The alternative protein space expands across a vast spectrum, with firms experimenting with new production techniques and ingredients. From spinning protein into fibrous textures that mimic animal muscle, to processing innovations that minimise protein off-notes, from fungi to pea and even animal cells grown in labs, it’s an exciting industry to behold.
But like many categories across the food and drink sector, inflation has seen consumers changing their behaviours and tightening their belts. For the meat alternatives sector, this has led to a slowdown, but it comes against a backdrop of many years of strong growth.
“There is still a steady and sustained interest in eating meat-free. The key drivers of health, taste, sustainability and animal welfare continue to play a key role in everyday shopping decisions, but affordability and value are now also front of mind,” Quorn Foods’ consumer director, Gill Riley, told Food Manufacture. “We hope to see economic pressures continue to ease and, as we do, we expect these key drivers to remain prevalent.”
Alternative proteins: can we expect growth or a plummet?
Data from Future Market Insights suggests that the global alternative protein market is anticipated to see healthy growth in the future, reaching $423bn at a CAGR of 19% over the next decade. The UK specifically is projected to witness a CAGR of 4.5%.
However, this will follow a period of consolidation – which we’ve already begun to observe. But this is not unique to the alternative protein sector, as some may have suggested. As Riley noted, financial strain has meant many sectors are feeling the pinch.
“These continuing pressures are contributing to a turbulent consumer environment, with many people cutting spend and changing their usual shopping habits,” Riley said. “We have been working hard to ensure that Quorn stays relevant to consumers and we’re proud to be bucking the trend. We’re continuing to invest in the brand to stay front of mind and drive awareness and relevance.”
But consolidation is generally a natural part of growth too regardless of economic climate.
Commenting on recent events in the shaky market, Caroline Schwarzman, director of commercialisation and growth strategy at MycoTechnology, told Food Manufacture: “This is a natural part of market growth. After initial hype and success, brands and products proliferated to capitalise on consumer interest in the nascent plant-based category. This growth was further fuelled by an advantageous funding environment that enabled many new startups to capitalise and bring new offerings to market.”
Within plant-based specifically, which has seen several recent administrations and acquisitions, Schwarzman explained there has been two fundamental shifts.
“The first was that the market expanded past the tranche of innovator consumers – those that are willing to try any new solution and test new fads – and moved into the mass market. Products did not adapt to this new, much larger consumer base however. Brands continued to push forward their sustainability credentials first, underinvesting in taste, texture and nutrition – the qualities that matter most to the broader consumer base. As such, many people tried plant-based offerings and found them dissatisfactory for their price point. Repeat purchase rates have suffered and the market is consolidating to adjust for this.”
The brands that excel on taste, texture, nutrition and price will win out, with those who fail to do so closing or being absorbed into others.
“This competitive contraction happens in every new market,” she added.
The second shift was the change in interest rates, which have impacted funding availability and forced startups to try and become profitable quickly.
“Not all brands were on track to be financially independent by 2023 and they're closing or merging as a result. This doesn't mean the industry doesn't have potential, just that the funding model has changed and that has impacted brands along the way.”
Schwarzman believes we’ll see further closures of some plant-based brands, with the market dominated by a smaller number of “more qualified companies” in the future.
She added: “Innovation rates will slow as companies prioritise quality over speed to market, which ultimately will benefit segment growth.”
Price is also likely to mimic other markets, she predicted, as some brands try to own the right to win in low, medium and premium priced segments.
“Overall, we're seeing plant-based products come closer to price parity with animal products and in some cases they are already undercutting pricing, especially in the UK, which is the lowest priced plant-based market in Europe,” she said.
Despite this bump in the road, Quorn’s Riley doesn’t believe this slow period means the end of meat alternatives. On the contrary, she expects the category to recharge, rebuild and head back towards buoyant growth.
“The category has experienced a huge wave of new product innovation over the last couple of years and this has driven interest and awareness, although it hasn’t always kept shoppers coming back,” Riley said.
