[sort of a repost because my last post about this got no response]
Sales of plant-based meats declined significantly in 2022, likely due to inflation and health concerns. Alternative proteins cost 43% more on average than real meat, and many consumers view them as a luxury good.[1] I view this as a major setback for the development of alt proteins, and it makes me worried about their potential to replace factory farming in the medium and long term.
However, there are reasons to still be optimistic - the technology is improving, and another 20+ years of R&D (government, private, and philanthropically funded) could make alt proteins cost-competitive with conventional animal products. Perhaps donors should "stay the course" - as an analogy, if you're investing for the long term, you shouldn't pull your money out of the stock market just because your portfolio's value drops 20% in one year.
What are your thoughts?
- ^
"Reducing the price of alternative proteins" (Good Food Institute, 2022)
I haven't got a very well calibrated model, but I'm still fairly optimistic about alt proteins becoming increasingly commercially viable. I would update very little on 2022 being a fairly bad year for a few reasons:
- Total invested capital in alt protein is still comparable with other food sectors, with major increases in cultivated and fermented meat investment.
- Government investment is growing and locked-in as part of multi-year programs in many countries
- Many new production facilities are springing up, which should reduce prices, especially for fermented and cultivated products.
- I think we've reached the turning point for national safety approvals for cultivated meat, and I expect more (such as China and Japan) in 2023-2024
- There has been some pretty considerable investment in certain emerging markets (APAC and MENA)
So I wouldn't update too much on 2022's slowdown- it's a combination of macroeconomic factors, Russia-Ukraine, high interest rates and rising energy prices that have reduced investment, and inflation that's led to reduced consumption.
As for your question of whether alternative proteins will take off. I'm optimistic. I think we've entered a situation where:
I feel that we have the right incentives and technology to produce super tasty, affordable alternatives for various consumer types, and when we get these products, the market should start to grow.
The reasons I could be wrong might be:
- We'll continue to lack those killer products at an affordable price. The market will be dominated by poor, low-cost products, giving alt protein a worse reputation among many normal consumer groups.
- It's only ever going to be a niche market. Almost everyone actually prefers conventional meat, and most consumers are more resistant to change than we currently think. Cell-cultivated meat will be seen as the only viable alternative, and people will continue consuming conventional meat until cell-cultivated meat hits price parity.
Good point. I believe all the dollar figures I cited aren't inflation-adjusted, which is probably the main difference between sales by weight and sales by dollar.