easier at the top of my head and because it's heavily studied. Approximately 15% of all fluid milk sales in the United States are non-dairy. And so for every 100 glasses of milk, somebody is drinking 15 or not coming from a cow or a goat or a sheep. This is going up from single-digit percentages in the last decade. So it's a massive shift, and there have been a couple of reasons for that.
One is in 2008, a company called Blue Diamond launched has a product called Almond Breeze, which is the number one selling non-dairy milk in the United States. They started merchandising their product in the refrigerated section. And whereas traditionally non-dairy milk had been in ambient shelving, putting them in the fridge change the perception for consumers. First of all, it made it ready to drink and more pleasant to the palate if you opened and had it immediately. But secondly, people think of dairy as being very fresh and associate quality with freshness. And so if you think about shelf-stable dairy mix milk like Parmalat or something, those are primarily purchased and consumed. Even the dairy ones are primarily purchasing consumed in times of crisis or poverty, or in situations where people can't access fresh milk. So if you can, you prefer that.
But there are other things that have had major impacts on the growth of non-dairy milk, namely taste and price. On the taste side, because there are so many different plants from which one can produce milk alternatives, and cows milk can only be so versatile, there are myriad opportunities to create products that are going to satisfy and excite the palate in different ways, from new mouth feels, tastes and textures, and even functionalities in terms of baking applications and nutrition. And so having so many plants and the continued research that's happening means that every day more and more consumers are going to find products that they like even better than the status quo, and that's what's enabling the change. Milk is the easiest to replicate because the texture is much less complex than having to create the muscle and fat experience of meat or having to create the many functional properties of eggs, leavening, binding, emulsified, et cetera. That's the first one to happen, but every day we're seeing new innovations that are expanding on the pleasures that one can get from eating these kinds of foods. And we have a major advantage in the plant kingdom that our resources are endless. We've only explored a tiny, tiny fraction of the plants that are available to us.
Clare [00:09:50] So is there scope for further growth and are dairy alternatives seen as a gateway for consumers to adopt other plant-based products as the norm?
David [00:09:59] Certainly, the trajectory is going in the right direction. I mean, consumption of dairy milk in the western world is declining substantially year over year over the last 20 years, and consumption of these non-dairy alternatives is skyrocketing. When you asked about what motivates people to eat these, I mentioned that it was health, but I also mentioned the importance of taste and price. And I think non-dairy milk is the greatest benchmark of that. If you look at other categories of plant-based products again, using the United States as an example, only about one per cent of burgers are plant-based, yet 15% of fluid milk is. And so I would argue the reason for that is that it has taken longer to develop plant-based burgers that replicate the exact texture and taste and price that consumers are seeking.
As milk has become more abundant and companies have learnt how to use different sources for them and demand has grown, allowing more R&D and putting more resources into scaling and creating efficiencies for companies. Prices have gone down. There are more and more retailers offering their own store brands or private label products, which decreases product price dramatically because you don’t spend money on marketing. And so these solutions are leading consumers who may not have become consumers just based on values like sustainability or health or animal welfare to opt for them because the taste and price are at parity or good enough or even better, they're saying, even if it costs a little more now that it doesn't cost too much more, I'm going to go that way.
As the R&D continues to improve in other categories, as we're seeing with things like Impossible Burgers and Beyond Burgers and other things, Moving Mountains that are really improving on categories. We're going to see that happen. Prices are going to go down and they already are. Taste and texture are going to improve and consumers are going to opt-in, not just because they think it's the right thing to do, but because it's what they want to do.
Clare [00:12:01] So that was David based in New York, Mark, he talks about in terms of sustainability, there is just no comparison to what we've just discussed, like the dairy alternatives and the plant-based alternatives of meatless meats to the meat version. I mean, you can't disagree with that, can you?
