The Future of Food Stands to Win Big
Like what was mentioned in my previous blogs, the planet is what we eat. The way how we consume food has become critical in how we combat the climate crisis. According to Boston Consulting Group’s (BCG) latest report (2022), animal-related products account for 15% of global GHG emissions.
If we were to shift the consumption of these animal-related products to alternatives, not only it could help eliminate significant amount of emissions, but also presents itself with one of the best and viable investment opportunity we have seen to combat the climate crisis. As you can see from the chart below, investment in plant-based meat and dairy delivers the biggest emissions cuts of all sectors. For example, investment in improving and scaling up the production of meat and daily alternatives resulted in 3x more GHG reductions when compared to investment in green cement. There is a big difference between GHG emissions when compared between meat/dairy products and plants. Beef actually produce 6–30x more emissions than tofu across the whole value chain process. As much as 83% of farmland is used by meat and diary production, and there has been forests being destroyed for grazing and fodder growing.
Besides the positive environmental impact, plant-based meat/dairy products can also help alleviate food crisis. This situation has been exacerbated by the geopolitical tension between Ukraine and Russia. Food security has become an imminent issue countries around the global that needs to be addressed. By going for plant-based or alternative proteins, we’re essentially cutting out the “agent”, whether it’s a cow or a pig. Instead of feeding the crops to the animals and then eating the animals, the crops are directly consumed more efficiently.
While many consumers are aware and willing to switch to alternative protein products if they have a positive climate impact, they are not ready to pay a premium for it. However, we’ve seen investment increasing exponentially around the world as illustrated on the chart below. Many traditional food companies are investing in alternative proteins too, for example, Tyson Foods, Cargill and Thailand’s CP Foods. This is a healthy development since being just the disruptor in the industry is not sufficient. To achieve scale, buy-in from the large corporations along the value chain is key.
There’s been a lot of investments into electric vehicles, wind turbines and solar panels, but we have not seen comparable investments made on alternative proteins. One area that is most undervalued is the alternative seafood. It is only representing 0.1% of the total US seafood retail market. Closer to home in Asia, seafood consumption in the region accounts for >70% of the world. There’s definitely lots of room to grow if it follows the footprint of alternative meat/dairy. Alternative seafood companies doubled the amount they raised between 2020 and 2021. Some food companies are looking to dominate and be the leader in this space. For example, OmniFoods with headquarters in Hong Kong has ventured into this whitespace and aims to capture the first-mover advantage. Earlier in the year, China announced, as part of its 14th 5-year plan, its support for proteins from plants and microorganisms. It’s expected to see a ripple effect in the rest of Asia with more entrepreneurs incentivised to engage more in the space. Regulatory push is often a strong driver to accelerate any changes required to achieve sustainability.
Rapid market growth and high public/consumer awareness also serve as other powerful drivers. According to a report produced by Good Food Institute (2021), the alternative seafood has grown >40% from 2019 to 2021. The new companies that entered into the space during the same period were mainly from US, UK, Singapore and Canada — countries that have high awareness of alternative proteins.
While alternative seafood is at its nascent stage of development, industry players should come together and discuss how they can collaborate more to create synergies and opportunities. Since this is an industry that involves multiple jurisdictions globally and with many stakeholders, finding the right partnership platform is very important to take this to another level. Multi-Stakeholder approach could be useful to provide a platform for an official dialogue, knowledge exchange, standard-setting and eventually transform the partnership to support SDG-aligned investments.
It is exciting to see more and more alternative seafood products being available in the market. However, to make these mainstream, it will still take lots of efforts on education to consumers of the value of these products. Also, like what the BCG survey indicated, consumers are not ready to pay a premium unless there are additional benefits other than having the same taste as conventional meat/dairy. Are you ready to at least give it a try?
Footnotes:
BCG. (2022). The Untapped Climate Opportunity in Alternative Proteins, https://www.bcg.com/publications/2022/combating-climate-crisis-with-alternative-protein (last assessed 2 August 2022).
Green Queen Media (2022). The APAC Alternative Protein Industry Report 2021, https://www.greenqueen.com.hk/download-asia-alternative-protein-report-2020/apac-alternative-protein-industry-report-2021/ (last assessed 2 August 2022).
MSI Integrity. (2020). Not fit for Purpose: The Grand Experiment of Multi-Stakeholder Initiatives. https://www.msi-integrity.org/wp-content/uploads/2020/07/MSI_Not_Fit_For_Purpose_FORWEBSITE.FINAL_.pdf (assessed on 25 March 2022).