Sustainability Atlas
Food, Agriculture & Materials·13 min read··...

Deep dive: Alternative proteins — the fastest-moving subsegments to watch

What's working, what isn't, and what's next — with the trade-offs made explicit. Focus on KPIs that matter, benchmark ranges, and what 'good' looks like in practice.

In 2024, the global alternative protein market reached $90.5 billion, with fermentation-based technologies emerging as the only subsegment to achieve year-over-year investment growth—rising 43% to $651 million while cultivated meat funding declined 40% and plant-based investments plummeted 64% (Good Food Institute, 2024). This stark divergence signals a fundamental reshaping of where capital, talent, and technological innovation are flowing within the alternative protein ecosystem. For sustainability leads navigating Scope 3 emissions reduction, transition planning, and methane mitigation, understanding which subsegments are accelerating—and which face structural headwinds—has become critical for strategic portfolio allocation and supply chain decarbonization.

Why It Matters

The environmental imperative for alternative proteins has never been clearer. Animal agriculture produces approximately 20% of global greenhouse gas emissions, with meat and dairy protein production accounting for roughly 20% of global food energy consumption while generating over 70% of food-related emissions (Poore & Nemecek, 2018). By 2030, conventional meat consumption alone is projected to consume 37-49% of the remaining carbon budget allowable under the 2°C and 1.5°C Paris Agreement targets, respectively (Nature Climate Change, 2024).

The emissions reduction potential is substantial: switching from beef to plant-based proteins delivers a 90-98% reduction in CO₂ equivalent emissions per gram of protein. Even modest substitutions—beef to chicken—yield 70-80% reductions. A November 2024 lifecycle assessment from the Good Food Institute demonstrated that producing 100 grams of protein from peas emits just 0.4 kg CO₂eq, compared to 35 kg CO₂eq for beef—a factor of nearly 90x. Beyond carbon, alternative proteins require 75% less land and 50-95% less water than conventional animal agriculture.

For corporate sustainability professionals, alternative proteins represent one of the highest-leverage interventions for Scope 3 emissions reduction, particularly within food manufacturing, retail, and foodservice supply chains. The 2024 market shows 74% of consumers now follow sustainable diets and 58% report actively reducing meat consumption—creating both regulatory tailwinds and commercial opportunities for early movers.

Key Concepts

The Three Pillars of Alternative Protein Technology

The alternative protein landscape comprises three distinct technological approaches, each with unique economics, scalability profiles, and sustainability characteristics:

Plant-Based Proteins represent the most mature category, commanding 62-69% of the alternative protein market. These products derive protein from soy, pea, wheat, rice, oats, and chickpeas, processed into meat analogs through extrusion, high-moisture texturization, and formulation chemistry. Plant-based products have achieved the lowest production costs and broadest distribution but face ongoing challenges with taste parity and consumer retention.

Precision Fermentation utilizes genetically engineered microorganisms (yeast, bacteria, fungi) to produce specific animal proteins—casein, whey, collagen, heme, egg albumin—without animal involvement. This approach enables molecular-identical proteins with superior consistency and scalability potential. Precision fermentation experienced explosive growth in 2024, with European investments tripling to $130 million and companies like Perfect Day, Formo, and Onego Bio attracting substantial Series B and C rounds.

Cultivated (Cell-Based) Meat grows actual animal muscle tissue from stem cells in bioreactors, producing genuine meat without animal slaughter. While offering the most direct path to taste and nutritional parity with conventional meat, cultivated meat faces the most significant economic and regulatory headwinds. Production costs remain 5-10x higher than conventional meat, and only two U.S. products (UPSIDE Foods, Good Meat) have achieved FDA/USDA approval—neither of which is currently sold commercially.