“It’s crucial for brands to continually invest in long term growth, as well as responding to the changing needs of the consumer in the shorter term.
“Consumer trends and barriers may change but the fundamental drivers of a category and the brand’s role within that will always be relevant, as long as brands continue to understand our current and future consumers.”
Cementing yourself in a tough market
Faced with these headwinds, MycoTechnology which uses mycelial fermentation to improve the taste, texture and functionality of pea and rice proteins, says it has since taken a more discerning approach to its strategy.
“We certainly felt a shake-out was coming,” said Lisa Wetstone, vice president for marketing, strategy and innovation at MycoTechnology, but added that the brand is well-positioned as the market enters the next phase of maturity and growth.
That said, Wetstone said it has doubled down even further to focus on proving out how each of its products solves the most pressing challenges at a sub-category level.
“We are willing to ask tougher questions about their path to market, their competitive differentiation, and how our ingredients support those value propositions,” added Schwarzman.
Quorn has a long and successful heritage, having produced mycoprotein for almost 40 years. The brand was an early adopter of climate targets and since its inception has been a pioneer for sustainability in the meat-free industry.
According to Riley, value for money is a big focus for the brand’s strategy, which has what she describes as a “more crucial purchase driver”.
“We know there has been a perception in the past that meat free alternatives are less affordable. We have been focusing on ways to challenge these barriers and make meat free accessible enough to feed the whole family for less,” Riley said. “Our bigger frozen bags recently underwent a packaging update, highlighting the ‘big bag, great value’ messaging and piece count, for easier meal planning that helps budgets stretch further.”
The established meat-free brand is also continuing to innovate and only this year has entered multiple new spaces with more frozen sharing options, chilled evening mean solutions and its premium deli range.
“Excitement ultimately comes from new product innovation and consistently great tasting products. This is what entices first time meat reducers, as well as keeping loyal vegan, vegetarian and flexitarian shoppers interested,” she pointed out.
The future market for alternative proteins
In terms of a particular protein in the alternatives world leading, Schwarzman doesn’t believe one will dominate more than the other.
“This is not a winner take all market. We need every type of solution to feed an ever-growing population,” she contended. “Instead, you’re likely to see leading proteins in particular submarkets. Mycoproteins will likely dominate the mass priced channels as their unit economics are superior to most plant proteins. However, premium ingredients like mycelial fermented pea and rice protein, will become the preferred product for consumers who value taste and nutrition.”
But there is likely to be a future theme dominating alternatives, believes Wetstone – health.
“We have exhausted the first wave of consumers driven to the category by animal welfare and environmental benefits. Now the industry must offer new reasons to switch, to drive adoption of new consumer segments who aren’t yet bought in,” Wetstone anticipated. “We believe health is the next frontier; if brands can deliver products with clear health benefits over animal meat, and communicate this message effectively, the addressable market will grow dramatically.”
“To grow the consumer base and open up more shelf space at retail again, firms will need to improve the nutritional profile of their products and the associated messaging and branding. We'll see new efforts to fortify protein and fiber levels, reduce saturated fat, tout low cholesterol, and enrich with vitamins and minerals,” agreed Schwarzman.
As for its own approach, MycoTechnology will be leveraging its mycelial fermentation technology to deliver a mushroom-based whole food solution which provides a “superior health and nutrition story for meat alternatives”.
Meanwhile Quorn believes there’s huge potential still to be had in mycoprotein and agrees nutritional benefits will play an important role in the future, alongside new innovations and sustainability.
With this in mind, the company has been undertaking some initial development work that has shown promise in other areas, such as dairy.
“Our work in yoghurt and cheese alternatives in particular was hugely successful,” noted Riley.
These are just some of the drivers behind the launch of Marlow Ingredients, an independent division within the business which is making Quorn’s mycoprotein available to others. Through this new brand, the opportunities to extend applications of mycoprotein further, outside of areas Quorn presently operates within, are looking like an exciting possibility.