As the demand for animal-based food products increases faster than the rising global population, novel strategies for carbon-neutral food production are more important than ever. More than one-fifth of global greenhouse gas emissions come from agriculture, making the development and consumer adoption of alternative proteins critical to reduce negative climate impacts. Yet alternative-protein companies are navigating uncharted waters. These food products are not only emerging alongside new regulatory frameworks but also contending with the habits, aspirations, and cultures in respect to meat eating.
Eshchar Ben-Shitrit of Redefine Meat, Andre Menezes of TiNDLE, and Max Rye of TurtleTree share their insights with McKinsey’s Tomas Laboutka about what it takes to succeed in the alternative-protein space and why these products are critical to climate health. We’ve also included perspectives from two leading investors in the space.
Key insight #1: Alternative-protein companies can still reach a large, addressable market by using existing automation and technology capabilities.
Tomas Laboutka: Experts estimate we will need to cut annual beef and dairy consumption by 50 percent to save three gigatons of greenhouse gas (GHG) emissions by 2050. How much GHG do you estimate you’ll eliminate annually if you reach 1 percent of your target market share?
Max Rye: Cellular agriculture has the potential to reduce GHG emissions by 78 to 96 percent compared to traditional agriculture, so we’re definitely excited to see the environmental impacts our products will have. As our products are still in the development pipeline, we’re presently taking other tangible steps to improve our carbon footprint. We recently pledged our participation in the Carbon Pricing Leadership Coalition Singapore program to demonstrate our commitment as a low-carbon business. This program can give us a kick start to actively identify and keep our carbon emissions in check and measure how new initiatives can reduce our carbon footprint. We will be monitoring our carbon footprint in all aspects of our operational activities, from R&D to production to traveling.
Plant-based protein has the lowest barrier to consumer adoption, as the product is typically non-GMO, much more affordable, and easier for the consumer to fact-check and understand.Dimitra Taslim, vice president, GGV Capital
Eshchar Ben-Shitrit: We estimate that our total annual addressable market in beef is $500 billion. And we can address all of it thanks to our unique technology stack, which allows us to produce both minced-meat products (such as burgers) and whole-muscle cuts (such as steaks).
Let’s assume that a 1 percent market share requires us to produce 250,000 tons of New-Meat products with an average price of $20 per kilogram. According to our analysis, this saves 6.25 megatons of GHG. A year from now, we expect to have the capacity to produce approximately 5,000 tons of New-Meat a year in our first factory. By 2025, we expect to have capacity to produce 250,000 tons of New-Meat products, and in 2027, we can achieve this volume in sales. At first glance, this can seem like a huge amount of meat to scale up to production, but with our investment in automation and the maturity of our technology, we are already seeing a massive increase in productivity.
Key insight #2: To meet market demand, alternative-protein companies must provide consistently good flavor and be prepared to scale up.
Tomas Laboutka: What are the pros and cons of various alternatives to traditional dairy and meat?
Eshchar Ben-Shitrit: First and foremost, any new food product should taste delicious. In addition to constantly improving a product from quality, cost, nutrition, and sustainability perspectives, the entire R&D process must be rigorous in tasting the product in the lab alongside chefs and consumers. This has been our mindset from inception and continues to guide us at Redefine Meat. In the next decade, we’re confident that the investment in improving plant-based ingredients, using advanced technologies, will have an even greater impact on the market.
Andre Menezes: Generating real impact is important. We don’t have time to wait; we are in a late-stage extinction crisis. We need to go with what is viable, tasty, cost-efficient, and scalable. Plant-based products are the best solution when you consider all those factors, and we can use existing food science and technology to create products that taste good.
For an alternative-protein product to be successful with consumers at scale, it needs to meet their needs at three core levels: taste, price, and convenience. Nobody will buy it, or definitely won’t come back for a repeat purchase, if it does not taste good. The price needs to be right. And it has to be easily available—think distribution.Michal Klar, general partner, Better Bite Ventures
Tomas Laboutka: What are some of the hurdles that alternative-protein companies face when scaling, as opposed to conventional tech start-ups?
