Straight talk about plant-based protein
Wells Fargo Senior Vice President and Strategist
February 20, 2019
Vegan, vegetarian, and flexitarian diets have grown in popularity in recent years as consumer preferences and values have shifted towards health and wellness, humaneness, and sustainability. My study of plant-based meat alternatives, an important component of the alternative protein complex, yielded some interesting observations:
- Meat alternatives remain a popular and mostly tasty substitute for traditional animal protein; however, I see meat alternatives as an additional choice rather than a complete disruptor.
- There is considerable variation among products as to the amount of protein, fat calories, and sodium content contained in individual vegan meat alternatives. Thus, consumers need to carefully read labels before concluding that something is “healthy” just because it is derived from plants.
- While some of the narrative around plant-based protein focuses on the amount of water needed to produce one pound of beef (high at approximately 1,800 gallons), certain nut crops, like almonds, are even more water thirsty. If we want to come clean on alternatives, it actually takes more gallons of water to produce a pound of lentils then a pound of chicken.
- The meat alternatives sector is projected to grow globally at a rate of 7.5 – 8.0% between 2016 and 2022.1 While this growth rate seems high, it actually falls within 115 basis points of the expected growth rate for production of traditional meat and seafood. Hence, there might be an element of “hype” associated with the meat alternative industry’s growth rate, especially when considering the much lower base than traditional animal protein.
Tofu has been around for more than 1,000 years, so plant-based meat substitutes are not exactly a new phenomenon. However, the alternative protein category has grown in popularity in recent years for various reasons. First, a growing body of medical research points to better health and wellness from plant-based diets. Second, consumer tastes, values, and preferences are changing. Third, consumers are promoting more humane treatment of animals within the food production chain.
Another underlying factor with respect to changing consumer values towards plant-based protein relates to environmental stewardship, sustainability, and climate change. This is because animal protein production, beef in particular, requires more gallons of water per pound of protein produced compared to soybeans and peas.2 Additionally, livestock farming, including dairy, results in large amounts of methane gas release — from cow burps, manure, and flatulence — which is responsible for 14.5% of global greenhouse gas emissions3.
Ironically, the devil is always in the details. If more livestock consumed grass versus grain-based diets, digestion would improve, and methane gas release from cows would decline. Additionally, if we moved away from monoculture farming (the large-scale, industrialized production of just grain, animal protein, and dairy, but not all three together), and back to closed loop farms, manure could be applied as crop fertilizer, thereby reducing the need for mineral fertilizers and the chemical run-off into freshwater.
How did we get here?
During the late 1970s, I remember hearing from various media sources that bee pollen, wheat germ, granola, and ginseng should be consumed as a means towards achieving superior health. And The Jack LaLanne Show, created by the namesake body builder and exercise guru, told us that all we needed to do was exercise and eat right in order to maintain superior mental and physical health. While many Americans began understanding the need for healthier eating during the decade of the leisure suit, other things were shifting that made eating healthy much more complicated. In particular, diets began shifting away from home-produced meals in favor of packaged, processed foods. Also, soft drinks were expanding beyond the soda category, following the invention of Gatorade in 1965, to include other sugar-heavy beverages. Further, foods were being enhanced with edible oils and other sweeteners to improve taste.
By the 1980s, eating out several times per week was becoming a regular lifestyle. This was seen in the explosive growth of a Boston-based chicken restaurant, the predecessor to the current Boston Market, which is credited with creating the “fast-casual” restaurant category. The concept was to sell home-style meals to working professionals, dual-income families, and other demographics that lacked the time, desire, and/or expertise to prepare and eat home-cooked meals, but nonetheless demanded such.
Fast forward to the 2000s, and an increasing number of people across the age spectrum were experiencing higher incidences of diabetes, hypertension, and obesity. Diet, and quantity consumed, coupled with irregular physical activity, are often cited as contributors to these conditions.
Protein versus alternative protein
Proteins, often called the “building blocks of our bodies”, consist of small molecules known as amino acids that together form protein chains. Alternative proteins, such as plant-based meat substitutes and edible insects, provide a substantial amounts of protein, but require less natural inputs to produce. Composed of different sequences of amino acids, proteins are found in almost all whole foods.4 While plant-based protein products, such as tofu, veggie burgers and other “fake meat” products have been on the market for some time, insect protein and lab-grown meat are newer products whose future rate of adoption by mainstream consumers remains unknown.
