Alternative Protein: A Food Manufacturers Guide [+ Case Study]

Alternative proteins have seen a rise in popularity over the last decade - a trend expected to continue in future - as consumers look to maintain their protein intake while avoiding meat for personal, environmental or health reasons. Food manufacturers will find new opportunities in the alternative protein market as consumer demand surges for non-meat proteins: insect, plant and algae-based products, and ‘lab meat’ cultivated from animal cells. This article details how food manufacturing in the area of alternative proteins is developing, including:

• Current trends and future growth in the alternative protein market
• A case study of how one new food manufacturer is taking advantage of opportunities in the alternative protein market
• Six types of alternative protein food manufacturers are producing
• The pros and cons of manufacturing alternative proteins
• Food inventory management and alternative proteins
• Why consumers are turning more to alternative proteins 

The alternative protein industry: current and future growth

The alternative protein ingredients market has grown rapidly in recent years. In 2021 the alternative protein market is estimated to be worth US$14 billion, and this is predicted to continue rising – with growth tagged to be as high as 50% over the next few years. This growth in the alternative protein market is in line with consumer demand. According to an EY survey, almost 50% of consumers say the environment and climate change are now key to their purchasing decisions. More than 60% of consumers around the world say they will be ‘more aware of their physical health’ in future. The alternative protein market remains tiny, however, compared to the global meat and dairy market – which is valued at around US$2 trillion, with expectations of moderate growth. The demand for alternative proteins has surged in recent years, creating an opportunity for food manufacturers.

How food manufacturers are taking advantage of the alternative protein trend: A case study

One recently launched New Zealand company, Food Nation, is proving a winner in the alternative protein space. Food Nation uses vegetables and other ingredients like hemp, quinoa and buckwheat to make a range of ‘plant-powered’ products, such as patties and sausages. This company is the brainchild of sisters Miranda Burdon and Josie Lambert, who were inspired by reading about how changing eating habits could impact health and the environment. Both sisters had a background in the food industry, and realised there was a gap in the market – meat-free patties had been around for years, but these included ingredients like gluten and imported soy. They took a year to develop vegan products that showcased locally grown produce such as mushrooms and hemp. Food Nation began selling its products in 2020, and has already made a splash internationally. After only four months in business, it picked up the ‘Best Meat Alternative’ prize at the World Plant-Based Awards in 2020. It was also a finalist in the Best Packaging category. A New Zealand shop in Hong Kong stocks its products, and the company is investigating markets in the US and other parts of Asia. Food Nation benefitted from a $147,000 investment by the Ministry for Primary Industries’ Sustainable Food and Fibre Futures fund, which co-invests in initiatives to explore and develop sustainable methods of food production. Food Nation is one of several organisations that have received funding from MIP to investigate the production of alternative proteins, including spirulina and protein from snails. Innovative food manufacturers are creating novel plant-based goods.

6 types of alternative protein food manufacturers are producing

Many different alternative proteins are being developed to meet growing demand:

1. Insect protein

Insects are a highly nutritious, dense source of protein. But only 10% of Europeans would be willing to swap their meat for insects, according to a European Consumer Organisation survey. The ‘yuck’ factor associated with eating insects is proving a challenge to manufacturers. But attitudes are shifting – evidence of insects’ nutritional value, alongside the efficiency and sustainability of farming them, is contributing to their rise in popularity as a food source. The insect protein market is expected to reach nearly US$5 billion within six years. Across the world, many companies are now investing in insect-based food production. French company Ynsect, for example, farms mealworms to produce food products for humans and animals. Ynsect is currently building its third production site, which is the world’s largest vertical farm. In 2021 Ynsect acquired the Dutch company Protifarm, which produces a range of insect-based ingredients.

2. Non-milk protein

A trend toward dairy-free diets – spurred in part by awareness of dairy allergies – is contributing to the rise in non-milk protein production. There are numerous non-milk protein options now widely available, including those made from soybeans, nuts, and plants. The soy milk market, for example, has grown rapidly in recent years and is forecast to reach more than US$11 billion by 2025. The increased popularity of flavoured soy milk and its use in products such as yoghurt and desserts is driving much of the demand.

