The future of plant-based alternative protein ingredients

Plant-based protein ingredients and formulation

Step into the realm of plant-based alternative protein ingredients and formulations through the lens of a private equity investor. Together, we'll uncover the trends, customer needs and solutions for plant-based ingredients and key considerations for corporates looking to expand into this segment.

What trends do you see in the plant-based ingredient industry that are relevant for large corporates interested in entering this market?

There are different steps in the plant-based ingredient value chain, where a company could potentially enter the market. The hurdle to join in on genetics/strain development for plant proteins will be too big – established companies such as Bayer for example have an enormous head start and the process is very complicated to start from scratch. New entrants should therefore partner with companies that license different genetics and then try to evolve that plant with a good level of protein to also have higher levels of other desirable components such as fiber, iron etc. Initial processing is also difficult to enter due to high consolidation and initial investment. An interesting segment is wet fractionation where there is currently more demand than capacity in North America. Protein isolates with 80-90% purity produced via wet fractionation can be sold for three times the price of dry fractionation product, which is only 50-70% pure. Many companies are recognizing this and a lot of capacity is coming online in the next two years.

Company portfolios are also evolving into having multiple sources of protein e.g. chickpea, yellow pea, soy beans, wheat, etc. as this allows the customer to choose from a broad set of functions each better suited for a different application. Flavor houses already have broad portfolios to source from and help you structure the entire product matrix that can meet specific needs such as gluten-free, vegan, lactose-free etc.

End products are developing into whole cuts and how the product is presented is becoming more important. The plant-based product needs to look appealing in the uncooked form as well and need to be placed next to the traditional meat products as in a butcher’s shop.

What are the key customer needs in plant-based ingredients?

Nutrition is a big one, customers are looking for higher iron & vitamin B12 content, better amino acid profile, PDCAAS/DIAS scores need to be close to traditional animal proteins, fiber-rich, allergen- and additive-free. Many smaller companies provide flavors but do not have the library that other larger players do. The consumer needs meanwhile are starting to evolve to clean label and finding ingredients that are multi-functional, which is easier to serve with a large library of ingredients. Personalized nutrition is also a part of this market, not only for plant-based meat analogs, but also other plant-based solutions such infant nutrition and formulations for chronic conditions (e.g., constipation, allergens, etc.).

Another persisting issue is the flavor which is still not on the level of animal-based products. Especially whole cut products are much further away from sensory parity than the processed meats. Aside from processed hamburgers and patties there has been no product that can be sold on grounds of taste. Umami taste profile and species-specific taste profile for e.g. lamb, Wagyu, different seafoods also need to be developed but the solution to this is still unclear.

Finally, price parity is an important issue for all alternative protein products. The answer for price parity will change as the cost of traditional meat will increase; many investors still have 4 $/lb in mind but the costs are rising quickly. In some regions e.g. The Netherlands price parity for some products has already been achieved. Pricing depends heavily on the type of ingredients (e.g. soy vs pea or beans) and on the product type. Here whole cuts are again lagging behind processed meats even though the ingredients are essentially the same because the manufacturing technology has not yet been successfully scaled.

What technologies or activities could help solve these problems?

To improve nutrition and flavor producers can work with smaller companies e.g. Shiru that are developing a library of plant-based solutions with prototyping based on AI. A top of the list clean-label request is to find a replacement for methylcellulose binder, which has a very large potential to win over customers.

Among plant-based processing technologies extrusion is the most well-known, but alternatives such as 3D printing and shear cell technology are emerging. A common problem is that some flavors and other micro ingredients degrade after formulation. Nano-encapsulation could be a solution because it is more stable and better at inserting specific nutrients directly into the product, but expensive in terms of application. For example, Redefine Meat is working on 3D printed meat. The texture is incredible, but the flavor is not there yet – it needs to be incorporated better into the 3D printing ingredients or survive processing.

Within extrusion technology wet extrusion is gaining ground since it provides better formulation in most products but ideally a producer would have a facility which provides both wet and dry extrusion capabilities because some plant protein applications function better under with dry process.

Achieving price parity could be tackled by creating a plant-protein optimization lab where all parts of the plants – husks, whole beans, oil, etc. – are used for different plant-based or even fermentation products.

About Caio Malufe

Caio is a private equity investment professional and operator with 10+ years of experience, having led investment, strategy and business development projects for multiple start-ups, corporates and funds in the Food & Agriculture sector globally.