Sustainability Atlas
Food, Agriculture & Materials·14 min read··...

Market map: Alternative proteins — the categories that will matter next

Signals to watch, value pools, and how the landscape may shift over the next 12–24 months. Focus on KPIs that matter, benchmark ranges, and what 'good' looks like in practice.

In 2024, alternative protein companies raised $1.1 billion globally—a 29% decline from the $1.5 billion secured in 2023—bringing cumulative investment since 2016 to over $19 billion (GFI, 2024). Yet beneath this headline contraction lies a profound structural shift: precision fermentation captured $651 million (up 43% year-over-year), while plant-based funding collapsed by 64% to just $309 million. Cultivated meat attracted a mere $139 million, down 40% from the prior year. This reconfiguration signals that capital is not abandoning alternative proteins—it is migrating toward categories with clearer paths to cost parity and commercial viability. For founders, investors, and sustainability officers navigating this evolving terrain, understanding which segments will matter next is no longer optional; it is the difference between scaling impact and stranding capital in declining categories.

Why It Matters

The food system accounts for approximately 26% of global greenhouse gas emissions, with animal agriculture alone responsible for 14.5% of anthropogenic emissions (FAO, 2023). Ruminant livestock—cattle raised for beef and dairy—generate substantial methane, a potent greenhouse gas with 80 times the warming potential of CO₂ over a 20-year horizon. Beyond emissions, conventional protein production consumes 70% of agricultural land globally and drives biodiversity loss through habitat conversion.

Alternative proteins offer a pathway to decouple protein production from these externalities. Life cycle assessments (LCAs) consistently demonstrate that plant-based proteins reduce greenhouse gas emissions by 30–90% compared to conventional beef, while using 47–99% less land and 72–99% less water (Poore & Nemecek, Science, 2018). Precision fermentation and cultivated meat promise even greater efficiencies as production scales, with some fermented dairy proteins already achieving carbon footprints 97% lower than their animal-derived counterparts.

For the European Union specifically, alternative proteins align with Farm to Fork Strategy targets requiring 55% emissions reductions by 2030 and carbon neutrality by 2050. The EU's €10 billion Horizon Europe research programme has allocated significant funding to sustainable food systems, while member states like Germany ($145 million in 2024 alone) and the Netherlands are emerging as global hubs for alternative protein innovation. Corporate buyers facing Scope 3 reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) increasingly view alternative proteins as a credible decarbonization lever for their supply chains.

Key Concepts

Precision Fermentation leverages microorganisms (yeast, fungi, or bacteria) engineered to produce specific proteins identical to those found in animal products. Companies like Perfect Day produce whey protein without cows, while Formo creates casein for cheese applications. This technology achieves molecular equivalence—the proteins are chemically indistinguishable from animal-derived versions—enabling functional parity in taste and texture while eliminating the animal entirely from the production chain.

Mycelium-Based Proteins utilize the root structure of fungi grown in bioreactors to create whole-cut meat alternatives. Unlike extruded plant proteins, mycelium naturally forms fibrous, meat-like textures. Companies like Meati and Quorn have scaled this approach, with Meati's MushroomRoot products now available in over 6,000 retail locations across the United States.

Cultivated Meat (also termed cell-based or lab-grown meat) grows animal cells in bioreactors without raising and slaughtering animals. Following FDA approval for UPSIDE Foods and Good Meat in 2023, regulatory pathways have clarified in the US, Singapore, and Israel. However, production costs remain 5–10 times higher than conventional meat, limiting near-term commercial viability.

Hybrid Products combine plant proteins with fermentation-derived ingredients to achieve improved functionality. This convergence strategy allows companies to leverage cost-efficient plant bases while adding fermented fats, proteins, or flavor compounds that close the sensory gap with animal products.

