The Challenges, and Opportunities, in Chinese Alternative Protein

We’ve all seen the numbers.

The global market for plant protein alone is on track to exceed $162 billion by 2030, up from less than $30 billion last year, according to an August report from Bloomberg. At that point it would control nearly 8% of the world’s protein market. Sales of plant-based meat and fish alternatives may reach 5% of the total meat and fish market by 2030.

Plant-based dairy already accounts for nearly 5% of the total dairy market and that’s expected to double in the next decade. You get the idea. Alternative proteins are growing rapidly worldwide. And the same could be happening in China, if geared correctly, where 700 million consumers under 40 can help drive new interest in plant-based meats.

But, despite the growing recognition of next-generation plant-based protein in China, it is also facing some backlash from consumers there. A recent video clip on social media showing a famous young actress promoting plant-based meat dumplings sparked an online debate about the affordability and nutrition of plant-based meat products. And there are even concerns that the core technologies behind these new protein products are often held by foreign companies -- will that intellectual property take advantage of Chinese consumers without benefiting growing companies in the region?

The fact is, mainstream consumer knowledge and adoption of new protein products are far from there yet, and there are no shortcuts. Celebrity-driven buzz comes and goes but it doesn’t last. Companies need to be very cautious, as only the right products can help win over Chinese consumers in China, and it’s going to take time.

That’s why product/market fit is so important for the companies we work with -- they only get one chance so they need to stand out and make clear how their products better serve Chinese consumers than what’s available today. That’s what Dao Foods’ first cohort of companies are doing, from the plant-based functional protein drinks for children that WOW Foods is making, to Fresh Foods’ plant-based yogurt to 70/30 Food Science and Tech’s fermentation-based ready-to-eat meals. All are solving broad problems in new, plant-based ways.

Disruptive products and technologies like these are key in reaching the tipping point of mass adoption [of alternative protein]. It’s like the original iPhone in 2007. It was a disruptive invention, not an imitation of even the best phones available then.

Alternative protein investors know this as well, which is why they’re playing a long game in China. There is potential here for consumer backlash which is giving investors pause, especially those who are not intimately familiar with the industry or the region. It’s not about following the trend but building something sustainable.

Although momentum has been building up in this sector over the past two years, the alternative protein sector is still quite nascent in China. That’s OK because building a new industry in China is not a sprint but a marathon. The game changers in this space will be those entrepreneurs who know how to conquer the stomachs and minds of China's mainstream consumers and the investors who are prepared to support them, each step along the way and for the long run.

Good Food, Better World.