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Plant-based Meat

Plant-based Meat

FoodTech (Q4 2023): Spicing up for Veganuary in a tough market stew

This Insight covers quarterly updates on food technology and focuses on our coverage of Plant-based Meat (PBM), Plant-based Dairy & Egg (PBD&E), Cell-cultured Meat (CCM), Novel Foods, and upcycled foods and beverages (covered under the Food Waste industry hub). 

Key takeaways

Funding
  • Q4 funding increased moderately, led by PBD&E and CCM: Food tech startups raised USD 279 million across 24 rounds in Q4 (+50% QoQ and -32% YoY). PBM raised the most (~35% of total funding), but marked its lowest-funded quarter in the last two years. Growth funding, absent in the past two quarters, returned with notable rounds from Ripple Foods (PBD&E) and Daiz (PBM). The uptick in CCM funding (+131% QoQ) was driven by facility expansions in preparation for commercial production.
Product updates
  • PBM launches slowed ahead of Veganuary: Similar to last year, PBM announcements slowed in Q4 (14 vs. 100+ in 9M 2023), likely due to launches being delayed to align with Veganuary. PBD&E launches remained flat from recent quarters, while there was only one CCM announcement from EFISHient Protein. Other notable launches included bioactives from Novella, nutraceuticals from Ayana Bio, and plant-based pet food from Paleo.
New market developments
  • Activity picked up in Europe: US PBM developments remained broadly flat from recent quarters. However, outside the US, Redefine Meat made inroads in Europe with its expansion into the UK and the Netherlands. PBD&E developments in the US were also sluggish, but remained relatively strong outside the US, with a notable distribution expansion in Austria by Kern Tec.
Partnerships
  • Product collaborations took center stage across final products and ingredients: PBM and PBD&E partnerships for final products targeted the foodservice industry, focusing on plant-based alternatives for popular food items like pizza (Blackbird Foods, NotCo), burgers (Vacka, NotCo), and pasta (REBL Foods). Disruptors in the PBD&E and Novel Foods industries also collaborated on ingredient development, focusing on creating alternatives for proteins (QL AG, Vivici, and Protix) and animal fats (HIFOOD, Algarithm Ingredients). 
M&A
  • M&A activity picked up outside the US: We observed nine FoodTech M&A deals in Q4, a notable increase from just eight in 9M 2023. All deals were outside the US; most were centered in Europe. Lallemand’s acquisition of Evolva and Veganz Group’s acquisition of Happy Cheeze were distressed investments.
Regulations
  • Mixed developments in the regulatory environment: Germany earmarked EUR 38 million (~USD 41.5 million) for alternative proteins, while Czech Bene Meat Technologies received EU approval to use CCM in pet food. Conversely, Italy banned CCM production, Florida proposed a similar bill, and Poland considered restricting meat substitute labeling.
Outlook
  • PBM struggled to break into the mainstream: Beyond Meat’s Q3 results, which showed a 9% YoY decline in sales, suggest a rather bleak outlook for PBM unless significant improvements in taste, texture, and price are made to win over consumers. These challenging market conditions, along with restructuring activities (Beyond Meat, Motif Foodworks) and plant closures, could potentially lead to more distressed investing over the course of this year (as was the case in Q4). We may also see companies accelerating their activities in markets such as Europe and Asia-Pacific, where PBM products are gaining some traction. In the short term, product launches, which slowed significantly in Q4, would likely pick up in Q1 2024 in honor of Veganuary
  • CCM is at a critical juncture, gearing up for commercialization: The recent targeted funding rounds for facility expansions indicate a preparation shift toward commercial production. However, the industry still faces significant hurdles, from lengthy approval processes to challenges similar to those faced by plant-based counterparts, such as cost reduction and consumer acceptance. Nevertheless, after the USDA’s approval of cell-cultured chicken, other CCM alternatives, such as beef, fish, and seafood, are also expected to receive the green light soon.

