$930M invested in alternative proteins in Q1 2020 tops record-setting 2019 totals

Dive Brief:

  • Investment in alternative protein — both plant-based and cell-based options — was $930 million in the first quarter of 2020, according to the Good Food Institute. Not only is this a record amount of funding, but investment in the first three months of this year exceeds the $824 million invested in the segment in all of 2019 by 11%.
  • Plant-based meat, egg and dairy alternative companies have seen the bulk of these investments, the support and promotion group said. Plant-based companies received $747 million in 2019 funding, or 90% of the total. So far this year, they’ve received almost as much — a total of $741 million, or about 80% of the total.
  • As of now in 2020, cell-based meat companies have received $189 million in funding. That’s more than double the $77 million these companies received in 2019, and more than has been invested in the cell-based meat segment in its history. 

Dive Insight:

While other areas of the food industry have only seen challenges amid the pandemic, plant-based, cell-based and other alternatives to items that generally come from animals have raked in investments and support. Many of those investments that have come this year are the largest the companies have seen in their histories.

While the coronavirus outbreak has tightened food supplies and sent more consumers to grocery stores, it’s reinforced growth in alternatives to animal-based food. According to Nielsen statistics, during the nine weeks between the beginning of March and the week ending May 2, sales of fresh meat alternatives increased 264.2% above the same time period last year. Dairy alternatives have proliferated, with oat milk sales up 350% from the beginning of March to the week ending April 25 compared with last year. And according to Just, grocery sales velocity of its plant-based Just Egg have increased 51% since December.

The segment is also seen as lucrative. The 2019 investment figures include the $290 million raised by Beyond Meat in its blockbuster initial public offering, which showed Wall Street that the segment is more than a fad and pushed plant-based meat into the mainstream.

To be sure, many top meat companies and other Big Food players are launching plant-based meat lines. Since August, Smithfield, Hormel, Kellogg, Nestlé, Cargill, Conagra and JBS have launched new lines to get into the space. In the same time period, others have made investments in plant-based startups, including Tyson and General Mills. Tuna giant Bumble Bee has also entered into a partnership and had its CEO join the board of the parent company of plant-based seafood maker Good Catch Foods.

This year, the investment has continued. As much of the nation sheltered in place, Impossible Foods announced it closed a $500 million funding round, which by itself represents about 38% of all the money the company has raised in its history. For Impossible, the funding was well timed. It helped the plant-based burger company that started out exclusively in foodservice to hasten its retail expansion. So far this year, Impossible Burger has gone from a few hundred retailers to about 2,700, with a large launch in Kroger stores last week.

Large investments aren’t just limited to the older and bigger companies in the plant-based space, though. The beginning of the year saw a $200 million investment from food industry veterans to launch the plant-based protein platform LiveKindly and an $80 million funding round to help Nature’s Fynd — previously known as Sustainable Bioproducts — produce food from a fungus found living in a volcano.

While many of these types of products are available at stores or restaurants, cell-based alternative protein is not. Just, however, has told Food Dive its cell-based chicken nuggets could be available on a limited basis in high-end restaurants once the company receives regulatory authorization from a country — likely in Asia — to sell them.

Several companies, which use technology to grow actual meat from animal cells, believe their first products will be ready to come to market in 2021, and have attracted large investments to help them take the last few steps between R&D and having a product. One of them, Memphis Meats, received $161 million in funding this year — a round that increased its total funding eight-fold. Cargill and Tyson participated in the round, which the company will use to build a plant to produce beef, chicken and duck. Cell-based seafood company BlueNalu raised $20 million this year for a plant, and Israel’s Future Meat Technologies closed a $14 million funding round last year to build its plant.

While it remains to be seen if funding for these spaces continues at this breakneck speed — or if the widespread social distancing and shelter-in-place policies significantly delays R&D — sales are likely to continue on their upward trajectory. According to SPINS data, sales of plant-based meat increased 18% last year, and it now represents 2% of the entire meat market. There’s significant room for growth for all alternative products, and the question is how quickly it will happen.​

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