Mark [00:12:20] No. I think that the ratios of what you got it from an animal and the carbon footprint, there is no argument with that. I think what's interesting is the journey within plant-based foods at the moment. There has been a big focus on and he mentions on sort of taste and sort of texture and how that really started to nail that now from that perspective. We're involved in a business called Nourishing Ingredients in Australia, and they're in precision fermentation and they're actually through fermentation methods that producing obviously animal-free, but the producing fats or animal fats from fermentation. So that will then, in their business model, that will go into plant-based foods based on the fact that it's not come from an actual animal. So if you look in the past, there's been some limitations on plant-based food with a lot of coconut oil or a lot of plant-based fats, whereas this is really taking it to the next level when it comes to taste and how it moves forward.
Clare [00:13:17] During my research and interviews across the alternative protein landscape, I repeatedly came across one stumbling block. The challenge of scaling up.
How will plant and cultured cell-based meat significantly increase their own production without producing an overwhelming environmental footprint?
One solution could be fermentation on a large scale.
In November 2020, the World Economic Forum flagged fermentation as a key a global innovation area, stating fermentation presents an opportunity to fundamentally change the way the world eats and improve global, human and environmental health and the economy.
Fermentation in the alternative protein industry refers to cultivating microbial organisms for the purpose of processing a foodstuff or food ingredient, such as flavorings, enzymes, proteins and fats, which ultimately gives plant-based products or cultivated meat an authentic overall taste and structure.
And while traditional fermentation has been used for thousands of years to produce items such as bread and beer, precision fermentation goes further.
Microorganisms are used to produce proteins and other biomolecules for very specific purposes by producing genuine animal proteins through fermentation the possibilities become endless. And it's these technological leaps that have injected accelerated growth into cell-based, cultured meat.
According to the Good Food Institute, during 2021, there was a shift in investment from ingredient formulations to precision fermentation. Over the course of the year, more investment was received by businesses with fermentation at the heart of the product than any other technology. With $750 million in disclosed investment and its this technology against the background disquiet of current food production and a fresh, realigned focus on business models that have allowed many to express strong confidence in future growth and even disruption of the status quo.
In 2019, Rethink X published their headline-grabbing report, the title; Rethinking Food and Agriculture 2020 to 2030. The second domestication of plants and animals, the disruption of the cow and the collapse of industrial livestock farming. Catherine Tubb was the author.
Catherine [00:15:47] Rethink X we utilise S-curve disruptions and the thing about S-curves is essentially it takes a very, very long time for the market share to be built up. But then once you start going up that S-curve, it's incredibly fast. And so that's very much how our report was written. The idea that once you hit a tipping point, that disruption is basically over and what we see is kind of - how do you get to that tipping point - is very much a cost base. So when does the technology come down and costs?
When we were looking at it, we could forecast that these alternative proteins that we're seeing for food and when I say return to proteins, I mean, fermented and cultured meat could basically hit cost parity with animal protein by 2023 to 2025. Once that happens, you see an extremely fast disruption, basically as fast as you can build the capacity. It's not really demand-driven, a supply-driven. So really by 2035, we could see the end of farming as we know it. By 2030, it will already be over because it be way up that s curve, which is very fast, and that's what's probably taken most people's attention about the report.
Clare [00:16:54] So you wrote this a couple of years ago. Do you think we're on the S curve right now?
Catherine [00:16:58] when we look at it now, I think our forecast of costs was actually spot on, if not even to slow. So we had some alternative proteins, so fermented proteins, which is when you take a microbe and such, you get it to produce the protein being cost parity by 2023 to 2025. We saw that as being extremely disruptive because we definitely thought of this as a kind of business to business disruption. So ingredients, disruption, ingredients, when I say ingredients, I mean things like proteins and milk or gelatin in sweets, which is a very small part, but a kind of valuable part. And actually, that's where we go on as we expected it. I think the bit that surprised us is the cell-cultured meat that's just come down so much faster than we expected. I think we've seen, you know, even on the market, I think we sent the first product will be on the market by 2022, and we have it at the end of 2020. So I think in terms of the cost, for sure, it's gone way faster, in terms of the adoption. I think we're kind of on track. I mean, because we forecast such a fast disruption, any slight change or break the adoption or even acceleration can have a slightly larger effect. But I think we're definitely there. And once that cost gets there, we'll definitely see it ramping up. So it's just going to be supply-driven, for sure.
Clare [00:18:12] Tell me about your projections, say, in the next 10 years and what your report concluded in terms of resources and where our food will be coming from based on your results.