CategoryCost Parity TimelineEmissions Reduction vs. BeefKey Technical Challenge
Plant-basedAchieved (2023)30–90%Taste/texture optimization
Precision fermentation2024–2026 (selective)85–97%Downstream processing costs
Mycelium2025–202770–90%Bioreactor scale-up
Cultivated meat2030+80–95% (projected)Media cost reduction

What's Working

Fermentation's Ascendance

Precision fermentation dominated 2024 funding for compelling reasons. The technology has achieved or approached cost parity with animal-derived proteins in specific applications—Perfect Day's whey protein now matches conventional whey pricing when sold as a premium ingredient. The $651 million invested in fermentation companies in 2024 reflected investor confidence in this economics-driven momentum. Early 2025 reinforced the trend: Formo secured €36 million in venture debt from the European Investment Bank, Vivici raised $33.8 million in Series A funding, and Liberation Labs closed $31.5 million for fermentation infrastructure.

Retail Velocity and Distribution Expansion

Alternative protein products have achieved meaningful retail penetration. JUST Egg (from Eat Just/Good Meat) is now available in over 48,000 stores including Walmart, Whole Foods, Kroger, and Target, having sold the equivalent of 500 million eggs by February 2024. Meati expanded to 6,000 stores across Target, Whole Foods, Sprouts, Meijer, and Wegmans. This distribution scale signals category maturation—retailers are allocating permanent shelf space rather than treating alternative proteins as experimental.

B2B Ingredient Plays Gaining Traction

The pivot from consumer-packaged goods to business-to-business ingredient supply has proven strategically sound. Companies selling fermented proteins, fats, and functional ingredients to food manufacturers face shorter sales cycles, more predictable demand, and reduced marketing costs compared to building consumer brands from scratch. ADM Ventures' investments in companies like Air Protein and Sundial Foods reflect this B2B emphasis.

What's Not Working

Plant-Based Brand Saturation and Consumer Fatigue

The 64% funding collapse in plant-based proteins reflects real market challenges. Beyond Meat's stock declined over 90% from its 2019 peak. US retail sales of plant-based meat fell 13% in 2023, with foodservice down 8%. Consumers who tried first-generation products—often soy or pea-protein based with noticeable off-flavors—have not returned at rates necessary to sustain growth projections. Price premiums of 30–100% over conventional meat persist despite years of promised reductions.

Cultivated Meat's Cost Structure Impasse

Despite regulatory approvals, cultivated meat faces a fundamental unit economics problem. Cell culture media—the nutrient broth in which animal cells grow—costs $50–400 per liter at current scales, making cultivated meat products 5–10 times more expensive than conventional equivalents. Only $139 million flowed into cultivated meat in 2024, and Q2 2025 saw zero disclosed funding deals in the category. Without breakthrough cost reductions in growth factors and media formulation, commercial viability remains distant.

Exit Environment Paralysis

The alternative protein sector has produced few successful exits, limiting investor returns and deterring new capital allocation. No major IPOs have occurred since the challenging Beyond Meat experience. Acquisitions have been sparse and often at depressed valuations. This exit environment creates a negative feedback loop: limited returns suppress new fundraising, which constrains company growth, which further delays potential exits.

Key Players

Established Leaders

Impossible Foods (US) remains the category leader in plant-based meat, having achieved 20% price reductions and expanded to grocery and foodservice channels globally. The company's proprietary heme technology delivers the closest approximation to beef's cooking behavior and flavor profile.

Perfect Day (US) pioneered precision fermentation for dairy proteins, securing over $350 million in funding. Their animal-free whey proteins appear in ice cream, cream cheese, and sports nutrition products from major brands, proving the B2B ingredient model at scale.

Quorn (UK) represents the mature mycelium category, operating for nearly four decades with established manufacturing infrastructure and global distribution. The company's Marlow Foods subsidiary processes over 30,000 tonnes of mycoprotein annually.

Emerging Startups

Meati (US) exemplifies the mycelium breakthrough potential, having raised $100 million in May 2024 for its MushroomRoot product line. Their whole-cut steaks and cutlets achieve texture fidelity that previous plant-based products could not match.

