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Boston Consulting Group report: alternative protein industry takes cues from EV industry for growth

July 11, 2024

The alternative protein industry is on a promising path, but challenges remain in its quest to disrupt the traditional meat industry. A recent Boston Consulting Group (BCG) report, echoed by discussions at The Future of Protein Production Chicago conference (in the keynote presentation given by Sara Kopunova and Neeru Ravi back in April), explores valuable lessons the alternative protein industry can learn from the electric vehicle (EV) industry's experience.

Similar to the early days of EVs, alternative proteins often struggle to achieve feature parity with conventional meat products. Taste, texture, price, and convenience are all crucial factors influencing consumer choice. The BCG report highlights the importance of innovation in these areas for the alternative protein industry to gain traction.

"Just as EV manufacturers have invested heavily in battery technology to improve range and performance," says the report's co-author, Elfrun von Koeller, a BCG partner, "alternative protein companies need to focus on research and development to create products that effectively mimic the sensory attributes of meat." This could involve advancements in plant-based ingredients, fermentation techniques, and novel production processes.

Sara Kopunova and Neeru Ravi giving a presentation on this very topic back in April 2024 at The Future of Protein Production Chicago

Laine Clark, Senior Corporate Engagement Manager – Innovation at The Good Food Institute, presented similar themes at The Future of Protein Production Chicago.  Clark emphasized the need for non-dilutive funding models to support the research and development required to create more competitive alternative protein products. The potential payoff is significant. BCG estimates that increasing the share of alternative proteins to half the global protein market would cut emissions as much as taking half of gas-fueled cars off the road. Animal agriculture currently accounts for a staggering 15-20% of greenhouse gas emissions, compared with 10% for passenger road transportation.

Another hurdle mirroring the EV industry's initial challenges is affordability. Early EVs often carried a premium price tag compared to gasoline-powered vehicles. Similarly, alternative proteins can be more expensive than their conventional counterparts. Plant-based meat, for instance, has hovered around a mere 1% of total meat dollar sales in US retail for the past five years, while the electric vehicle industry has grown from a miniscule 0.2% of total new car sales in 2012 to a respectable 18% in 2023.

The BCG report suggests that economies of scale and efficient production processes are essential to bring down the cost of alternative proteins. "Collaboration between industry players, government incentives, and increased consumer demand can all contribute to making these products more price-competitive," the report argues.

Government policies have played a significant role in the EV industry's growth. Measures like tax breaks, subsidies for charging infrastructure, and stricter emission regulations have all contributed to EV adoption. The alternative protein industry can benefit from similar support. BCG highlights the stark funding disparity - in 2022, alternative protein companies raised only one-eighth of the private capital secured by the electric vehicle industry from 2017 to 2023. Additionally, government support for alternative protein companies paled in comparison, with just US$635 million received in 2022 compared to roughly US$40 billion in direct purchase subsidies for electric vehicles.

"Governments and alternative protein players should follow three lessons that jump-started the growth of the electric vehicle industry," says von Koeller. These lessons include innovation for cost and quality parity, supportive government policies, and securing public and private investment.

The EV industry has evolved beyond simply replicating gasoline-powered vehicles. EVs now offer unique features and environmental benefits that position them as a compelling choice for consumers. The future of alternative proteins holds similar promise. As the industry matures, it has the potential to not only replicate meat products but also surpass them in terms of health, nutrition, and environmental impact. Imagine alternative proteins that are customized for individual dietary needs or engineered to have a lower environmental footprint.

The alternative protein industry has a bright future, but achieving its full potential hinges on learning from the EV industry's experiences. By addressing affordability concerns, mimicking the sensory attributes of meat, advocating for supportive government policies, and fostering increased investment in research and development, the alternative protein industry can pave the way for a more sustainable and innovative food system.

If you have any questions or would like to get in touch with us, please email info@futureofproteinproduction.com

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