Alternative proteins, a solution to sustainability challenges within food systems

More than expertise in a specific field, being an effective consultant requires a holistic approach. The ability to think about the bigger picture, draw connections from past experiences, and apply those insights to new contexts is key. However, I also believe that having a good understanding of the sector your client operates in, and the associated challenges, opportunities and trade-offs, is crucial to adopt a tailored strategy and meet expectations. My experience in the SIRI Practicum these last few weeks has really showed me how important it is to engage in thorough preliminary research, especially since – coming from a background in finance and energy – I had limited knowledge of sustainability issues within food systems before I started working on this project.

Focused on transforming side streams from the food industry into high-value ingredients using mycelium, our client tasked my teammates and I with building a decision-making tool to help assess potential opportunities for technology deployment (e.g. partnerships with manufacturers), which is truly relevant and even pressing given the multiple challenges to food security we are facing today, spurred by the rapid population growth, climate change and geopolitical disruptions. In particular, 733 million people faced hunger in 2023 according to the WHO, and research by Bhardwaj et al. suggests there has been an alarming decline in the nutritional quality of food over the last sixty years while the agrifood sector (covered by SDG2) has significant impacts on biodiversity and the environment through land use and freshwater requirements. It is responsible for around 30% of the global anthropogenic greenhouse gases emissions (methane from cattle’s digestive process, nitrous oxide from fertilizers used for crop production, carbon dioxide from deforestation to expand farmland) with the largest share coming from meat and dairy, two major sources of proteins in traditional diets. As a result, various stakeholders are looking for replacements/alternative products and I find our client’s solution particularly interesting as it also addresses nutrient waste along the way.

To achieve our objective and design a useful instrument, we needed to identify the different elements that have an influence on how relevant it is for the client to pursue a certain opportunity – both in terms of financial viability and impact – since the two dimensions are equally important here. We thus dedicated the first weeks of the semester to market research, starting with a meeting with the Chief Scientific Officer to better understand the company’s position in the value chain and how it compares with other players, using the SWOT and Porter’s 5 Forces tools to structure our competitor analysis. In parallel, we used the PESTEL framework to expand our perspectives regarding the alternative protein landscape, which consists primarily of plant-, fermentation-, cell-, and insect-based products. We immediately noticed the high level of complexity of this industry, with a variety of business models and degrees of vertical integration (some companies are B2C and sell protein powder or substitutes for meat, eggs, seafood and dairy to end consumers while others, like our client, prefer B2B systems so their output serves as an ingredient for food/feed manufacturers downstream). Our research also revealed that there are specialized companies operating in at least 65 different countries and the market is expected to grow at a 9.9% CAGR, from $15.7 billion in 2024 to $25.2 billion in 2029, supported by key drivers such as public investment, technological innovation, consumer awareness and cultural acceptance. I specifically focused my attention on the regulatory environment and narrowed the analysis down to four considerations: stringency of waste management directives, authorization to use mycelium (e.g. “Generally Regarded As Safe” designation in the US versus heavier approval procedures in the EU), additional barriers that hinder competition and thus benefit our client (e.g. GMO laws limiting the development of precision fermentation), and finally the type of carbon emissions control since the production process generates a certain amount of biogenic CO2. Moreover, we looked at side streams efficiency (nutrient concentration, compositional complexity, convenience of collection) as well as infrastructure requirements (vessel size, energy consumption), and then proceeded to list the material parameters that should be included in our modeling tool. Moving forward, we will work on refining this deliverable based on client feedback and test it with real-world data from case studies, which should further reflect how much the technical, economic, regulatory and behavioral dimensions are intertwined and should all be taken into account to ensure value creation.