Switch to alternative proteins in commercial food production

The global food system accounts for 26% of global emissions (1), with animal-based products such as meat, seafood, dairy, and eggs accounting for ~15% of all global emissions (2). High-income countries, like the US and Australia, exhibit high per-capita meat consumption, and global diets are shifting toward a Western palate (3).

The industry produces emissions from four main sources: livestock emissions (e.g., methane from enteric fermentation), crops for animal feed, land-use change, and the supply chain (4).

Figure 1: Global GHG emissions in 2010 (Gt CO2e)1

Source: BCG, Food for Thought: The Untapped Climate Opportunity in Alternative Proteins (5)

There is already consumer demand to reduce animal protein intake and some consumers are willing to pay a premium for alternative proteins. Alternative proteins, which accounted for just 2% of the protein market in 2022, have the potential to meet this demand, while, importantly, reducing emissions compared with livestock production (6). By 2035, assuming a global market capture of 11%, the shift to alternatives could save more than one gigaton of CO2e. It would also conserve enough water to supply the city of London for 40 years (i). Furthermore, most investors consider environmental, social, and corporate governance (ESG) criteria, which presents a financing opportunity for companies investing in alternative protein (7). However, widespread adoption is key to decarbonizing the industry, which means alternative proteins cannot compromise on taste, texture, or come at a higher cost (8).

By 2035, as projected by BCG, it is likely that 11% of global consumption of meat, seafood, eggs, and dairy will consist of alternative options. This assumes that these products achieve complete parity in terms of taste, texture, and price compared with traditional animal proteins. However, with regulatory support and significant technological advancements, there is potential for global consumption to exceed 20% by 2035 (9).

There are three main types of protein alternatives that can substitute animal products for human consumption. Plant-based alternatives offer the most cost-effective and mature option, while fermentation-based and cultivated alternatives are still nascent.

Plant-based alternatives

Plant-based proteins, which are by far the most commercially mature alternative proteins, offer ample protein and fiber content while typically containing less saturated fat than animal-based counterparts. These proteins are extracted from ingredients such as soybeans and yellow peas, combined with flavor-enhancing additives, and texturized through processes like extrusion. Commercially available products like Beyond Meat and Impossible Foods have successfully introduced various plant-based meat alternatives. Despite the existing price parity gap (10), BCG projects that plant-based alternatives may reach production cost parity in the near term, even though retail prices may need the industry to mature further to achieve parity (11). On the other hand, plant-based dairy imitations have grown in popularity, achieving near-cost parity with conventional milk while garnering their own customer base due to lactose-intolerance and taste preferences (12).

Fermentation-based alternatives

Fermentation-based alternatives include proteins derived from bacteria, yeasts, single-celled algae, and fungi, which can be processed to produce flavored and texturized. The two primary sources of these foods are filamentous fungi that are generally incorporated into the product whole, and microorganisms like bacteria or algae from which proteins can be extracted while bypassing the rest of the biomass. It is worth noting that the current cost of producing such proteins remains two to three times higher than conventional animal-based proteins, though BCG projects that it may reach production cost parity in 2025 (13).

Cultivated alternatives

Cultivated alternatives include products derived directly from animal cells, such as "cultivated" meat and seafood. These are created by taking cells from animals like cows or pigs, placing them in a nutrient-rich medium, and stimulating them to grow and eventually form muscle tissue—the essence of meat—along with other essential organic components, including fat. The cost of making cultured meat still multiples that of conventional meat, and cultivated meat is not readily accessible to the general market yet, though the sale of such products has been approved in both the US and Singapore (14)(15). BCG projects that this technology may reach production cost parity with conventional meat in 2032 (16). For both fermentation-based and cultivated alternatives, early movers can develop a significant advantage, as continued technological advancement and increasingly complex business practices will create formidable barriers to entry (17).

Insect-based alternatives (primarily for animal consumption)

Insect-based alternatives are currently primarily used as an ingredient in animal feed and pet food. These alternatives have both sustainability and functional benefits, though high costs and prices, limited production capacity, and evolving regulations are presently limiting market growth, according to a Rabobank report. The report predicts that the demand for insect protein could reach 500,000 metric tons by 2030, a 50x increase from the 2021 market (18).

Beyond Meat: Beyond Meat’s plant-based products are sold in grocery stores, restaurants, and fast-food outlets such as McDonald’s, Pizza Hut, Taco Bell, and KFC (19), with the University of Michigan estimating the lifetime emissions of the company’s alternative burger product at just 10% of an equivalent volume of real beef (20).

