Beyond Meat’s initial public offering (IPO) created headlines earlier this month when it raised at least $240 million, giving the start-up a valuation of nearly $1.5 billion. Now we’re learning Impossible Foods, the California-based startup, has raised total funding of $750 million, giving it a market valuation of $2 billion.
The two companies have turned fake meat into some real money.
But, they’re not alone. In fact, according to the Good Food Institute, investors have put $16 billion into plant-based meat, egg and dairy products over the last 10 years, and $13 billion of that in 2017 and 2018.
Last year, 12 cell-based protein companies raised capital worth $50 million. Eleven new cell-based companies entered the field last year, bringing the total to 27.
The cultured or cell-based products are well behind the development of plant-based proteins. Last year, the plant-based category grew 23%, exceeding $760 million in sales. Analysts note the most developed plant-based category is plant-derived milk, which totaled $1.8 billion in sales last year and represents 13% of the total U.S. retail milk market.
While substitute protein sales total about $1 billion of the U.S. market now, if their sales grew to match the 13% of retail sales now found in the substitute milk and dairy markets, the substitute protein market would be about $35 billion.
While growth in the substitute protein market is impressive, the category is not without some major hurdles. The first obstacle to growth may be the availability of pea protein. That’s the major ingredient in plant-based burgers, and while analysts see the production of pea protein growing in the futures, current supplies are stretched thin, limiting the availability of the finished product.
Another, possibly more troublesome hurdle, is the fact plant-based burgers are by definition highly processed foods, and their ingredients may be unappealing to some consumers. Plant-based burgers are typically high in sodium, gluten and fats. Some also include genetically modified ingredients, which some consumers already shun.
While those obstacles and others are real, the amount of money investors are pouring into fake meat products suggests the category is not going to fade away anytime soon.