3. Whey protein

Whey is the liquid that is created during the production of cheese. Whey used to be discarded as a waste product, but it has a powerful range of essential amino acids that support the strengthening of muscles and loss of body fat. Because of this, whey is popular with bodybuilders, who usually consume this as a flavoured milk or in powder form. The demand for whey products has soared in recent years, and many businesses in this space have built new factories to meet demand. For instance, Arla Foods produces a range of whey-based products, from ingredients for infant formula to sports bars for athletes. Food manufacturers are exploring how more of our food can be made out of insects – such as crickets.

4. Plant proteins

Plant proteins are another popular alternative to dairy or meat-based proteins. Tofu, for example, is made from curdled soy milk, and is popular because of its mild flavour and high nutritional value. Long used in Asian cuisine, tofu is increasingly popular in Western diets. The tofu market is expected to surpass US $1.2 billion by 2028, as more consumers turn to vegetarian and vegan diets. The pea protein market is also predicted to boom: in 2017, the pea protein market worldwide was worth US$32 million, and this is predicted to rise to US$176 million by 2025. Other popular plant proteins include quinoa, chia and hemp seeds.

5. Lab meat

Lab meat is emerging as an alternative for consumers who are reluctant to fully move to a vegetarian or vegan diet, and wish to maintain some meat in their diets. Lab meat is created by taking cells from live animals and developing an edible meat from those cells in a laboratory. US company Eat Just produces lab meat chicken bites that are produced by growing cells in a bioreactor. These cells are then combined with plant-based materials to make their chicken bites. In 2020 Eat Just’s chicken bites was authorised to sell lab meat commercially in Singapore – the first company to achieve this. Eat Just’s co-founder and CEO, Josh Tetrick, predicts that while its product is currently more expensive than traditional chicken, ultimately it will be cheaper, as production increases. Eat Just’s growth and its success in Singapore looks forward to a future in which meat can be produced in bulk without killing animals or environmentally unsustainable farming practices.

6. Algae protein

Algae is rich in nutrients and amino acids, and is often available in powder form, making it easy to add to drinks or meals. Popular options like spirulina and chlorella are rich in vitamins, and have high levels of amino acids, essential fatty acids, and complete proteins. Dried algae has around as much protein as soybeans, but higher levels of essential amino acids. Because of this, protein from algae is increasing in popularity among consumers who are particularly concerned about their health and/or the environment. Manufacturing businesses are looking to take advantage of the algae trend. As part of its sustainable foods drive, multinational giant Unilever has partnered with Algenuity, a biotech startup specialising in algae production for specific markets. Algenuity has worked out a way to remove algae’s bitter taste, making it more palatable for consumers. Spirulina – often available in powder form to be added to smoothies – is rich in protein, essential fatty acids and vitamins.

Alternative proteins – the pros and cons for food manufacturers

As with any emerging industry, there are pros and cons in manufacturing alternative proteins. Each type of alternative protein has its unique pros and cons. For example, a business looking to market products containing insect protein will have to overcome consumer reluctance around eating insects. Anyone seeking to build a business in the sector should ensure they have done their due diligence on these points. Other issues a manufacturer will need to explore are:

• Cost and sustainability of production
• Supply chain stability
• Consumer demand
• Labelling concerns – e.g. consumer dislike of long, complex ingredient lists
• Taste
• Nutritional benefits

In addition to these factors, not all alternative proteins are considered ‘complete proteins’, which can mean the product is less marketable. Snack balls which contain proteins from products like nuts and hemp have grown in popularity in recent years.

Here we outline four considerations for alternative protein manufacturers:

1. Insect protein - the ‘ick’ factor
2. Lab meat – cost and labelling concerns
3. Fruit, vegetable and nut production - environmental impact
4. Pet food and alternative proteins – a new opportunity

1. Insect protein- the ‘ick’ factor

Insect proteins have a distinct ‘ick’ factor among consumers that is proving hard to shake. The concept of eating a bug - which has been presented as a nightmare scenario on some reality television shows - continues to be off-putting for consumers. And this is despite the fact that insect proteins have clear nutritional benefits, and insect farming is environmentally friendly and cost-effective. It is also unclear how insect-based products should be stocked in stores - they are considered meat, but more palatable for vegetarians and vegans than livestock meat. As a result, insect-based products often end up in the ‘organic’ or ‘alternative’ sections of stores.