Funding: Early signs of recovery; growth funding returned after two quarters

Analyst Take: With PBD&E and CCM segments at the forefront, FoodTech funding increased modestly in Q4, showing early signs of recovery although remaining well below early 2022 levels. PBM struggled to attract investor interest amidst challenging market conditions, reporting its lowest-funded quarter in the past two years. Inflationary pressures and premium pricing continue to weigh on PBM demand, alongside restructuring activities and plant closures. The uptick in CCM funding was anticipated, following the USDA approval of cultured chicken earlier this year. Growth-stage funding, which had been absent for the past two quarters, made a comeback, with notable rounds from Ripple Foods and Daiz.
  • FoodTech startups raised USD 279 million across 24 funding rounds in Q4 2023. While this was still a 32% YoY decrease, Q4 showcased early signs of recovery, with a 50% QoQ increase in funding.
  • PBM funding—despite accounting for ~35% of the total raised—continued to lag and was at its lowest for the past eight quarters. The uptick in funding mainly came from PBD&E (+295% QoQ) and CCM (+131% QoQ) industries.
  • The average funding round size was also up 43% QoQ (USD 13.3 million, but was lower than the average for the past eight quarters of USD 17.4 million). This was driven by a resurgence in late-stage funding rounds. Having been absent in Q2 and Q3 2023, growth funding accounted for 35% of total funds raised in Q4 (across two rounds). The average funding round size across PBD&E (+97% QoQ) and CCM (+39% QoQ) industries saw notable increases.

Plant-based meat, dairy, and egg 

  • PBM startups raised USD 96.9 million in Q4 (-6% QoQ and -43% YoY). This was the lowest amount raised in a single quarter for the past two years and is reflective of the industry’s challenging outlook. Notable PBM funding rounds include Japanese startup DAIZ securing USD 47.4 million to build a new production facility and Umiami securing ~USD 34 million for international expansion.
  • PBD&E funding picked up (USD 73.4 million; +295% QoQ and -8% YoY), driven by Ripple Foods’ USD 49 million Series F round (accounting for 67% of total PBD&E funds raised in Q4) to fuel distribution and product innovation of its pea milk offering. Bon Vivant also secured ~USD 16 million in seed funding to commercialize its animal-free milk protein.

CCM

  • CCM startups raised USD 87.5 million in Q4 (+131% QoQ and -43% YoY). This was driven by BlueNalu’s USD 33.5 million in a Series B round and a further USD 20 million investment from the NEOM Investment Fund and another USD 20 million from Triplebar. The raised funds were mainly to scale up facilities in preparation for commercial production after the approval of cultivated meat in the US earlier in the year. 

Upcycled F&B

  • We observed a single funding round from Crush Dynamics, which secured ~USD 1.5 million in grant funding from the Canadian Food Innovation Network to develop a new ingredient for food products made by fermenting upcycled wine derivatives and agricultural waste.

Novel Foods

  • Other novel food segments raised USD 19.6 million across seven funding rounds (-26% QoQ and +14% YoY). Funding was largely attributed to product development activities. 
  • Notable funding rounds during the quarter included insect-based livestock feed company FarmInsect’s USD 8.7 million in Series A funding and plant-based ingredient developer Solar Foods’ USD 8.7 million in Series B funding.

Product updates: Meat alternatives slowed down; PBD&E launches remained stable 

Analyst Take: PBM product activity slowed down considerably in Q4, with only a few notable PBM announcements from Cocuus and Foody’s, WOOP4, Nuveg, and Heura, alongside PBD&E launches from Coconut Collab, Kern Tec, and The Every Co. Moreover, despite USDA’s green light for CCM in Q2 2023, companies in this space continue to face challenging and lengthy regulatory approval processes, which could imply extended timelines for market entry. This was evident from only a solitary new CCM product announcement in Q4 by EFISHient Protein. Other notable novel food launches included bioactives from Novella, nutraceuticals from Ayana Bio, and plant-based pet food from Paleo, while Zayt Bioscience and Brightseed introduced upcycled F&B products.