Key Performance Indicators by Subsegment

MetricPlant-BasedPrecision FermentationCultivated Meat
Production Cost vs. Conventional1.5-3x2-5x5-10x
CO₂eq per 100g Protein0.4-3.5 kg1-4 kg5.6 kg
Commercial Readiness (TRL)96-84-6
2024 Investment$309M (-64% YoY)$651M (+43% YoY)$139M (-40% YoY)
Average Deal Size$31M$15-25M$96M
Regulatory Approval StatusBroadly approvedCase-by-caseLimited (2 US products)

What's Working and What Isn't

What's Working

Fermentation technologies are capturing disproportionate capital and commercial traction. In Q3 2024 alone, fermentation attracted $174 million compared to just $56 million for plant-based and $3 million for cultivated meat. Seventeen new fermentation facilities were announced or opened globally in 2024, with Liberation Labs' 600,000-liter facility in Richmond, Indiana representing one of the largest dedicated precision fermentation infrastructure investments to date. The technology's ability to produce ingredient-level proteins (rather than finished consumer products) enables integration into existing food manufacturing supply chains—a critical commercial advantage.

Mycelium-based products are achieving cost competitiveness faster than expected. Companies like Meati Foods ($100M Series C1 in 2024) and Infinite Roots ($58M Series B) are demonstrating that fungal fermentation can achieve production economics competitive with conventional meat within 3-5 years rather than the 10+ year timelines projected for cultivated meat. Mycelium offers natural fibrous textures without extensive processing, reducing both CAPEX requirements and ingredient complexity.

Government funding is increasingly filling the VC gap. With private investment constrained by high interest rates and risk aversion, public funding for alternative proteins reached $84 million for cultivated meat alone in 2024—doubling from $42 million in 2023. The U.S. Department of Defense's Distributed Biomanufacturing Program committed up to $100 million to precision fermentation companies including Perfect Day, The Every Company, and Liberation Labs. This public-private hybrid model is enabling capital-intensive infrastructure builds that pure VC would not support.

What Isn't Working

The U.S. plant-based retail market is contracting significantly. Refrigerated plant-based meat retail sales declined 17% in 2024, with average SKUs per store down 31% since early 2021 (from 14.1 to 9.7 SKUs). Beyond Meat's stock performance and financial health—including $1.2 billion in debt, payment delays to suppliers, and bankruptcy speculation—exemplifies the category's challenges. The core problem: taste and texture still do not match conventional meat for most applications outside nuggets and ground products.

Cultivated meat faces structural regulatory and economic barriers. Six U.S. states (Montana, Indiana, Mississippi, Alabama, Florida, Nebraska) have enacted or are considering bans on cultivated meat sales. Meanwhile, Q3 2024 saw average cultivated meat deal sizes collapse to $396,000—down from $10 million in Q2—reflecting investor skepticism about near-term commercial viability. The technology requires significant advances in growth factor cost reduction, bioreactor scaling, and scaffolding technology before achieving price parity.

Consumer price sensitivity remains the dominant purchase barrier. Despite strong stated preferences for sustainability, actual purchasing behavior remains highly price-elastic. Plant-based products commanding 1.5-3x price premiums over conventional meat struggle to maintain repeat purchase rates, particularly in inflationary environments. This dynamic creates a "valley of death" between early adopter enthusiasm and mainstream price parity.

Key Players

Established Leaders

Impossible Foods (Private, ~$2B valuation): The San Francisco-based company pioneered heme-based plant burgers achieving superior taste profiles through precision fermentation of leghemoglobin. Despite a 71% valuation decline from its 2021 peak of $7 billion, Impossible maintains partnerships with McDonald's, KFC, and Taco Bell, with estimated revenues exceeding $500 million annually. The company is targeting a liquidity event within 2-3 years.

Perfect Day (Private, $1.5B+ valuation): The precision fermentation leader raised $90 million in Series E funding in 2024 to scale production of animal-free whey and casein proteins. Perfect Day's B2B ingredient model—supplying dairy proteins to major food manufacturers rather than consumer products—has proven more capital-efficient than vertically integrated approaches.