Catherine [00:18:22] We definitely see this is like a protein disruption, right? So if we think about it obviously it's written as a disruption of the cow and the reason we focus on the cow is because the cow is the most inefficient protein producer, and that's in terms of inputs that you need to create one gram or kilogram of protein.
And then that's really all this is. We're saying, Hey, there's technologies around that can just do this so much more efficiently than the cow. And that's both in terms of resources. So land and water and food inputs, low carbohydrate input, but also in terms of time. You know, that's also a very valuable resource that takes a long time to grow cows or grow cows to have milk. So, you know, actually in terms of time as a big input that as well. And so really, you're just increasing the efficiency of production.
So if you look at a cow as just a factory and say, Hey, how can we improve this factory? And it might just be taking the microbes inside the cow, making them do it in a better, more efficient way.
Obviously, the inputs in the cow, because you're going from kind of 20 to 30 to 1 down to 1 to 1 or 2 to 1 it just has huge impacts on the resources you need. If you think about it. In the US, about 40% of the land is used to grow crops to feed cows. And suddenly, if you're freeing up that land space, you're freeing up those crops. It just gives a lot more scope for what you can grow as well.
So I think these are huge ramifications is quite hard almost to predict how it's going to look like, are we going to start growing more plants? What are we going to use the land for? Where does the value in the land come from? Does it become a carbon sink? We're actually going to be actively planting crops or trees in order to be a carbon sink in the future. It's a kind of really changes how we value land and then resources as well that go along with it.
Clare [00:20:09] Talk to me about how you view the farming industry and how it will change, and there's a wealth and depth of experience with mass production and where they fit into this new world of alternative protein.
Catherine [00:20:24] Disruption is not destruction or disruption often creates whole new industries, new jobs. So when we talk about disruption, we try and take that view. But saying that often the jobs and the industries that change the most are the ones closest to the heart of the destruction, which of course in this case will be the production of animals.
There is still a lot of value in animals and also I think there's still going to be animals, farmed. So, you know, if you think about, say, 20 % of farming still exists, so you're still going to have 200 million cows and they still need that expertise in that farm in that time.
But actually, you could argue we do it better, like we definitely see this as a disruption more to industrialized farming. They're still going to be room for more organic, locally produced products. And I think that's going to be a lot of knowledge and kind of cell lines and genes of animals. But equally, there will be jobs lost in this industry because it's just so far-reaching. But I think a lot of the value these farms have a lot of knowledge, a lot of value. I think the holistic idea of regenerative farming is going to take off because I always say, the cows going to have an existential crisis.
So it's been used for food and materials over many years. You know, arguable it used to be used for a lot more than it is today. And suddenly, it could have a whole new purpose on the farm. So it may be that farmers have to kind of pivot, which I know a lot of farmers are already having to diversify and play that game, and it becomes part of a bigger picture on the farm for sure.
How we produce food, how we design food, how we develop food is going to change. It's going to become a very much localized production system. You won't need to export beef from South America to wherever you'll be able to grow it locally in the supermarket courtyards, you know they'll have these fermentation tanks.
And then comes the nutritional benefits. You know, it's not about flexing the production that we call our future software model. You're ready to flex what you want in the amount of fat, the amount of protein to make it taste as good as you want. Right. So suddenly, we're kind of always about to go beyond what we have now. You know, at the moment, 75% of what we eat comes from 12 plants and animals, but the number of proteins and universe, we don't know the number. There are so many proteins that we have no idea what they do, what they could do. And I think the idea to some of the access products and foods and taste we haven't been able to before. I mean, there's that company that's raising money to grow. A mammoth Darwin's favourite food was a Galapagos turtle. Wouldn't even think of doing that now, but perhaps we're going to suddenly have access to these tastes and textures of the past.
Clare [00:23:06] That was Catherine Tubb, author of the Rethink X report The Disruption of the Cow. Interesting reading, Mark.