Plant-based meat, dairy, and egg 

  • Similar to last year, PBM product launches slowed down in Q4, but remained broadly flat YoY. This is likely due to companies delaying their launches to coincide with Veganuary. We observed 14 new product launches in the PBM segment, with plant-based pork (five) and seafood (four) being the most prominent categories. The shift in the product mix to favor pork and seafood alternatives (over beef and poultry alternatives) was notable.\
  • PBD&E launches (12) remained broadly flat from recent quarters, mainly featuring new plant-based milk products. Plant-based butter and yogurt product launches also picked up.
    • Notable plant-based milk launches included Coconut Collab’s barista-style dairy-free “M!LK” and the addition of Milked Coconuts & Cashews to Elmhurst 1925’s plant-milk range 
    • Nature’s Fynd also launched a dairy-free yogurt made from its fungi-based protein, Fy.
    • Wesson launched a new line of plant-based butter, while Avebe unveiled “PerfectaSOL,” a potato-based texturizer for plant-based dairy products.
    • We observed new plant-based cheese launches by Kern Tec with Wunderkern Kesä and Bel Group’s Laughing Cow cheese triangles. 
    • The Every Co made a notable plant-based egg launch with its precision-fermented liquid egg product, EVERY Egg—the third addition to its liquid egg portfolio.

CCM

  • We observed only a single CCM product launch during the quarter, bringing the number of new CCM product launches in our coverage to a total of 18 across 2023  (vs. 15 in 2022). 
  • EFISHient Protein unveiled its first prototype of a cultivated tilapia fish fillet ahead of schedule in December 2023, bringing it a step closer to its goal of producing sustainable white fish species at scale.

Upcycled F&B

  • Two new product launches within the space occured during Q4 2023. These include Zayt Bioscience’s launch of Zayt Butter, a sustainable fat alternative made from upcycled fruit waste, and Brightseed’s launch of an upcycled and non-GMO-certified gut health ingredient called “Brightseed Bio Gut Fiber.”

Novel Foods

  • Notable alternative ingredients launches included from Novella, which introduced a line of cell-cultured berry bioactives, and BASF Aroma Ingredients, which introduced two new flavors under its “Isobionics” portfolio 
  • Two new nutraceuticals launches with Ayana Bio unveiling its “Plant Cell Advantage” portfolio and Arbiom’s introduction of Yusto yeast powder
  • Paleo entered the plant-based pet food market, filing and publishing a patent to use its animal-free heme in pet food formulations, targeting a 2024 launch. CULT Food Science launched its third pet food ingredient, “Bmeaty.” 
Please refer to Appendix 1 for the complete list of new product launches.

New market developments: US plant-based activity remained sluggish; Europe picked up

Analyst Take: US PBM developments remained broadly flat from recent quarters and were reflective of the challenging market conditions. Outside the US, Redefine Meat made inroads within the European market with its expansion to the UK and the Netherlands. PBD&E developments in the US were also sluggish, but remained relatively strong outside the US, with a notable distribution expansion in Austria by Kern Tec.

Market activity: Europe caught up with North America

  • Global PBM & PBD&E market activity remained consistent in recent quarters. Europe caught up with North America for the first time, accounting for ~52% of total activities in Q4 2023 (compared to ~33% on average for the past seven quarters). Notably, we did not observe any market activity outside of North America and Europe in Q4 2023.
  • PBM market activity was sluggish across the last few quarters, owing to the challenging circumstances facing the industry. PBD&E activity also declined from the levels we observed in Q2 and Q3.

