This article is an excerpt from GreenBiz Group’s 16th annual State of Green Business, which explores sustainable business trends to watch in 2023. Download the report here.

Browsing supermarket shelves, consumers can find a dazzling array of products, from ice cream to sausages and prepared meals to protein bars, without animal-based ingredients. The alternative protein industry has written a tremendous success story — evidenced not only in stores but also by the $5 billion in disclosed investments companies secured in 2021, a fivefold increase from just three years ago.

Alternative protein backers have long extended beyond companies such as Impossible Foods and Beyond Meat to the world’s largest food companies — including Nestlé, Unilever and Mars as well as meat giants such as Tyson and Cargill. And yet, the industry can’t prove that it has saved a single animal or avoided notable carbon emissions because its products aren’t replacing conventional meat, dairy and eggs in omnivores’ shopping baskets.

Instead, food companies may just be spicing up the bean and tofu rotations of vegans and vegetarians. While these are nice-to-have customers, alternative proteins can only fulfill their promise to slash the food systems’ greenhouse gas emissions by getting mainstream meat eaters to substitute at least some of their steaks, chops and burgers with plant-based alternatives. In 2023, food purveyors will accelerate efforts to capture those consumers.

What needs to give? Taste, perception and price.

Many of today’s plant-based foods don’t live up to the taste and texture of the products they’re meant to replace, so the industry is expanding its toolkit. Dairy from precision fermentation and mushroom-based meats made big waves in 2022. The star of 2023? Cultivated products from real animal cells, but for which animals were not killed or otherwise harmed.

Such cultivated meats will show up more often as ingredients than pure products. For example, while some companies will create premium offerings such as cultivated steaks, many others will likely create hybrids — say, Mission Barns’ plant-based chorizo sausage that contains a sprinkle of cultivated animal fat to make the taste and texture more like the real thing.

Call it alt-protein 2.0.

As flavor and mouthfeel improve, companies will also revamp product perception, drawing on the rich lessons learned during alt-protein 1.0. Rather than touting their foods as planet and animal saviors, the industry will likely put taste front and center and place their products where they belong — in supermarket meat aisles and chef specials rather than in separate vegetarian or vegan sections.

For example, Eat Just started promoting its plant-based eggs simply as “really good eggs” in celebrity-backed ad campaigns last spring. New York City’s hospitals successfully introduced plant-based lunches for patients by marketing them as the “Chef’s Special.”

The industry can’t prove that it has saved a single animal or avoided notable carbon emissions because its products aren’t replacing conventional meat, dairy and eggs in omnivores’ shopping baskets.

Yet none of these efforts will succeed if prices don’t come down. And that may be a lot for food companies to swallow. Heavy subsidies, large-scale production and environmental externalities make conventional meat, milk and eggs inexpensive. To compete, alt-protein companies must improve their economies of scale by reaching beyond the startup funding community to gain support from governments, large-scale investors and big food companies.

Jeremy Coller, a British investor and philanthropist, is helping the industry reach new shores. With the FAIRR Initiative, he’s guiding a $69 trillion investor network to account for the ESG risks associated with intensive animal agriculture. In turn, FAIRR and the Good Food Institute launched an ESG framework for alternative protein companies, fostering the industry’s transparency. With clear-cut comparisons at hand of the risks in conventional and alternative protein portfolios, more investors may earmark future funds for the latter.

Governments also increasingly understand the case for supporting protein research and manufacturing. Resource-constrained countries such as Singapore and Israel have long led the way. U.S. President Joe Biden signed an executive order to launch a national biotechnology and biomanufacturing initiative in September that, among other goals, aims to improve food security by supporting cultivated meat.

As these and other forces collide, alt-protein companies may finally stand a chance to make good on their promise of giving food shoppers healthier, more climate-friendly choices at competitive prices.

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