Impossible Foods: Another plant-based producer, Impossible Foods, has partnered with several major restaurants and retailers, including Burger King and Walmart (21). Their flagship product, the Impossible Burger, produces 89% less emissions than conventional meat across its lifetime (ii) (22).

Mosa Meat: Mosa Meat, a Netherlands-based cultivated meat company focused on beef, aims to have a publicly available product within a couple years (23). They have pioneered a method of producing animal fat (a key part of reproducing animal-based taste and texture) that is over 98% cheaper than previous methods (24).

Changjin Biotechnology: Changjin Biotechnology, a Shanghai fermentation-based alternative proteins company, debuted its yeast-based dairy products, including cream and cheese, in 2023, following a $30M Series A funding round. According to the CEO, they will have full production capabilities by the end of 2023, and they expect the microbial dairy market will capture 22% market share in China within 15 years (25).

Innovafeed: Innovafeed, a French biotechnology company, develops processes for breeding insects and incorporating them into plant and animal nutrition (26). They have secured €490M funding and have launched three insect-powered value chains: feeding trout, poultry, and pork. Their method produces less than half of the carbon emissions of standard feed inputs and currently saves 57,000 tons of CO2 per year (27).

Climate impact

Targeted emissions sources

Alternative protein solutions facilitate emissions reductions, primarily in:

Scope 1 (for farmers who transition to alternative proteins): Avoided direct emissions from agricultural operations

Scope 3 (for food company):

• Category 1 (Purchased goods and services)

• Category 5 (Waste generated in operations)

Decarbonization impact

A study from the Johns Hopkins Center for a Livable Future (27) found that median plant-based meat generates 93% fewer emissions per 100g of protein compared with the median beef from beef herds (reduction percentages vary depending on the animal protein being replaced). The median cultivated meat generates 78% fewer emissions than the median beef from beef herds. Insect products produce even fewer emissions, at ~96% of the emissions of beef from beef herd (~1kg CO2e per 100g of protein). A summary of ranges can be found below:

Figure 2: Cradle-to-processing gate GHG footprints (wherever possible) per 100 g protein

Source: Santo, R. E., Kim, B. F., Goldman, S. E., Dutkiewicz, J., Biehl, E. M., Bloem, M. W., Neff, R. A., & Nachman, K. E. (2020). Considering Plant-Based Meat Substitutes and Cell-Based Meats: A Public Health and Food Systems Perspective. Frontiers in Sustainable Food Systems, 4, 569383. https://doi.org/10.3389/fsufs.2020.00134 (28)

Business impact

Benefits

• Access to new markets: Switching to alternative proteins can lead to increased sales, as a growing subset of consumers are looking for alternative protein options

• Improved brand image: Switching to alternative proteins can improve the brand image of a company (e.g., restaurant, retailer), as it demonstrates a commitment to sustainability and animal welfare

• Resource costs: Producing alternative proteins generally requires less water and feedstock, meaning there can be cost advantages compared with conventional meat production

• Supply Resilience: Incorporating alternative protein sources regionally can create supply chain resilience and increase food security

Costs

• Impact on operating costs: Switching to alternative proteins can lead to increased costs at present, as these products are often more expensive to produce than traditional animal-based products

• Investment required: Investment in R&D, product development, and new manufacturing processes

• Eventual subsidies used: Regional and country-specific subsidies apply (e.g., U.S. President Biden’s Executive Order to launch a national biotechnology and biomanufacturing initiative that seeks to drive agricultural innovation, including the use of cultured animal cells (29)

• Relevant dependencies: There are major consumer acceptance challenges with alternative proteins, as some people are hesitant to try these products

Impact beyond climate and business

Co-benefits

• Animal welfare: Alternative proteins provide nutritional options that do not involve animal slaughter or suboptimal animal living conditions

• Water usage and quality: Conventional meat production requires massive amounts of water and is a major source of water pollution, while alternative protein sources, such as soy, require less than 7% of the water to produce the same volume of protein as beef and cause significantly less pollution (30).

• Biodiversity: Reducing dependence on animal agriculture (e.g., land for grazing, feeding) has the potential to reduce biodiversity loss

• Improved public health: Plant-rich diets are associated with improved nutrition and nutrient availability, which can reduce cardiovascular disease and obesity, and improve mental health (31). However, there is still debate about whether alternative meats are healthy, with health impact largely depending upon the product being consumed, how it was produced, any other additives it may contain, and other product-specific details

• Improved working conditions: Protein alternatives reduce the need for slaughterhouses, which often have extremely harsh working conditions

Potential side-effects

Altering your supply chain to replace conventional meat with alternative proteins can result in negative effects if workers’ jobs and communities are impacted. For this reason, it is essential to engage with the upstream ecosystem to ensure a just transition that assures workers’ welfare.