Distribution network: PBM expansions continued; PBD&E slumped to record lows 

  • The US PBM distribution network expansions were led by retail channels, which accounted for 97% of the 7,874 new establishments observed in Q4 2023. Incidentally, this was the highest number of new establishments we observed across the preceding one-year period (although only marginally higher compared to Q4 2022). This was led by Daring Foods’ launch of a new line of plant-based frozen entrées at 3,760 retail locations nationwide and Wicked Kitchen launching a range of frozen entrées at 1,965 Target locations.
  • Activity contracted across distribution channels outside the US with only 2,492 new additions (-29.1% QoQ and -41.1% YoY). Nevertheless, ~46% of the new additions observed in Europe were attributable to the UK and the Netherlands, with Redefine Meat entering the retail space with its chef-endorsed plant-based meats, being available at 1,150 retail locations across Albert Hejn and Crispx chains in the Netherlands, as well as at leading UK online retailer Ocado.
  • US PBD&E distribution activity fell for the second consecutive quarter, reaching a record low. All new distribution activities were attributable to a single expansion within the retail channel, as Armored Fresh expanded distribution of its almond milk American cheese slices across 215 locations among Fresh Thyme Market, Town and Country Foods, and Fred Meyer stores.
  • Interestingly, PBD&E distribution activity outside of the US was higher. We observed 829 additions to the retail channel, notably Kern Tec’s launch of cheese made from upcycled apricot kernels under its Wunderkern brand across 500 Billa stores in Austria.

Partnerships: Product collaborations took center stage across final products and ingredients

Analyst Take: FoodTech partnerships centered around product development, with an even split in focus between final products and ingredients. PBM and PBD&E partnerships for final products targeted the foodservice industry, focusing on plant-based alternatives for popular items like pizzas (Blackbird Foods, NotCo), burgers (Vacka, NotCo), and pasta (REBL Foods). Disruptors in the Novel Foods and PBD&E industries were particularly active in ingredient development, focusing on creating alternatives for proteins (QL AG, Vivici, and Protix, who partnered with incumbent Tyson Foods) and animal fats (HIFOOD, Algarithm Ingredients).

Plant-based meat, dairy, and egg 

  • A number of collaborations took place for product innovation this quarter PBM companies like Prime Roots partnered with Fabrique Delices to develop koji-based pâtés and foie gras for foodservice, Blackbird Foods & Beyond Meat collaborated to launch plant-based pepperoni pizza, and NotCo partnered with Yellowbird Sauce to launch NotChicken spicy patties. Notable collaborations in the PBD&E space included QL AG and Vivici partnering with Ginkgo Bioworks to develop dairy proteins and The EVERY Company collaborating with Grupo Nutresa to develop plant-based egg alternatives.
  • Several PBM companies partnered with foodservice establishments, including Chunk Foods, which partnered with Monster Vegan restaurants to expand its US footprint, Omni Foods and Neat Burger’s collaboration to launch new seafood menu items, and Impossible Foods bringing its Indulgent Burger to customers through restaurants in the Ruby Tuesday chain.
  • Several key supply agreements were also signed, including PBD&E company Oatly, which partnered with Insomnia Cookies to increase nationwide foodservice distribution, adding to its portfolio of partnerships in 2023. Singaporean PBM company Tindle Foods made its US retail debut through partnerships with several established retailers, including Giant Eagle and FreshDirect. The Plant Based Seafood Co also inked its first partnership with a large-scale distributor, working with Sam Rust Seafood to expand its US distribution network.

CCM

  • The cultivated meat segment featured notable cross-border product collaborations, with Blue Nalu expanding its strategic partnership with Mitsubishi Corporation, Pulmuone Co. Ltd., and Thai Union to launch its cell-cultured seafood in the Asia-Pacific region, as well as a sales partnership with NEOM, a futuristic city in Northwest Saudi Arabia. Israeli biotechnology firm ProFuse Technology partnered with Estonian company Gelatex to advance cultivated meat production and French CCM company Vital Meat launched a collaboration with Biowest to scale up production of cell-cultured chicken.

Upcycled F&B

  • No notable partnerships were observed for this segment during the quarter.