ADM (NYSE: ADM): The agricultural commodities giant has invested heavily in alternative protein infrastructure, including plant-based protein extraction facilities and partnerships with precision fermentation startups. ADM's scale provides critical manufacturing capacity for the alternative protein supply chain.

Nestlé (SIX: NESN): Through its Garden Gourmet and Sweet Earth brands, Nestlé has become one of the largest food conglomerates investing in plant-based and hybrid protein products, leveraging its global distribution network for market penetration.

Emerging Startups

Meati Foods (Colorado, $275M+ raised): The mycelium-based meat company raised $100 million in Series C1 funding in 2024, positioning itself as the frontrunner in fungal fermentation. Meati's products are available in over 6,000 retail locations across the U.S.

Formo (Germany, €100M+ raised): Europe's leading precision fermentation company raised $61 million in Series B (2024) plus a $36 million venture loan from the European Investment Bank (Q1 2025) to scale koji-based cheese production.

Onego Bio (Finland, $50M+ raised): The Helsinki-based startup raised $40 million in Series A funding for precision fermentation egg proteins, targeting the large food ingredient market for egg albumin replacement.

Prolific Machines (California, $86M raised): Developing light-based (optogenetic) cell cultivation technology that could dramatically reduce cultivated meat production costs by replacing expensive growth factors with photomolecular activation.

Key Investors & Funders

Breakthrough Energy Ventures: Bill Gates-backed $1B+ climate fund with a 20-year patient capital model. Key alternative protein investments include UPSIDE Foods ($400M Series C), Prolific Machines, and Helaina.

SOSV: The world's most active deep-tech climate investor, with $306 million Fund V announced in 2024. Through its IndieBio program, SOSV has backed 59 climate-tech companies including Prime Roots, NotCo, and California Cultured.

Temasek Holdings: Singapore's sovereign wealth fund with long time horizons, investing in Eat Just ($200M+ Series H), Perfect Day, and Shiok Meats with a food security strategic focus.

European Investment Bank (EIB): Increasingly active in alternative protein infrastructure, providing venture loans to Formo and other European fermentation companies.

U.S. Department of Defense: Through the Distributed Biomanufacturing Program, DoD has committed up to $100 million for domestic precision fermentation capacity, reflecting national security interest in resilient protein supply chains.

Examples

  1. Liberation Labs (Indiana, USA): In Q1 2025, Liberation Labs operationalized its 600,000-liter precision fermentation facility in Richmond, Indiana—one of the largest dedicated alternative protein manufacturing facilities in North America. The $31.5 million investment exemplifies the infrastructure-first approach that is succeeding in the current market: rather than developing consumer brands, Liberation Labs provides contract manufacturing capacity to multiple precision fermentation companies, de-risking the sector's CAPEX requirements through shared infrastructure. The facility's scale enables production costs competitive with conventional dairy proteins for the first time.

  2. Meati Foods (Colorado, USA): Meati's mycelium-based steaks and cutlets achieved distribution in over 6,000 U.S. retail locations by 2024, making it one of the fastest-scaling alternative protein companies outside the legacy plant-based category. The company's $100 million Series C1 round validated investor confidence in fungal fermentation's production economics. Critically, Meati's products achieve whole-cut textures—steaks, chicken cutlets—that plant-based extrusion technology cannot replicate, addressing one of the category's primary consumer pain points.

  3. Formo (Germany): As Europe's precision fermentation leader, Formo raised over €100 million by Q1 2025 to develop koji-based animal-free cheese that achieves functional properties (meltability, stretchability) impossible with plant-based alternatives. Formo's European Investment Bank venture loan demonstrates the growing role of public-private financing in scaling capital-intensive food technology. The company's B2B ingredient strategy—supplying casein and other dairy proteins to cheese manufacturers—mirrors Perfect Day's successful model.