2. Lab meat – cost and labelling concerns

Lab meat also presents a challenge in terms of mass production and labelling. The methods used to create lab meat are complex, and the proteins required to develop the meat in a lab are currently produced in small quantities, meaning the product remains expensive. However, the price point is rapidly dropping. In 2018, leading lab meat manufacturer Aleph Farms said one serving of steak cost US$50 to make. It now says it’s on a path to producing lab meat that is on par cost-wise with farmed meat or plant-based alternatives. Labelling lab meat is also contentious - debate continues over whether lab meat should be labelled meat alongside other farmed meat products. One challenge food manufacturers face is growing nuts on a large scale without significant impact on the environment.

3. Fruit, vegetable and nut production - environmental impact

Producing and supplying plant-based products also comes with environmental challenges. As outlined in this BBC article, some vegetarian or vegan diets leave a high carbon footprint, due to the consumption of fruits and vegetables transported from other countries. Nuts, in particular, can leave a significant environmental footprint when they are produced in bulk. The mass production of nuts requires intense water, pesticide and fertiliser usage. Plant-based food producers face the challenge of ensuring this mass production is beneficial to both consumers and the environment.

4. Pet food and alternative proteins - a new opportunity

Meat-free proteins have not just risen in popularity for human consumption - the demand for meat-free pet food alternatives has also risen in recent years. Pet owners are increasingly interested in the nutritional and environmental benefits of meat alternatives for their beloved animals. For example, start-ups like Petaluma are now offering products like roasted peanut butter and sweet potato dog food, which also contains chickpeas, peanuts and brown rice. Other plant-based pet foods on the market include those from the likes of V-Planet, which has sold vegan animal foods since 2005 and expanded into Asia in 2020.

• Read more: Pet Food Manufacturing and the Pandemic: Inside an Industry Boom

Pet owners are increasingly feeding their pets meat-free options - creating an opportunity for food manufacturers.

Food inventory management and alternative proteins

The rise in consumers seeking sustainable and nutritious protein sources is expected to continue at pace. As it does, there is a demand for food manufacturers to have more transparent, easily traceable supply chains and sustainable production systems. An effective batch and serial tracking system, for example, helps manufacturers ensure transparency, and allows for easy identification of issues in their supply chain. And with some alternative protein ingredients coming at higher cost, it becomes increasingly important that manufacturers are able to track product margins accurately and easily.

Why are protein alternatives trending?

Food manufacturers looking to capitalise on the alternative protein trend need to understand why consumers have changed their buying habits. Broadly speaking, consumer interest in this space is shaped by three areas on concern: :

1. The environmental impact of the meat industry
2. The ethics of eating animal products
3. The health benefits of vegetarian or vegan diets

1. The environmental impact of the meat industry

One significant contributor to the rise of the alternative protein industry is concern around climate change. In New Zealand, for example, agricultural emissions are the biggest contributor to climate change, and consumers have become increasingly aware of the damage caused by their lifestyle decisions. According to the New Zealand Agricultural Greenhouse Gas Research Centre, emissions from the country’s animal farming do more harm than all other nitrous oxide and carbon dioxide emissions put together. As consumers have gained greater awareness of the environmental impact of traditional agriculture, they have increasingly turned to more environmentally friendly forms of food production. Protein alternatives are trending due to concern over environmental impact, among other reasons.

2. Concern around the ethics of meat production

Many consumers are concerned about the ethics of the meat industry. Consumers have become more aware of animal welfare issues in the farming industry – such as animals being kept in small or substandard pens, having limited access to the outdoors, or lack of contact with other animals. In addition, much industrial-scale meat production relies on antibiotics to manage illness. This is contributing to the rise in antibiotic-resistant bacteria – superbugs that are estimated to kill 700,000 people a year.

3. The health benefits of vegetarian or vegan diets

A concern with healthier diets is also a major factor driving the alternative protein trend. The health benefits of vegetarian and vegan diets have been well publicised in recent years. Non-meat diets generally include more vegetables, fruit, grains and legumes, which are high in fibre, vitamins, minerals and healthy fats. This lessens the risk of several diseases, including diseases of the heart.