Formo (Germany) leads European precision fermentation for cheese, with €50 million Series B funding and subsequent venture debt from the European Investment Bank totaling €36 million. Their fermented casein enables mozzarella and ricotta products indistinguishable from dairy originals.

Air Protein (US) represents next-generation fermentation using CO₂-fed microorganisms to produce protein with minimal land, water, and emissions inputs. Their $32 million Series A funding from ADM Ventures signals interest in carbon-negative protein production.

Key Investors

Lever VC has emerged as the sector's most active investor, leading Redefine Meat's $135 million Series B and backing over 30 European alternative protein companies. Their deep category expertise provides strategic value beyond capital.

CPT Capital focuses exclusively on animal-free innovations, with portfolio companies including Beyond Meat, Hoxton Farms, Better Dairy, and THIS. Their London base makes them central to European deal flow.

Blue Horizon (Switzerland) manages over $1 billion in assets dedicated to sustainable food systems, with investments spanning Impossible Foods, Planted, and numerous precision fermentation companies across the value chain.

S2G Ventures (US) operates a $2 billion fund backing food and agriculture innovation, with alternative protein investments including Perfect Day and Meati. Their generalist food-systems lens provides portfolio companies with cross-sector strategic support.

Examples

Meati: From Lab to 6,000 Retail Doors

Meati's trajectory illustrates successful scaling in the mycelium category. Founded in 2016, the company developed proprietary fermentation processes to grow MushroomRoot biomass in days rather than the months required for traditional mushroom cultivation. Their $100 million 2024 funding round enabled manufacturing expansion to meet retailer demand. Key success factors included: (1) whole-cut product format addressing the texture limitations of extruded plant proteins; (2) simple ingredient lists appealing to clean-label consumers; (3) competitive pricing within 50% of conventional chicken; and (4) demonstrated retail velocity justifying expanded shelf allocation. The company reports products are now available in Target, Whole Foods, Sprouts, Meijer, and Wegmans.

Formo: European Precision Fermentation at Scale

Formo demonstrates the European precision fermentation opportunity. The Berlin-based company produces casein—the protein responsible for cheese's stretch and melt—through yeast fermentation. Their €50 million Series B in 2023 and €36 million EIB venture debt in 2025 provide non-dilutive capital for production scale-up. Unlike plant-based cheeses that sacrifice functionality, Formo's fermented proteins enable mozzarella that melts authentically and ricotta with traditional texture. The company's regulatory strategy targets Novel Food authorization under EU frameworks, with commercial launch anticipated by 2026.

Rebellyous Foods: Manufacturing Innovation for Price Parity

Rebellyous Foods (US) tackled the alternative protein industry's manufacturing deficit directly. Rather than outsourcing production to contract manufacturers using equipment designed for animal processing, the company developed its proprietary Mock 2 production system optimized specifically for plant-based chicken. This system produces 10–25 million pounds annually at costs approaching conventional chicken parity. Their approach—treating manufacturing innovation as core IP rather than an outsourced commodity—provides a template for reducing the cost premiums that limit alternative protein adoption. The company reported $2.78 million in gross sales in 2023 while expanding its foodservice customer base.

Sector-Specific KPI Benchmarks

KPIPlant-BasedPrecision FermentationMyceliumCultivated Meat
Cost per kg (protein basis)$4–8$8–15$10–18$50–200+
GHG emissions (kg CO₂e/kg protein)2–61–42–54–15 (projected)
Land use (m²/kg protein)3–101–52–82–10 (projected)
Water use (L/kg protein)200–800100–500150–600300–1,500
Time to market (new product)6–18 months12–36 months12–24 months36–72 months
Retail price premium vs. conventional30–100%50–150%40–80%500%+

