News — The global alternative protein market and larger food tech spaces have grown rapidly over the past decade.
Companies brought in billions of dollars in private funding from firms eager to invest in a low-interest-rate environment.
But as , alternative protein companies have been left to navigate a more complicated landscape, seeking solutions and strategies to help maintain momentum. To better understand how alternative protein companies are adapting to this new environment, Mathias Cousin and his team at Deloitte Consulting LLP and his team conducted a series of interviews with sector leaders, gathering insights and an understanding of industry trends.
To learn more about his takeaways from those conversations, I sat down with Mathias Cousin, Managing Director of Monitor Deloitte.
Daniel Gertner: Private funding across all sectors slowed in 2023, and companies in food tech and alternative proteins are operating in a very different funding environment than a few years ago. What are some ways startups can best navigate the current fundraising landscape?
Mathias Cousin: I wish I had a silver bullet for what companies need to ensure a successful fundraising round with large sums of capital. Unfortunately, there isn't a single solution. That being said, I’ve heard two tips from venture capitalists over the past year. One is to focus on the quality of your product. How does it compare to the status quo? Does your alternative to beef taste like conventional beef? How can you get the customer experience as close to the conventional product?
The second is to have a well-thought-out, scalable plan. “Don’t run before you walk” and be purposeful at the earliest stages of development. Now more than ever, it is important for early-stage startups to be capital-efficient, deliver on the promise of their core capability, and prove that there are paths to profitability.
DG: Alternative proteins often offer sustainability benefits compared to conventional proteins, but sustainability alone hasn’t led to widespread, mainstream adoption of these products. How can companies communicate their sustainability benefits while leveraging other factors like taste, price, and nutrition to attract and retain consumers?
MC: When consumers decide what to buy off the grocery market shelves, they rapidly and subconsciously consider a myriad of factors. First off, the customer has their own traditions or personal conventions, people often purchase what they are familiar with, what they are comfortable with, and the products or product types they were raised with. To help overcome those traditions, you need to beat the traditional product with factors such as price, branding/familiarity, taste, and sustainability to name a few. I don't think companies can lead with just sustainability. Products should be great and sustainable, not sustainable and great. Let's consider clothing as an example. I would argue that customers buy clothing solely for reasons such as brand familiarity, cost, quality, and trendiness, to name a few, and that sustainability is an added bonus to the previously mentioned factors. The takeaway here is to have great and sustainable products.
DG: As the food tech sector matures, it's diversifying to include foods enabled by fermentation and cell cultivation. What do these innovations mean for the future of the sector, and how can they help address consumer needs?
MC: I think it means we’re going to see a lot more innovation and different food varieties. In the earlier years of the food tech revolutions, products were either a dairy alternative or a ground meat alternative. It has been very exciting to see all of the new categories. One of the new food tech categories is baby nutrition (human breast milk) made using precision fermentation. This innovation wasn’t on my radar, but thanks to the diversification of food tech, I anticipate we will see even more new and unique products soon.
I also think that precision fermentation and cell cultivation represent a quantum leap in the possibilities of food manufacturing. This has enabled us to think about creating new foods that we couldn’t have thought of previously. This is a longer-term vision but one worthy of excitement, especially if we can scale.
DG: We continue to see robust involvement in the food tech and alternative protein sectors from diversified meat and CPG companies. How are they engaged, and do we expect that to change over time? How does the involvement of some of the food industry’s largest players influence innovation and market dynamics?
MC: Unbeknownst to the average consumer, a majority of the food on your grocery market shelves comes from fewer than 10 companies. Since only publicly traded companies are required to share their financials and performances, and most food tech companies are private, these large companies don't have visibility into private food tech companies’ performance, their technological progress, and the adoption of their products. A major trend recently is that these large, diversified companies are investing in smaller, private food tech companies. I am excited to see cooperation and support, but their funding is driven by more than altruism. Becoming an investor usually includes a seat in the board room and access to financial performance metrics. These companies are learning whether food tech companies have a promising product that can penetrate the market with the option of fully acquiring some of the best companies. Overall, I think this is a positive trend for the end user and an encouraging sign for any private food tech company receiving interest from these larger organizations.
DG: Achieving price parity with conventional products remains a challenge for alternative proteins. What are some paths to price parity for these food production technologies, and are there specific business strategies that can help the industry close the price gap?
MC: As is the case with any ',' companies should focus on reducing their costs, becoming lean, and prioritizing their most promising products. I mentioned earlier that venture capitalists are looking for disciplined leaders who won’t run before they walk, and that same sentiment is needed for price parity. Separately, I would also encourage companies to think of business-to-business (B2B) production. Instead of doing all the work to make a consumer-facing product, you can potentially shorten your pathway to the customer by being an ingredient provider and partnering with companies with an existing supply chain, manufacturing line, and customer base. Some examples include egg replacements and flavor compounds. Acting as a raw ingredient provider can potentially accelerate the adoption of food tech. Sometimes the best innovations are ones the consumer takes for granted and doesn’t even know are there.
Before you go
GFI has compiled a suite of resources on the latest innovations in alternative proteins and the steps industry players can take to move the sector forward. Check out our recently published resources on , the , and the .
Donor support makes it possible for us to share all of our data, resources, and expert insights free of charge — in other words: our reports, whitepapers, and newsletters will never be behind a paywall. Consider of $5, $50, or more today to help power our work through 2025 and beyond.
RSS