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“Beefing” Up Your Portfolio: Impact Investing in Alternative Proteins

By Michele Demers Blog

The global food system is dominated by outdated and unsustainable methods of production, distribution, and consumption. Traveling from farm to fork, our food eats up 10% of the total U.S. energy budget, 50% of U.S. land and 80% of all freshwater consumed in the United States, making up over one-third of human-induced greenhouse gas emissions.

Global livestock emissions alone account for nearly a tenth of all man-made greenhouse gas emissions. Likewise, the industrial livestock production sector overuses antibiotics, threatening the public health, and processing plants often mistreat workers, providing unsafe working conditions, long hours, and inadequate pay.

The farming of animals has become increasingly separated from its natural existence on the land. Today, most farm animals in the United States are raised in confinement on huge industrialized systems that are more like factories than farms. The 10 largest cattle feeding operations in the US comprise approximately 30% of the total feedlot capacity and only 0.4% of birds were produced by independent operations outside of the industrial broiler production contracts that dominate the industry.

As consumer awareness of the detrimental effects of traditional meat production increases, alternative protein companies are growing at an impressive velocity. Our research showed the alternative proteins sector totaled $7.75B in 2016 and is slated to nearly double to $14.73B by 2025. Plant-based and lab-grown meats are increasing in their market share and have potential to catalyze impressive social and environmental change. The alternative protein sector is poised to claim up to a third of the protein market by 2054. This growth will likely be reflected throughout the value chain, affecting agriculture, food technology, and end products. This market is rapidly emerging to accommodate higher consumer demands for high amounts of protein that are sustainably sourced.

Beyond Meat, a company developing “mass-market solutions that perfectly replace animal protein with plant protein,” has been garnering the attention of industry giants such as Tyson Foods, and other investors across food, finance, tech, and entertainment.

Other companies such as Perfect Day Foods, with millions raised in funding and a new patent secured, are working with top food investors and companies to bring animal-free proteins to market. Their February $24.7M raise signifies the largest Series A in the history of the emerging food tech space.

The once static protein industry is shifting to accommodate novel sources like pea protein, cricket flours, and other creative food sources. Within the next few decades, the alternative protein market will diversify significantly as the variety of novel sources of protein expands. Third-generation plant proteins, insects, algae, and synthetic biology sources could constitute over 50% of the alternative protein market by 2054. These alternative protein sources are a strong investment opportunity for venture or growth stage impact investors looking to generate financial returns.

You can purchase our new Sustainable Food Systems Market Overview here