Mark [00:23:14] Yeah, I think in some cases, the innovation in the technology is amazing, and we're all on a passion project and we all love what we're talking about. But in my opinion, some of the timelines are optimistic. And I think also that these companies that are already existing that have done a job in feeding populations already, they need to look at how they're pivoting and how they are creating traceability and sustainability as they already are within what they're doing. And we know that from some of the companies that we're talking to, it's about businesses understanding how they want to operate and how they want to transact with people and what people will expect of them going forward. I don't think that was suddenly gone to shit to the extent that all these industries are going to be eradicated overnight or certainly in the short term.
Clare [00:24:07] However, the rate of production change pans out. Evidence of this catalyst of change can be seen in the branding and diversification of the large food multinationals. A few final thoughts from our New York plant tech food proponent and investor David Benzocaine.
David [00:24:23] So you look at a company like Cargill, one of the world's leading producers of meat and of ingredients for agricultural industries. While they still are in the animal industries, they have made a massive shift towards plant-based and alternative protein categories because they recognize that's where consumers are going. That's where therefore manufacturers want to be. And so that's what the ingredients they're demanding. And that's where they need to be as a company to be resilient to the risks of being dependent on an outdated, inefficient supply chain. And other companies are doing the same. If you look at a company like Tyson, they no longer describe themselves as a poultry or meat company. They describe themselves as a protein company. And that's become extremely popular amongst previously animal-based companies to reframe how they're thinking about what they're offering to be about protein and nutrition, and not about the way in which that is provided currently.
The thing I would suggest is that people look at FAIRR.ORG - It's called the Farm Animal Investment Risk and Return. Founded by UK investor Jeremy Coller, FAIRR is an organization that helps to educate and rally investors, global investors, with trillions of dollars in assets around understanding the risks that come with being dependent on animal agriculture. And they're helping investors to assess whether the large food companies they're investing in are at risk of climate disasters or foodborne illness disasters that can really mess up their supply chain.
Clare [00:25:59] There are many projections out there of how alternative protein will reshape future market shares. Many more moderate than the projected trends discussed by Catherine Tubb and David Benzaquen. But one thing is for sure this emerging sector ticks many boxes on the road to net zero. So much so. Protein diversification and its associated technologies not only fits well with national climate mitigation strategies, but it’s also now on the agenda for many leaders, talent and businesses across the established agricultural community. Here's Mark from Chaseman Global.
Mark [00:26:32] At the moment, there's an interesting space within a lot of amazing businesses in AgTech providing amazing products, but we see a consolidation happening in this space over the next few years. They are embracing technology here in Australia. I think we have some of those innovative farmers on the planet with droughts, floods.
Technology is great, but it has to solve the problem. It has to simplify their lives. What farmers don't want is the complexity that is driven by transacting with, say, 15, 20 different companies. So we do see some consolidation within the space. But you know, there is definitely going to be some huge shifts and exciting shifts when it comes to the whole farm management, productivity and how things move forward. Agriculture has changed in the last sort of 10 years and will continue to change at quite a pace, which is exciting.
Clare [00:27:23] So the market is a tough conversation, something that needs to be discussed. Change is key. Confidence in future markets. What? Everyone's got an opinion about it, haven't they? What would you say the analysis is from Chaseman? Is it cultivating that talent to drive the industry in the right way and bring everyone else along with it?
Mark [00:27:43] We're very focused on that. We're passionate about finding the right people when we map markets and when we look for people, we're not blinkered from a point of view of the talent that we're looking for. Sometimes it comes from outside the agricultural sectors. A lot of the times there's a requirement that it's within the agricultural sector, but we're all about finding the best people to solve these problems and drive these businesses forward. And the message to everyone now, and it's clear with any business, is the change is coming. We have to embrace it. It is for the right reasons, obviously, and not fear and really embrace it and drive it forward for the greater good.
Clare [00:28:19] Chaseman Global's Asia-Pacific director, Mark Cooper.
Well, that's it for this episode. My sincere thanks to Mark Cooper. David Benzaquen and Catherine Tubb. Next time on cultivating conversations THE VERTICAL, we chat to the entrepreneur behind the largest indoor vertical farm in Europe and learn how he successfully made the transition from Start-Up to scale up. I'm Clare Nasir and you've been listening to cultivating conversations.