future of protein production with plates with healthy food and protein

When data met protein

April 26, 2023

Ed Brown & Griff Holland from Zedible reveal the importance of dynamic data and insight to align financial and environmental performance

Data and alternative proteins. What’s the link? How do these very subjects work together and, more importantly, how could they complement one another better? This is a relationship that needs to be pressed because the opportunities for alt protein brands – particularly those selling into the food-service market through wholesales or direct – is clear and the implications are powerful.

These times they are a’changin’

We have all read about the rise of the alternative proteins market. According to a report by Boston Consulting Group, the global alternative protein market stood at 2% in 2020, with protein of the animal variety making up the remaining 98%. However, this is forecast to increase to 11% of the market by 2035. So, there is a tremendous growth curve to be enjoyed by existing and new entrants to the market. We can see the level of investment into alt protein brands over the past decade has been staggering, at an estimated US$14.2 billion private investment in the space over the past decade, with 2021 and 2022 accounting for US$8 billion of this alone according to The Good Food Institute. This appetite has perhaps cooled off in 2023 – a function of market jitters – but when the opportunity is so vast, the smart money is on more money flowing into this space in the medium to long term.

So, cow’s fart… a lot

Why? Simply, more consumers are looking for plant-based (and in time, subject to approval) lab-grown options for their protein needs as the link between the climate emergency and the food system becomes more embedded in customer minds. Recent big-selling pop science books from the likes of Bill Gates and Mike Berners-Lee have enlightened and entertained the masses. More people are seeing data around the scale of the food system as a source of global greenhouse emissions. According to a publication in Nature, the impact could be as great as 34%. The fact that a liter of diesel has 2.4kg of carbon whereas a kilo of ruminant meat (beef, lamb, venison) can have considerably more than 10 times this figure is quite astonishing.

Impossible Foods, one of the leading plant-based protein brands, has made carbon data a key part of its marketing strategy. The US company has conducted extensive research into the environmental impact of its products and has published detailed reports on its website.

It’s clear data matters. But the application of this knowledge is really what’s important. So, how can the data of the embodied carbon of alt protein versus regular protein go from a place of being just an interesting statistic to being practically deployed and ultimately lead to greater adoption of alt proteins, especially in the food-service industry?

The regulations are coming

Large companies in the food-service space or those organizations that have ambitious self-imposed carbon-reduction targets (think of many public or quasi-public sector organizations) are needing to get a grip on their Scope 3 emissions.

A report from the Zero Carbon Forum, a UK hospitality sector-focused sustainability organization, showed that up to 90% of the emissions for food-service will originate not from the light bulbs but from what’s on the plate, in the form of embodied carbon in the ingredients (Scope 3). So, if this is the scale of the impact, the food-service sector will need to start understanding this more and putting this insight to work. The regulations are not here yet but there is only one direction of travel in this space and that’s for more not less.

By providing detailed carbon data, alternative protein brands can demonstrate their commitment to sustainability and win over more consumers

Let’s dance

According to a 2019 UN FAO report, food-service represents approximately 50% of the entire global food system by value. So, be it consumer pressure or the threat of regulations, the market needs a way to assimilate this carbon data and the inherent advantage that alt proteins have over traditional protein sources as a way to drive down carbon. What complicates matters is that the environment is just one factor to consider. Revenues, customer experience and profit margins are what keeps these companies in business, so carbon needs to dance with the commercials to really get somewhere. Add into the mix the complexity arising from sales mix, seasonality and sales volumes gauging true materiality, and then being able to take action, is not completely straightforward.

The art of the possible

So, the opportunity for alt protein brands is to focus on organizations that fully appreciate the carbon reduction as part of their ESG strategy and to be able to show how substitution with their products could look for a prospective customer. Let’s run through a hypothetical example of a restaurant business selling beef burgers. Let’s assume alt protein is 25% more expensive than traditional beef. Beef burgers are the best seller in a restaurant business. Let’s then assume this restaurant generates US$1.5 million in revenue and 450 tons of CO2 a year from its ingredients. If burgers represented 20% of sales, given a typical patty weight, this could mean that more than 160 tons of carbon is associated from that one ingredient.

So, going to a full alt protein product for such an important revenue driver is too commercially risky. Well, what would the outcome look like if the restaurant looked at a blend of alt protein ‘X’ with traditional beef on this signature product? How would that restaurant business feel about taking this blended approach if they could easily see how this change could yield a significant reduction of their overall Scope 3 emissions with only a marginal sacrifice in gross profit margin?

If the restaurant did a 10% alt protein blended with traditional beef, using real-world figures, we could estimate a scenario where that change could yield a reduction in CO2 of 3.3% across the whole business while sacrificing only 0.4% in gross profit margin, an 8.3 times ‘return’ in carbon for margin. Therefore, if informed with that data – which melds the carbon and commercial discussion together to see the impact in the round – they may decide to try this out.

A recent Guardian showed the potential impact if Burger King and McDonald’s took a blended product approach across their beef burgers. The art of the possible showed that the potential scale of impact could be huge, to the tune of 51 million tons of carbon averted annually. In the current market, though, this is a step too far for stakeholders in these organizations. The commercial risk is too great… for now.

Future ready

However, what if, in the near future, the pressure to mitigate these emissions (either from customers or regulators) through carbon removal or offsetting meant they were obliged to factor in this carbon- mitigation cost. How would that margin/carbon trade-off look? That hypothetical restaurant brand may now look at the impact of this blending not as a small hit to margin, but as a positive ROI because they have averted having to pay to offset ‘X’ tons of carbon at price of US$80 per ton.

Carbon data isn’t just important for alternative protein brands looking to win over customers. It’s also becoming increasingly vital for wholesale consumers looking for products that align with their values and align to their P&L. A recent Nielsen survey found 62% of consumers are willing to pay more for products from brands that are committed to sustainability, so the outlook is positive as people are making these connections more readily and are more willing to contribute to the solution, financially. By providing detailed carbon data, alt protein brands can demonstrate their commitment to sustainability and win over more consumers.

With the alternative protein market growing rapidly, carbon data is quickly becoming a key tool for success. Brands that invest in measuring and analyzing their carbon emissions will be well positioned to win over wholesale customers and thrive in this increasingly competitive market by showing how carbon and the commercials can be aligned for all.

For more information about Zedible, please click here

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

About the Speaker

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