Action Checklist

  • Audit Scope 3 protein exposure: Map alternative protein opportunities within your supply chain, prioritizing categories where plant-based or fermentation-based substitutes have achieved taste and cost parity (e.g., dairy ingredients, egg proteins, ground meat applications)
  • Develop a tiered transition timeline: Near-term (2025-2027) focus on mature plant-based and fermentation ingredients; medium-term (2028-2032) integrate precision fermentation proteins as costs decline; long-term (2033+) monitor cultivated meat for price parity
  • Evaluate fermentation infrastructure partnerships: Engage with contract manufacturers like Liberation Labs to secure supply agreements for precision fermentation ingredients before capacity constraints emerge
  • Establish MRV frameworks for protein switching: Implement measurement, reporting, and verification protocols for Scope 3 emissions reductions from alternative protein adoption, aligning with GHG Protocol guidance
  • Monitor regulatory developments across key jurisdictions: Track cultivated meat approval timelines in Thailand (18-month regulatory pathway initiated 2024), Singapore (existing approvals), EU, and U.S. state-level restrictions
  • Pilot hybrid formulations: Test blended products (plant + cultivated, plant + fermentation) that optimize taste, cost, and sustainability profiles while building internal capabilities

FAQ

Q: Which alternative protein subsegment offers the best near-term emissions reduction potential for corporate supply chains? A: Precision fermentation currently offers the strongest combination of commercial readiness, scalability, and emissions reduction for ingredient-level applications. Fermentation-derived dairy proteins (whey, casein), egg proteins (albumin), and fats can integrate into existing food manufacturing processes with minimal reformulation, delivering 90%+ emissions reductions versus animal-derived equivalents. For finished consumer products, mature plant-based options in ground meat, nuggets, and dairy alternatives remain the most cost-effective pathway, though consumer acceptance challenges persist.

Q: What timeline should sustainability leads plan for cultivated meat to achieve cost parity with conventional meat? A: Current projections suggest cultivated meat will reach wholesale cost parity ($3-5/lb) between 2030-2035, assuming continued advances in growth factor cost reduction, bioreactor scaling, and regulatory approval expansion. However, this timeline carries significant uncertainty given the 40% decline in cultivated meat investment in 2024 and emerging state-level bans in the U.S. Prudent transition planning should treat cultivated meat as a 2030+ option rather than near-term opportunity, while monitoring enabling technology breakthroughs (e.g., Prolific Machines' optogenetic approach) that could accelerate timelines.

Q: How should companies approach alternative protein claims in sustainability reporting? A: Alternative protein adoption should be reported within Scope 3 Category 1 (Purchased Goods and Services) emissions inventories, with clear documentation of substitution ratios, lifecycle assessment methodologies, and baseline comparisons. The Good Food Institute's 2024 comparative LCA provides validated emissions factors for plant-based products. Companies should avoid greenwashing risks by using conservative, peer-reviewed emissions factors and acknowledging processing-related impacts that some LCAs overlook. Third-party verification of protein switching claims is increasingly expected by investors and regulators.

Q: What are the key risks of over-reliance on plant-based protein strategies? A: Plant-based proteins face several structural challenges: declining U.S. retail sales (down 17% in 2024), persistent taste/texture gaps versus conventional meat, consumer fatigue with ultra-processed formulations, and commodity price volatility for key inputs (pea, soy). Diversifying across fermentation technologies reduces concentration risk. Additionally, some plant-based products carry significant processing-related environmental impacts that offset agricultural emissions reductions—particularly for highly processed meat analogs requiring extensive ingredient inputs.

Q: How is government policy shaping the alternative protein investment landscape? A: Government funding has become increasingly critical as private capital retrenches. Public investment in alternative proteins doubled to $84 million for cultivated meat alone in 2024. The U.S. Department of Defense's $100 million commitment to precision fermentation reflects national security interest in protein supply chain resilience. Conversely, state-level cultivated meat bans in six U.S. states create regulatory fragmentation that may push innovation offshore. The EU, Singapore, and Israel are emerging as regulatory-friendly jurisdictions attracting alternative protein R&D and manufacturing investment.

Sources

Topics

alternativeproteinscapexMRVtransition planmethaneScope 3

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