Max Rye: Since cell-based food is a novel category, its regulatory frameworks, including the naming process, are being developed in tandem with the products. For this reason, our experts are in contact with regulatory agencies in Singapore and the United States to develop guidelines that will benefit the entire industry. Singapore’s approval of the commercial sale of Eat Just’s cultivated chicken is great news for the cellular-agriculture industry. With the progress that’s been made, we’re confident that cultivated food products will see their market share increase significantly in the foreseeable future.
Scaling up production to achieve commercial viability is another hurdle for many food-tech companies. That’s why we work strategically with our partners, including bioprocessing firm Solar Biotech, to increase our production capacity and enable our production volumes to meet market demand consistently.
Andre Menezes: There’s nothing harder than getting consumers to be open and try something new. We are dealing with the pinnacle of food. As countries and families become wealthier, eating meat is often the aspiration. Unfortunately, some people have tried alternative proteins in the past, and they didn’t perform. But if we now have a plant-based burger that tastes as good as a beef burger, why do we still have beef burgers? It’s not because it’s too expensive or the taste isn’t good. It’s because we’re trying to substitute something aspirational with an alternative that’s perceived as worse or cheaper, and that doesn’t work.
Key insight #3: The alternative-protein space is creating a new organizational structure, and success will depend on thinking beyond the boundaries of mimicking the competition.
Tomas Laboutka: In tech start-ups, the biggest tensions tend to be between commercial and product tech teams. What cultural specifics are unique to the alternative-protein space? How do you align the interest in scientific progress with the need for commercial viability?
Eshchar Ben-Shitrit: Our unique organizational structure combines the qualities of fast-paced and agile scientific organizations, which rapidly adopt innovation and use best-in-class and tech-focused marketing and business teams, with those of traditional, large supply-chain and production organizations. The philosophies of risk taking, “moving fast and breaking things,” and “not taking no for an answer” are great, but not when applied to food safety. At Redefine Meat, different disciplines have come together to build a company with a fastmoving and innovative culture—while recognizing, and respecting, that we’re a part of the greater food system.
Andre Menezes: Some people say that you should invest in R&D for however long it takes to create a perfect product. They want to create something that’s one-to-one with animal meat, but my point of view is more pragmatic. Comparisons with animal products don’t limit us. Take a leading European oat milk company’s oat milk product, for instance. It doesn’t taste like cow’s milk. So what? It’s a great product. I prefer to derisk technology from the short term and see a lot of value in developing operational scalability and evolving without limiting ourselves to comparisons with animal products.
Key insight #4: Have a good go-to-market strategy that educates customers and provides context. Figure out what it takes to change people’s habits and drive adoption; it may not be what you think.
Tomas Laboutka: Based on your observations, what are proven strategies to win the early adopters? How do you get a majority of customers to buy alternative-protein products?
Eshchar Ben-Shitrit: Our target group is flexitarians or conscious carnivores. These consumers are constantly trying out new products, so, for them, “new” is not enough. We need to develop products that motivate people to change their eating and purchasing habits. We decided to investigate the most important product attributes to these consumers across different areas, including flavor, nutrition, price, and availability.
Product price is perceived as an important factor in purchasing decisions. However, what happens if product portions are bigger than they are currently? If we increase the price, how will consumers perceive this? What if the product is tastier than the ones the consumers are used to—will price elasticity be different? We found that the key is the product’s sensory attributes, mainly texture and flavor.
When those attributes are convincing enough, a hesitancy to try is replaced with a willingness to buy again and again.
Andre Menezes: Go-to-market and communication strategies play a huge role in helping a new product perform at its best and win customers’ hearts on the first introduction. At the beginning of a launch, you must teach people how to use a product and what it’s about. We’ve already been told that steak tastes good. If you cook it and it tastes bad, it’s because you didn’t know how to cook it, not because the product is terrible. But for plant-based meat, we don’t know these things, so if something goes wrong during a customer’s first experience, they will say, “That product doesn’t work.” We need to eliminate the chance that customers misunderstand the product.
