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Strategic entry modes into sustainable food alternatives
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Published July 4th, 2024

Strategic entry modes into sustainable food alternatives

Summary key insights

The article explores the food and beverage industry's strategic approaches to entering the sustainable food alternatives market, a sector known for its potential in environmental sustainability and market growth. It outlines three strategic entry modes—Build, Partner, Buy—each with unique advantages and challenges to help businesses mitigate risks and achieve their objectives effectively. Discover practical strategies for entering this dynamic sector, whether through building capabilities, forming partnerships, or acquiring established players.

Reading this article provides valuable insights into the strategic entry modes employed by companies venturing into the sustainable food alternatives sector. It highlights the tangible first steps these companies have taken, from integrating innovative food technologies to optimizing their market approaches. You'll discover how successful firms have aligned their unique capabilities and goals with an entry strategy, offering a clear blueprint for navigating this dynamic industry effectively.

Estimated reading time: About 5 minutes

The food and beverage industry's shift to sustainable food alternatives: strategic entry modes

The food and beverage industry is increasingly acknowledging the viability of the sustainable food alternatives sector. Even amidst temporary fluctuations, such as the recent dip in demand for plant-based meats that stirred negative perceptions, the resilience and potential of this sector persists. Strategic investments in alternative proteins not only align with timely market trends but also ensure substantial returns through enhanced sustainability, market diversification, and access to emergent technologies.

Environmental and market benefits of alternative proteins

Alternative proteins, requiring significantly fewer natural resources compared to traditional animal-based proteins, promise a substantial reduction in environmental impact. Studies suggest that producing plant-based meats results in approximately 30% to 90% lower greenhouse gas emissions compared to conventional beef. For cultivated meat (lab-grown), early data indicates potential reductions in emissions by 70% to 90% once the technology matures and operates at scale. This sector caters to a rapidly expanding demographic of health and animal welfare conscious consumers, broadening market reach. It has potential to eventually reach wide consumer groups beyond the ones looking for vegan options. Thus, early adopters gain critical advantages, from setting industry standards to spearheading technological innovations, which could solidify their market leadership.

Strategic entry in the alternative proteins sector

The complexity and novelty of the alternative proteins market demand a meticulously tailored entry strategy to mitigate economic risks while achieving business objectives. Depending on a company’s unique capabilities and market goals, the entry strategy varies significantly:

Build: Building the capability to produce alternative proteins internally requires a strategic approach to mitigate risks associated with cost estimation inaccuracies and potential overruns. Given the novelty and technological complexity of alternative proteins, particularly in methods such as precision fermentation and cultivated meat, initial cost projections can often be underestimated by 50-60%. To navigate these challenges effectively, companies should prioritize comprehensive feasibility studies that delve into every aspect of production, from technology requirements and supply chain logistics to regulatory compliance. This ensures a realistic initial estimate and highlights potential hurdles early in the planning phase.

Partner: Entering the alternative protein space via partnerships offers a strategic route for companies looking to mitigate the risks and costs associated with internal capability development. Partnerships, particularly in such a technically demanding and rapidly evolving sector, can significantly reduce initial capital outlays—often by 30-40%. This approach allows companies to leverage external expertise and existing technologies, accelerating time to market and spreading the financial and operational risks. To effectively implement this strategy, it's crucial for companies to establish clear agreements on the division of responsibilities, intellectual property rights, and revenue sharing. Additionally, selecting partners whose strategic goals align with one’s own ensures smoother collaboration and mitigates the risk of strategic misalignments. For instance, companies venturing into plant-based proteins have successfully partnered with agricultural and supply chain experts to streamline production and distribution, optimizing both cost and efficiency.

Buy: Choosing to enter the alternative protein market via acquisition offers a direct path to market presence and immediate access to established technologies and customer bases. This mode is particularly advantageous for companies seeking a rapid scale-up in the competitive landscape. Acquisition costs, while substantial, are often justified by the immediate operational capabilities and market access they confer. However, companies must carefully evaluate potential targets for compatibility in corporate culture, technology scalability, and market position to avoid common pitfalls such as integration challenges and performance shortfalls. Historically, up to 70-80% of mergers and acquisitions fail to meet performance expectations, primarily due to issues in cultural integration and technology assimilation. To mitigate these risks, thorough due diligence and a well-structured post-acquisition integration plan are essential.

Table 1 summarizes three strategic entry modes for companies considering entry into the alternative protein landscape while considering the above-mentioned considerations: Build, Partner, and Buy.

Table 1 - Click to expand

Strategic entry roadmap and expert guidance

In summary, entering the alternative proteins market presents a significant opportunity for innovation and growth, but it also involves complex challenges that require strategic planning and execution. Companies can choose from three main strategies to enter this space: build, partner, buy. Each approach has distinct advantages and potential pitfalls, with internal development offering control at the expense of higher costs and risks, partnerships reducing initial outlays while requiring careful alignment, and acquisitions providing quick market access but necessitating thorough integration efforts.

For companies considering entry into the alternative proteins sector, the following step-by-step guide can help streamline the process:

  1. Conduct a market and feasibility analysis: Understand the market landscape, regulatory environment, and technological maturity/ requirements.
  2. Define a focused strategy and choose an entry strategy: Based on capabilities, goals, and risk tolerance, define a focused strategy within the space and select whether to build, partner, or buy.
  3. Develop a detailed plan: For building, focus on technology acquisition and facility setup; for partnering, identify and negotiate with potential partners; for buying, conduct due diligence and prepare for integration.
  4. Implement with flexibility: Maintain adaptability in plans to manage unforeseen challenges as they arise.
  5. Monitor and optimize: Continuously assess performance against objectives and adjust strategies as necessary.

For firms seeking expert guidance in the sustainable food alternatives industry, Bright Green Partners is well-positioned to provide specialized consulting services. With a deep understanding of the alternative protein industry and a track record of successful engagements, we can effectively support your business. Our top-tier consultants empowered by our expert network of over 2,500 industry professionals can help tailor your entry strategy, mitigate risks, and find suitable industry partners. We are committed to positioning your business for success in this dynamic and promising sector.

Discover how we can support your journey in the alternative protein industry. Schedule a call with our Managing Partner, Floor, to discuss your needs and explore tailored solutions for your business.

Ready to discover what alt protein strategies could mean for your business? Discuss it in a 30 minute call with our Managing Partner, Floor.
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