Alternative proteins: An attractive market for investors worldwide

Alternative proteins are becoming an important trend in the dietary changes of consumers.

The group of alternative proteins consists of four categories:

• plant-based: protein derived from vegetables and herbs
• cell-based: protein obtained from animal cells by means of biotechnology
• micro-organism-based: protein derived from algae, kelp, mycelia, microbes and other types of micro-organisms
• insect-based: protein derived from insects such as crickets and black soldier flies

More and more people are choosing to reduce conventional proteins from meat, fish or dairy products in their diets for animal, environmental and climate protection reasons, and are instead turning to alternative protein products. A global industry has developed from this demand over the past few years: Companies that offer corresponding end products, but also the technologies and machines to produce and process proteins from plants, microorganisms, animal cells and insects. Likewise, established companies are getting involved and contributing their operational experience and capital investments. This development will provide the industry with strong growth in investment and start-ups over the period 2015-2021.

In the first half of 2022, inflation, disrupted supply chains and increasing consumer restraint weighed on the entire food industry. Financing and transaction activity in the alternative proteins industry also slowed in the first half of 2022 due to the unfavourable global economic environment. However, an upward trend is fundamentally expected as alternative proteins of all categories are forecast to grow significantly in market size in the coming years.

At the same time, the market for tomorrow's alternative protein sources is becoming increasingly competitive, which is why investors are paying particular attention to innovative technologies and processes that show the potential to scale up. Increased capital infusion through investors and collaborations with established companies can achieve the scaling and associated cost optimisation that is the biggest challenge facing this industry. The investments and collaborations enable players to fund research and development projects, expand their production and increase efficiency.

Factors that continue to favour the positive development of the industry also include greater consumer acceptance, technological innovation and, in particular, regulatory support. More and more countries are promoting the production of alternative proteins. However, financial commitment is only the beginning: it is about the rapid yet reliable approval of new foods, the equal treatment of different protein alternatives in terms of subsidies and taxes - ultimately the transformation of an entire industry.   

Find out about financing and transaction activity in the alternative protein industry in the first half of 2022 and the market potential of the individual segments of plant-, cell-, insect- and microorganism-based proteins in our new English-language publication series "Alternative Protein Deal Cosmos". The first issue provides a global and local overview of transactions, investments, start-up and investor characteristics of the industry. In addition, our experts present the development of the start-up and investor landscape with the help of detailed analyses on the individual segments of the protein alternatives.