As the middle class across large developing markets expands and starts to shift its caloric budget from carbs to protein, there will be a generational opportunity for this group to leapfrog animal proteins to alternative proteins, provided that the product tastes good and is priced right.Dimitra Taslim, vice president, GGV Capital
Tomas Laboutka: The demand for meat and dairy products is growing the fastest in Asia. What is consumers’ “leapfrogging” potential in these emerging markets for plant-based meat and dairy?
Max Rye: Many Asian countries have a long history of consuming meat and dairy alternatives. For example, soy products such as tofu and soy milk have been a part of the Asian diet for thousands of years. However, cultivated protein is still a novel concept in Asia and globally. It takes time and effort to introduce the concept to consumers and build trust in the technology and its products.
With preliminary knowledge of the benefits, Asian consumers may be more open to adding alternative proteins to their diets. And early products with high-value milk ingredients such as lactoferrin can complement both alternative milk and traditional dairy products.
Andre Menezes: It’s all about making plant-based meat as crave-able and as aspirational as animal meat. You need to deliver taste and experience; this is when leapfrogging happens. Bring the category or your brand to the highest level and ensure your product delivers well.
Key insight #5: Vertically integrated business models and strategic partnerships can help companies flatten the green premium.
Tomas Laboutka: From a cost-side perspective, how long would it take to flatten the “green premium” compared with conventional dairy? What are the accelerators?
Max Rye: Ensuring low costs is vital for the sustainable expansion of the industry. Currently, the costs of cell culture make up 55 to 95 percent of cell-based meat and dairy products. That’s why we’re working quickly to commercialize the growth factors that support cell growth. This will be a game changer in enabling cell-based meat companies to accelerate their cost-reduction progress in the next five years.
The alternative-protein investment can have a great impact and great return only if the product can be scaled for mass market; niche will not cut it.Michal Klar, general partner, Better Bite Ventures
Andre Menezes: People say plant-based products are expensive, but that’s a misconception. It’s an issue of time and scale. Plant-based meats are still in the investing and developing stages. There will be a green premium if you’re investing in the technology and capital expenditures. But after that portion is over, it doesn’t mean they’re more expensive to produce.
The moment you have a vertically integrated model like top companies in the meat industry, you can run more efficiently and buy materials cheaply. You’ll be running at equal capacity. To me, that’s the question: How quickly can the category as a whole get an equal setup?
Key insight #6: Leaders don’t just create a great product; they prioritize evolution and innovation to stay ahead of competitors.
Tomas Laboutka: What is your secret sauce? What role should patents play in the business build?
Max Rye: We are creating a new category that unlocks access to the naturally occurring ingredients found in milk for application in infant, adult, and specialized nutrition. This strategy will set us apart from existing companies focusing on using cell-based methods to produce bovine milk products that are commodities, an approach that can present significant challenges in scalability and regulatory compliance. To that end, patents will be essential to ensuring the safety of our inventions as well as helping our business grow, guard its market share, and generate profits from patent licensing.
Beyond milk and milk ingredients, we are also building a new paradigm about what “sustainable food” can and should mean. For a food to be truly sustainable, it has to be not only planet friendly but also a way of eating that people can, and want to, come back to over and over again. Food companies usually focus on just one aspect, but for our food systems to improve, both aspects have to be integrated.
At TurtleTree, we’re rethinking how the world eats through “food intelligence.” This philosophy means that each of our products will be ethical, transparently sourced, functionally nutritious, culturally conscious, and, above all, delicious. We believe this holistic approach to sustainability is what will keep consumers coming back to us—it’s a commitment to creating greater change in a way that’s immediately relevant and beneficial to multiple aspects of their lives.
Andre Menezes: No company can become massively successful solely because they create a great product. There are so many great products out there.
Instead, we have to embrace the challenge of continually improving and using technology to deliver what the customer wants and keep that drive moving forward. This approach becomes a powerful competitive advantage.