How large is the addressable market?
There are several published estimates of the size of the global meat alternatives marketplace. The middle of the range amounts to about $8 billion dollars. This is small relative to the multi-trillion (USD) global meat, poultry, and seafood market. In conducting research, I expected meat alternatives to be forecasted to grow at a much higher nominal rate coming from such a small base. However, the following chart indicates that growth in plant protein is only slightly higher than meat, and largely in-line with expected seafood market growth.
Source: Statistica, Inc. January 11, 2019
Source: Statistica, Inc. January 11, 2019
“Who’s who” in alternative protein
According to CB Insights, there are 99 startup companies that are classified as manufacturers of alternative proteins. Below are a number of so-called vegan meat branded companies that I currently follow, and from whom I have tried products.
- Beyond Meat is a Los Angeles, CA-based creator of plant-based meat substitutes made from non-GMO, gluten-free pea protein. The company began selling its products on a national basis through Whole Foods in 2013.
- Entomo Farms is a Canadian producer of cricket flour, whole-roasted crickets, and seasoned cricket snacks for humans, and cricket powder for pets. On its website, the company claims that crickets offer 3x more protein than beef and 2x more protein than soy, while also providing 10x more vitamin B12 than salmon and 3x more potassium than a banana.
- Impossible Foods is a Redwood City, CA-based company that produces plant-based substitutes for both meat and dairy products. The company is most frequently associated with its trademarked “Impossible Burger” product launched in 2016.
- Memphis Meats is a San Francisco, CA-based food technology company aiming to grow” sustainable cultured meat” using biotechnology. The company’s CEO and co-founder is Dr. Uma Valeti, a Mayo Clinic-trained cardiologist who previously served in leaderships roles at the American Heart Association and American College of Cardiology.
- Tofurky is the trademarked brand name for Hood River, Oregon-based Turtle Island Foods. Turtle was an early pioneer in the American plant-protein marketplace. The company produces fully vegan, meatless products, including tempeh, deli slices, veggie burgers, and hot dogs, made from organic tofu and wheat protein.
What’s the nutritional story?
Over the past six months, I sampled nearly all of the following 15 products listed in the below chart considered to be alternative protein. In general terms, I found the taste and consistencies to be generally good and enjoyable. However, in creating a comparative nutritional matrix, I was disappointed with the composite scores of a few of the products, specifically Cento Lentil Soup, Upton’s Jackfruit, and the Dr. Praeger’s veggie burgers, given the low relative protein and high sodium content. The Impossible Burger and Burgerville Bean Burger were delicious and full of protein at 20-21g per serving, but a bit high in sodium content. Additionally, I found I had to eat two of each of these products to satisfy my hunger. From the standpoint of lean protein, I found Trader Joe’s Tempeh to be the standout meat alternative, with its 20g of protein, 240 calories, and only 10mg of sodium.
Source: Fatsecret.com January 11, 2019
How do animal proteins compare to each other?
My study revealed that chicken breast and pork loin offer a better combination of high and leaner amounts of protein (23-25g per serving), calories, and sodium relative to a beef burger. Interestingly, while turkey breast offers a respectable 15g of protein and low calories per serving, it has the highest amount of sodium of the four products.
Source: Fatsecret.com January 11, 2019
There is much to like about plant-based protein alternatives as an addition to my diet, and I have personally increased my intake to ensure my own health, and the planet’s resilience. However, consumers must carefully read the nutritional labels of products in the marketplace for accurate understanding of the amounts and quality of the plant protein in various foods. Also, while it is tempting to ignore the dynamics underpinning the growing popularity of alternative proteins, food innovation comes in many forms and flavors, and the plant-based food movement is here to stay as an additional food category. That said, I believe that venture capitalists must conduct deeper diligence on the sector’s long-term growth dynamics before committing capital at potentially overly optimistic valuation levels.
1. Statistica, Inc.
2. U.S. Geological Survey
3. United Nation’s Food and Agriculture Organization
4. The Lexicon of Food, January 3, 2019