Action Checklist

  • Audit portfolio allocation: Evaluate existing alternative protein investments against category momentum—consider rebalancing from plant-based consumer brands toward precision fermentation and B2B ingredient plays
  • Assess supply chain integration: Identify opportunities to incorporate fermented ingredients into existing product lines; many precision fermentation outputs function as drop-in replacements for animal-derived ingredients
  • Map regulatory pathways: For EU market entry, begin Novel Food authorization processes 18–24 months before planned commercial launch; engage with EFSA early on dossier requirements
  • Develop Scope 3 procurement strategies: Quantify emissions reduction potential from alternative protein sourcing; build supplier relationships with companies achieving third-party verified LCA claims
  • Monitor cost parity milestones: Track quarterly updates on fermentation media costs, bioreactor capacity expansion, and downstream processing efficiency—these determine category commercialization timelines
  • Engage retail buyers proactively: For product companies, demonstrate velocity data from pilot programs; retailers increasingly require 12+ months of scan data before permanent planogram allocation

FAQ

Q: Which alternative protein category offers the best risk-adjusted returns for investors in 2025–2026? A: Precision fermentation presents the most compelling near-term opportunity. The category attracted 60% of 2024 funding, has achieved or approached cost parity in selective applications (dairy proteins, specialty fats), and benefits from clearer regulatory pathways than cultivated meat. B2B ingredient companies selling to food manufacturers offer shorter paths to revenue than consumer brands requiring extensive marketing investment. Key de-risking factors include: demonstrated production at 10,000+ liter bioreactor scale, established co-manufacturing partnerships, and signed offtake agreements with major food companies.

Q: How should food companies evaluate alternative protein ingredients for Scope 3 emissions reduction? A: Prioritize ingredients with third-party verified LCAs from recognized providers (Carbon Trust, Quantis, or similar). Request cradle-to-gate emissions data that includes upstream agricultural inputs for fermentation feedstocks. Compare against category averages: switching from conventional dairy proteins to precision-fermented equivalents typically reduces emissions 85–97%, while plant-based proteins achieve 30–90% reductions versus beef. Ensure suppliers can provide data in formats compatible with your carbon accounting software and CSRD reporting requirements. Verify claims at the SKU level rather than accepting corporate-level averages.

Q: What manufacturing challenges limit alternative protein scaling, and how are companies addressing them? A: Three bottlenecks constrain scaling: (1) Bioreactor capacity for fermentation remains limited, with global food-grade fermentation capacity estimated at under 5% of animal agriculture's output; companies like Liberation Labs are building dedicated infrastructure to address this gap. (2) Downstream processing—separating, purifying, and texturizing proteins—often represents 30–50% of production costs; innovations in membrane filtration and spray-drying efficiency are critical. (3) Ingredient sourcing for fermentation feedstocks (sugars, nitrogen sources) creates upstream supply chain dependencies; companies increasingly pursue partnerships with agricultural processors to secure reliable inputs at scale.

Q: What distinguishes successful alternative protein startups from those struggling to raise capital? A: Investors in 2025 prioritize demonstrated unit economics over growth projections. Successful companies typically show: (1) revenue traction exceeding $500,000 annually, even at seed stage; (2) clear paths to gross margins above 40%; (3) manufacturing strategies that reduce reliance on expensive contract manufacturing; (4) customer diversification beyond single retail or foodservice accounts; and (5) intellectual property protection for core processes or ingredients. The "funding winter" has eliminated tolerance for capital-intensive consumer brand building without near-term profitability visibility.

Q: How do European regulatory frameworks compare to US pathways for alternative protein commercialization? A: The EU's Novel Food Regulation (2015/2283) requires pre-market authorization for proteins produced through processes without substantial history of consumption—including precision fermentation and cultivated meat. Authorization timelines average 18–24 months following dossier submission to EFSA. The US FDA pathway, by contrast, relies on GRAS (Generally Recognized as Safe) self-affirmation for many fermented proteins, enabling faster market entry. However, EU authorization provides pan-European market access through mutual recognition, while US companies must navigate fragmented state-level regulations. Singapore's regulatory framework remains the most accommodating globally, having approved cultivated meat sales in 2020 and subsequent products through streamlined review processes.

Sources

Topics

alternativeproteinsScope 3methaneLCAbenchmark KPIstraceability

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