Novel Foods

  • Other novel foods also heavily featured product innovations. Tetrapak partnered with AB Biotek to introduce a range of postbiotic food solutions and with Lund University to launch Biotech Heights, a research hub for food innovations. Bühler expanded its collaborations with insect farming companies, adding Agraloop and Divaks.
  • Other notable partnerships:
    • Algarithm Ingredients partnered with De Wit Speciality Oils to expand distribution of its algae-based omega oils in Europe and Biospringer partnered with Univar Solutions to distribute its natural yeast ingredients in the European Nordics region.
    • Tyson Foods partnered with Protix to advance sustainable insect-based protein production, while ChoViva and Lindt collaborated to launch a limited edition chocolate bar to commemorate “Veganuary.”
Please refer to Appendix 2 for the complete list of partnerships.

M&A: Deals picked up outside the US  

  • We observed nine M&A deals in the FoodTech space during Q4 2023. This was a notable increase from just eight in the first nine months of 2023. Most of the activities were centered in Europe. 
  • Lallemand’s acquisition of Evolva (for ~USD 30 million) and Veganz Group’s acquisition of Happy Cheeze were both distressed investments and were reflective of the industry’s challenging market conditions. VFC Foods’ acquisition of Clive's Purely Plants was its second this year, following its investment in The Meatless Farm (another distressed startup) in June.   
  • Wide Open Agriculture’s (WOA) acquisition of the leading lupin producer Prolupin’s assets for ~USD 2.7 million was also notable. The acquisition made WOA the largest lupin protein producer globally.

FoodTech: Key M&A deals (Q4 2023)


Regulations: Mixed developments in the alternative meat landscape

Analyst Take: We observed two broad camps for alternative meat regulation. On one hand, countries like the US, UK, Germany, Israel, and Singapore have been largely accommodating of the CCM and PBM space. Meanwhile, regulators in Italy, France, and Poland have been more restrictive, and the industry has had to contend with pushback from powerful lobbies for traditional meat industries. The legislature in such markets has targeted labeling, alleging that consumers may be confused when distinguishing between animal and alternative meat, notwithstanding studies that contradict this allegation.
  • Governments and industry players took positive steps in advancing alternative meat products
    • In November, the German Government announced plans to allocate EUR 38 million (~USD 41.5 million) for plant-based, precision-fermented, and lab-grown proteins in the 2024 budget.
    • In the same month, Czech cell-cultured meat startup Bene Meat Technologies received EU approval for its lab-grown meat for use in pet food. While the company is in discussions with pet food manufacturers for potential collaborations, it also plans to create its own brand of finished pet food products.
    • In December, French cultivated meat alternatives company Vital Meat filed a pre-market dossier for its cultivated chicken product, Vital Chicken, with the Singapore Food Agency (SFA) for regulatory approval. If approved, Vital Meat will be the first European company to receive regulatory clearance for cell-cultured meat in Singapore.
  • Significant regulatory setback in Italy, with potential headwinds for the industry in Poland and the State of Florida 
    • In November, Italy passed a controversial bill prohibiting the manufacture and sale of CCM and preventing the use of meat-related terms like “salami” and “steak” for plant-based meat substitutes. The regulation introduces penalties between EUR 10,000 (~USD 10,855) and EUR 60,000 (~USD 65,130) for every infringement.
    • In the same month, A Florida Republican legislator proposed a new bill to ban CCM production, sale, and distribution in the state, contradicting the increasing acceptance and supporting legislation of CCM at the federal level. The bill aims to impose fines and cease-and-desist orders for non-compliance and would require regulatory approval from the US Department of Agriculture and Consumer Services. The bill will take effect in July 2024 if enacted.
    • In December, Polish regulators proposed measures to restrict the use of terms traditionally associated with animal meats being used on labeling for plant-based meat substitutes, similar to what we observed in France during September 2023

Summary of new FoodTech startups added in Q4 2023

Notable FoodTech startups added to our coverage include the following:

Appendix

Appendix 1: Market activity, market distribution, and new products
Appendix 2: Disruptor partnerships
Appendix 3: Q4 2023 funding rounds

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