KANSAS CITY, Mo. – Alternative proteins are hot, and they’re not going away.

Leading processors of animal proteins and multinational consumer packaged goods companies are all looking to invest in alternative proteins or create their own brand of products. Billions of dollars are flowing to companies in the segment. Beyond Meat, which recently launched an initial public offering, raised $240 million dollars on its way to a valuation of nearly $1.5 billion. The Impossible Burger has gained a foothold in foodservice locations across the United States — but also is nearly impossible to find due to strong demand and supply shortages.

What’s going on? Christine McCracken, animal protein analyst at Rabobank Agri-Finance has a few ideas which she shared with attendees of the 2019 Animal Ag Alliance Stakeholders Summit held May 8-9 in Kansas City, Missouri.

“What the trajectory looks like is still up for debate, but there is a lot going on,” McCracken said. “You only have to look at what happened…with Beyond Meat to say there’s a lot of investor interest; a lot of money flowing into this category.”

But the question we should be asking is — according to McCracken — why?

“…these are not new products; alternative proteins have been around for a long time,” she noted. “What’s changed? What are consumers looking for that makes this so much more successful than any time in the past?”

Alternative proteins today taste much better than their predecessors, for starters. Another driver is the marketing savvy of the producers — they’ve honed their message and made clear who is their target customer.

“I think Beyond [Meat] and Impossible [Foods] both have done a fantastic job not just in product development,” McCracken said. “You might not like them but there is a group of consumers that do. They are marketing machines. They have got those products in every nook and cranny in America.

“They are fantastic – they have 80-plus percentage store penetration at this point,” she continued. “They’ve got an Impossible Whopper now at Burger King. They have put themselves in the mainstream and that is a big part of it.”

Yet another factor lifting alternative proteins into consumers’ sights is stagnant growth at the retail level.

“You listen to any earnings call from any large food company and I can tell you that nothing is really growing at grocery,” McCracken said. “Alternative proteins — that’s hype, it's exciting. It appeals to this generation that nobody can really tap into. So, in that perspective, I think it checks a lot of boxes.”

The shortage is real

But no success story can be complete without some adversity. Even in the alternative protein space there are some limitations. McCracken noted that there’s no guarantee that a limited selection of products will be a sufficient draw for repeat customers to the category, and supply chain challenges have resulted in consumers being unable to try the products at times.

“They haven’t been able to find enough ingredients for their products,” McCracken said. “I think that’s a real risk for them. They haven’t really thought through the supply chain in terms of dealing with inventory.”

Industry action is critical

“As an industry, it’s your job to stay on top of this,” McCracken told the audience. “Don’t think it’s not going to be a challenge for the industry.”

As the US sends more products abroad, the price of meat in the US will rise which will provide yet another window for alternative proteins to further develop and grow market share. But plant-based meat alternatives aren’t always what they’re hyped up to be. McCracken noted that animal proteins maintain the lead on the attribute of ‘natural.’

“The package on some of these processed alternative meats is 20 ingredients long,” McCracken explained. “These are highly processed products — they’re not natural. You look at your product, and what’s the ingredient list? You’ve got the edge, use it.”