From Farm to Future: Shaping the Future of Food with Alternative Proteins

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As the global population increases, expected to reach 8.5 billion by 2030, providing sustainably produced protein-rich food will be crucial to meet the needs of a growing global population. Assuming global population growth and consumption patterns continue at a similar pace, by 2050 we will require the equivalent of almost three planets to be able to provide safe and sustainably produced food needed for a healthy, growing populace. To meet global protein needs, investments in protein alternatives beyond conventional animal protein sources are critical to sustainably feed almost 10 billion people by 2050.

New sources of alternative proteins, such as plant and cell-based proteins, provide a unique opportunity for investors to consider asset allocation considerations in a market that is projected to reach $423 billion by 2033. This continually upward growth trend in the alternative protein market is expected to continue as alternative proteins in all categories are forecast to grow significantly in market size in the years to come.

Alternative Proteins and Beyond : The Food of the Future

One of the most powerful mitigators of climate change is the greater adoption of alternative protein diets, which would require less water, emit fewer greenhouse gas emissions, and utilize lower amounts of land usage than animal protein-based diets. Alternative plant proteins, in particular, are proven to reduce chronic illnesses such as heart disease, stroke, diabetes and cancer, which will reduce the global costs of chronic disease which are projected to reach 56% by 2050.

Consumers are increasingly conscious of lowering or fully substituting their animal-based consumption patterns, as 87% of consumer respondents from the US, UK, the Netherlands and Germany reported as being committed to transitioning to becoming non-meat eaters, flexitarians or conscious meat eaters. Dietary health is one of the major structural drivers shaping current and future risk-adjusted returns and requires increased investment from both the public and private sectors to assist in the growth of the alternative protein investment landscape.

Plant-based protein

In 2022, the global plant-based protein market in terms of revenue was estimated to be worth $12.2 billion and is expected to reach $17.4 billion by 2027, growing at a CAGR of 7.3%. As a highly nutritious food source, plant proteins provide many nutrients essential to maintaining a healthy lifestyle such as fibre, essential minerals and vitamins. Plant proteins, which mostly consist of soy, potato, pea, rice, chickpea, and wheat, among other plant proteins, have seen increased investor demand as the most established and largest alternative protein source. The reality of climate change and its effect on the future of food production is also a key driver in increased plant-based protein consumer demand, as expected price parity is anticipated as manufacturers continue to efficiently scale operations.

Cell-based protein

In Singapore, the first country to have approved the commercial sale of cultivated meat, investments in alternative proteins multiplied to US$169.8 million by 2022, from just US$5.9 million in 2019. Expected to become a US$25 billion global industry by 2030 and surpass the taste and texture of conventional meat, cellular-derived protein can be created by two main methods: precision fermentation (modifying yeast to produce animal proteins) and cultivating cells from existing animal protein to replicate the process occurring inside a living animal that produces meat. Aimed at substantially reducing the environmental impacts of animal grazing and growing feed, cellular-based protein focuses on eliminating animal harm when producing meat to create a more ecologically-friendly meat industry.

Actionable Insights: The Alternative Protein Market Frontier

Investors can seize opportunities in the fast-growing alternative protein industry through diversifying and positioning portfolios for adaptations in consumer protein demand by incorporating the following actionable insights into their investment outlook:

Explore Vertical Integration Opportunities

Investigate the potential for vertical integration within the alternative protein supply chain by considering investing in companies that actively monitor multiple stages of the production process, from ingredient production to final product manufacturing and distribution for sustainability compliance. These companies provide greater control over quality, and cost efficiencies, and offer alternative protein companies a competitive edge in the market.

Identify Niche Markets and Niched Products

Instead of solely focusing on mainstream alternative protein products, look for opportunities in niche markets within the alternative protein sector by considering investing in companies that cater to specialized dietary preferences, such as gluten-free, allergen-free, or regional cuisines. These niched products can tap into underserved consumer segments.

Monitor Regulatory Developments Closely

Actively monitor regulatory developments related to alternative proteins to capture current opportunities in the alternative protein market industry. Investing in companies that demonstrate adaptability and compliance with evolving regulations can be advantageous as regulatory changes can significantly impact market dynamics, product labeling, and market access.

While offering promising investment opportunities, the alternative protein market requires investors to conduct thorough market research and due diligence to make informed investment decisions while harnessing the tremendous momentum of the structural shift in the global food system driven by the rise of alternative proteins.

Alternative Proteins: A Novel Investment Opportunity in a Reimagined Global Food System

Our global food system is the primary driver of global biodiversity loss. Estimates suggest that by 2050, the global demand for meat and milk will grow by 70%, with fish consumption more than doubling in comparison with consumption patterns 50 years ago. Traditional methods of acquiring protein have proved to be environmentally unsustainable, as producing meat by farming animals puts substantial pressure on global water and land resources, accelerating biodiversity loss and exacerbating the effects of climate change. By investing in alternative proteins, investors are well-positioned to capture a truly differentiated source of alpha in our evolving global food system.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Aisha Williams

An entrepreneur, futurist, and sustainability activist, Aisha is dedicated to reimagining the future of impact and sustainability as the Founder and CEO of ImpactVest, an impact mission-driven alternative asset management firm focused on promoting a purpose-driven economy and re-imagining capitalism.

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