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Demand for plant-based protein is sparking product innovation

WellToDo | February 2020

With the global plant-based protein market predicted to reach $40.6 billion by 2025, food brands big and small are doubling down on innovation to meet rising demand from health-conscious consumers.

Over the past 6 months, koji bacon, seaweed shrimp and soy sausages have all hit the market, with brands including Unilever, Nestlé, Tyson Foods, and Archer Daniels Midland Company (ADM) investing millions of dollars on NPD within the space.

According to ADM, leading industry player and one of the world’s largest suppliers of food ingredients, ‘protein surplus’ (i.e. added vitamins and wholegrains), product variety, and ‘clean’ options with minimal ingredients, among others, will be the key trends driving this market going forward.

2020 is “going to be another break out year” for the plant protein market, says Kurt Long, director of Flexitarian Solutions at ADM, adding, “we expect to see even more new and enhanced protein options hit the shelves in the coming months, and to get an edge in this growing space, manufacturers have to respond quickly with on-trend products.”

As demand for nutritional and sustainable plant-based food soars, established companies are responding with product development, investment and expansion in order to consolidate their market position and ensure long term customer loyalty.

Last year, DuPont Health and Nutrition expanded its range with a new plant-based, high protein ‘nugget’ made from soy and pea sources. While this January, the Merit Functional Foods Corporation received a sizable co-investment from Protein Industries Canada to facilitate the completion of a $65 million pea-protein and canola-protein facility by the end of the year.

Established in 2019 by Burcan NutraScience - global technology leader in the development of plant-based proteins - and three veteran food industry executives, Merit Foods looks to produce the first high-purity, non-GMO canola protein products for the global market. Not only is the new production facility “crucial” for the company’s continued growth, says Co-CEO Ryan Bracken, but it will help to “create a new value-added revenue stream for canola grown in Western Canada.”

And it’s not only existing brands that are capitalising on this high growth market; recent years have witnessed an explosion of startups seeking to disrupt the category and cement their position as one of the leaders of the plant-based protein movement.

As demonstrated in the growing number of new and exciting products gracing supermarket shelves, protein diversification is increasingly common among startups as a means to distinguish themselves from competitors and satisfy consumer demand for product variety.

Seeking to fill the gap in plant-based seafood options, US startup Good Catch offers seafood classics made from legumes and algae oil. Launched in 2016, the brand made its first commercialisation partnership outside of the US earlier this year, with a national listing in Tesco stores. This followed on from the announcement that the company raised over $32 million in a series B financing round led by several leading industry players including Greenleaf Foods and New Crop Capital.

It is estimated that $673 million was invested into the US plant-based industry alone in 2018, whilst European investment into alternative proteins is projected to reach €600 million this year according to a Dealroom report on the food tech sector.

Inevitably, this influx of investment, a result of those wanting to cash in on this mass consumer dietary shift whilst also improving their portfolio against the Sustainable Development Goals, is accelerating innovation within the industry.

Last week, Dutch startup FUMI Ingredients, which claims to have produced the world’s first vegan and non-GMO egg-white replacer using upcycled beer yeast, received its first investment of €500,000 from Innovation Industries and SHIFT Invest.

Elsewhere, SEN Foods - a Czech startup offering high protein, insect-based products - raised €1.9 million in Series A funding in a round co-led by Reflex Capital and Presto Ventures.

In 2019, Emergy Foods - a US startup using mycelium to grow ‘whole muscle’ plant-based proteins - secured $4.8 million in venture capital funding from 12 investors.

Despite the flurry of investment and innovation, experts in the space believe there are still plenty of untapped opportunities to seize.

“I don’t think there’s anything on the market right now that can match the textural qualities of a whole muscle meat,” Tyler Huggins, CEO of Emergy Foods, told NOSH. “We’re looking at different white spaces that we believe are untouched in the market right now, and we’ll be coming out with a variety of different products.”

With the market still in a relatively early stage of its life cycle, and consumers increasingly seeing plant-based alternatives as the norm, innovation in taste, texture and flavour will remain a key tactic for brands both old and new. In turn, such developments promise a more diverse and more sustainable food supply chain in the near future.

Minnie Taylor