According to Lever VC Managing Partner Nick Cooney, the growth of alternative protein firms in Asia has been so rapid that the ‘next big firm’ could well have already come into existence and is just waiting to get its products, technology and investments all in place.
“Asia has seen such massive growth in this space – just two or three years ago, there were no alternative protein firms with good products or brands, but today, there are numerous firms and the number is growing everyday,” Cooney told FoodNavigator-Asia.
“As of yet, there is not yet one single company in Asia that fits the description of being the next Beyond Meat or Impossible Foods, but there are definitely many out there that are already showing solid strong early traction - this crop is growing fast and I definitely expect to see one or more of these breakout to become the next Beyond or Impossible for the region and even beyond soon.
“So many firms we know, both ones we invest in and ones we are watching, are showing strong potential, from Hero Protein and Marvelous Foods in China which are growing quickly in their respective categories, to TiNDLE in Singapore – and so many more potential others.”
Although both Beyond and Impossible are plant-based meat firms, the advances over the past few years have progressed so quickly that cultivated products and products made from fermentation technology are also growing rapidly, and it could well be that that ‘next big firm’ comes from this sector if given enough time.
“From the companies we invest in, we have seen exciting and very fast growth from cultivated product firms like Turtletree Labs, Avant Meats which is already looking at commercial stuff, and CellX in China which is growing very quickly,” said Cooney.
“To become the next big alternative protein firm, it really all depends on what the firm is focusing on and them getting their strategy right – we believe that this means they must be focusing on creating the product with the best possible quality and get their technology just right.
“This means putting enough emphasis and time into these areas, as opposed to getting the product ‘just good enough’ for sales then pouring all their effort into marketing instead. That strategy would only get ‘just good enough’ results for the firm, not more.”
Lever VC recently secured US$80mn in investments for its Lever VC Fund I, and although Cooney declined to name the investors due to privacy requests, he told us that the fund has the backing of some of the largest animal meat producers, retail groups and food ingredient players in the South East Asian region as well as China, the United States and Europe.
“The initial target for this fund was US$50mn, which has obviously been exceeded, which is great for us as it means we have more leeway to invest in more plant-based, cultivated and fermented technology companies as well as write bigger cheques for existing ones,” said Cooney.
We previously spoke to Cooney regarding the fund’s criteria for cultivated product firm investment. He added that the terms are similar for fermented technology firms, but for plant-based firms the requirements are somewhat different as most of these should already have some commercial success.
“For plant-based products, we usually look for those with some early sales traction of about US$200,000 to prove their product resonates with consumers and they know how to sell this; we will do stringent taste tests to test out the quality so we are sure they rank at least first or second in their category in the region, and we look at their brand to ensure this has been well-developed and will resonate with consumers,” he said.
“Another very important thing is for the market they are targeting to be large enough such that it is not overly competitive – for example, some firms are doing very specialized products like charcuterie which is not a very big market, whereas others could be trying to make more plant-based burgers for the US where it is already pretty saturated and will be hard to get traction.
“Conversely, plant-based meat and dairy in places like China or Russia are promising, and perhaps even emerging markets such as Brazil where the sector is still small but growing very quickly.
Future of alternative protein
When asked which type of alternative protein he believes will dominate the market over the next few decades, Cooney said that cultivated and fermented products may grow to surpass plant-based eventually – but the latter is definitely not going anywhere.
“Plant-based is doing really well now and it has that cheap price point which is really going to be difficult to beat in terms of cost efficiency, and there are those who are choosing it for specific taste or health reasons, so I doubt it’s going anywhere even in the next 20, 30, 40 ,50 years,” he said.
“Fermented tech is coming to market short-to-mid-term, and cultivated products in mid-to-long-term, could be five to 10 years or less, but I believe hybrid products which are plant-based with some cultivated or fermented added will come along first.
“In 40 to 50 years though, cultivated and fermented products could take a larger market share than plant-based products as price parities are reached and acceptance grows – but again, plant-based won’t be going away as it will still have its consumers.
“What’s for sure though is that all of these three will be taking market share from conventional meat and dairy – not one another – so there is plenty of room to grow.”