Additionally, some alternative proteins may require more energy than animal-based foods (e.g., cultured alternatives) (32). To avoid emissions, using renewable energy may be crucial in ensuring the effective low-carbon production of certain alternatives.

Typical business profile

This solution applies to companies that have animal-based food in their supply chain, including upstream players like farmers, ingredient suppliers, agribusiness traders, and food processors, and downstream players like CPG brands, retailers, restaurants, and other customer-facing food providers. By using alternatives to their existing animal products or creating new products using alternative proteins, companies can make headway toward their net-zero strategy, and create compelling business and brand value by focusing on sustainability

Stakeholders involved

From the perspective of a downstream food company, an array of internal and external stakeholders must contribute to the adoption of alternative proteins, for example:

• Executive Management: To set decarbonization goals and decide to invest in new technologies, as well as work with regulators and investors

• Finance & Accounting: To align budget availability amid new, complex, capital-intensive supply chains

• Product Development: To redesign products around alternative proteins.

• Procurement: To implement a roadmap for engaging alternative proteins suppliers

• Marketing & Sales: To develop a sales strategy that targets customers’ willingness to pay for alternative proteins

• Farmers: To produce alternative protein inputs (e.g., soy) and transition away from conventional livestock production as necessary

• Government: To support research and development into alternative proteins; test and verify the food safety of newly developed products; and provide science-based guidance for consumers on the benefits and risks of new foods

Key parameters to consider

Solution maturity

Maturity for alternative proteins for human consumption based on taste, texture, and production cost parity with animal-based products:

• Plant-based alternatives: High –projected to reach parity in the near term (33)

• Fermentation-based alternatives: Medium –projected to reach parity in 2025 (34)

• Cultivated alternatives: Low – projected to reach parity in 2032 (35)

Technical constraints or pre-requisites

The uptake of alternative proteins depends on reaching parity with animal proteins in terms of taste, texture, and price to motivate widespread consumer adoption. Each of these factors depends on key technical improvements across the value chain for each solution (36).

• Plant-based alternatives: Optimized protein crops, improved protein extraction, clean formulations, and scaling of texturizing capacity

• Fermentation-based alternatives: More efficient growthon less costly feedstocks, optimized extraction, and clean formulations

• Cultivated alternatives: More efficient growth using significantly cheaper cell extraction processes and more sophisticated production infrastructure, and better ways to replicate key non-muscle elements of the meat experience

Implementation and operations tips

Below are some typical steps a company aiming to switch to alternative proteins can engage in:

1. Assess emissions: Conduct a comprehensive assessment to understand the emissions and environmental footprint of animal-based products, focusing on identifying the products that contribute most to emissions

2. Identify alternative protein potential, and role in sustainability plan: Identify the products that are well-suited for product re-design using alternative proteins, in terms of manufacturing process and customer adoption. Estimate emissions reduction trajectory and assess/develop fit within net-zero strategy and broader sustainability plan. Consider advantageous business opportunities, especially within less mature areas like fermentation-based and cultivated proteins, as there is immense potential for building competitive advantage by investing in capabilities early, since cost and difficulty of entry will only become higher as technology develops and becomes more complex. Investment areas for each include:

   • Plant-based proteins

     • Formulation

     • Research & Development

     • Scaling of texturizing capacity

   • Fermentation-based and cultivated proteins

     • More efficient growth

     • Feedstocks

     • Cultivation equipment

3. Implement solutions: Develop and market alternative protein products, prioritizing products that can be rolled out in the near term to build momentum and help spur demand:

   1. Invest in research and development of new alternative protein technologies

   2. Work with suppliers to redesign value chain

   3. Educate and train employees and customers in products with meat alternatives

4. Advocate widespread adoption: Generate support from regulators, customers, and competitors to accelerate adoption:

   1. Engage with customers and stakeholders to raise awareness of the need for alternative proteins

   2. Support the development of regulations that promote meat alternatives

   3. Partner with competitors and peers to grow the alternative proteins market

Footnotes:

(i) Note: Based on consumption data from a base-case market model (moderate adoption), assuming emissions per kilogram of conventional and alternative protein, as outlined in the Blue Horizon study Environmental Impacts of Animal and Plant-Based Food.

(ii) Note: while the emissions reduction potential of these alternative proteins has been assessed, their full reduction potential is still being debated.