When might the term ‘alternative protein’ be obsolete?

Three questions to ask

• What market share can alternative protein reach in the US by 2040, and what are the primary drivers?
• What are potential land-use implications in the US?
• What can protein disruption and land-use changes mean for agri-food stakeholders?

Protein is being reimagined globally, and its availability from alternative sources may have profound and disruptive impacts on the agri-food system and land use. A protein system transformation also has the potential to unlock opportunities for food and agricultural stakeholders to help address some of the world’s most pressing challenges, including decarbonization, restoring ecosystems, producing circular and bio-based materials, and producing enough healthy food for a growing population.

The food system continues to be reimagined as stakeholders place greater emphasis on the planet, consumer demands and greater connectivity across ecosystems. As that reconfiguration progresses, we see organizations innovating in new ways and offering greater transparency and sustainability. This is particularly true within the protein system, where alternative protein adoption and investment velocity are increasing. 

Recent research and scenario modeling by the EY-Parthenon team in alternative proteins sought answers to the following questions:

• What market share can alternative protein reach in the US by 2040, and what are the primary drivers?
• In combination with shifts in other agricultural consumption patterns, such as the impact of electric vehicle adoption on corn ethanol demand, how might alternative protein adoption shift the demand patterns of core commodity products in the US?
• What are the potential land-use implications of these demand shifts?
• What could these changes mean for agri-food stakeholders?

Advancements in plant-based, fermentation-based and cultivated protein technologies are all accelerating. While sensory and cost parity with animal protein have not yet been achieved, hundreds of innovations are occurring globally in the inputs, ingredients and processes used in alternative protein production. Each innovation is driving the category closer to sensory and cost parity with animal protein — and driving increased consumption and consumer engagement. 

Forecasted alternative protein disruption in the US, 2020–40

Alternative dairy, which our analysis shows could be upwards of 60% market share by 2040, is a strong analog for alternative meat. The alternative meat forecast of 9% by 2030 compares favorably with the experience of alternative milk, which has penetrated American households and now accounts for 15% of all dollar sales of retail milk.¹ The rest of the alternative dairy category, including cheese, is advancing technologically and continues to attract increasing levels of investment. If social, environmental and regulatory drivers (e.g., water or carbon taxes) are factored into conventional protein production, market shares for alternative meat and dairy could surpass our base forecast considerably.

Plant-based and fermentation-based meat in the US may reach sensory and cost parity by 2024. “Fermentation-based” here refers to biomass fermentation. However, the budding “precision fermentation” industry is creating functional and nutritional ingredients that will be incorporated into all categories of alternative protein products. Cultivated meat, on the other hand, can potentially reach cost and sensory parity by the end of the decade. As the underlying cultivated protein technologies advance, we expect increasing production and consumer adoption of this source of protein and anticipate that by 2040 they could potentially surpass plant-based proteins in popularity. It is important to note that cultivated fats may reach parity sooner and be incorporated into plant-based products in the coming years. To drive our analysis, we considered production costs and advancements in sensory technology while incorporating potential tailwinds and disruptors.

Data released by the Plant Based Foods Association shows plant-based milk is already purchased by more than 39% of households in the US.⁷ Furthermore, in June 2021, David MacLennan, CEO of agribusiness giant Cargill, said that plant-based products would eat into consumer demand for meat. The company’s analysis indicates that plant-based protein will be perhaps 10% of the market in only three to four years.⁸

Research by the University of Pennsylvania shows that 25% of people adopting a new norm can trigger and catalyze widespread behavior change.⁹ Adoption of alternative proteins at levels of 25%, or even less, would create significant impacts on the food system. Those impacts are not limited to the opportunities presented by a new and growing market. There are also impacts in the potential displacement of current markets for animal-based meat. This is an industry that is built on significant infrastructure investments in both animal production and processing, and much of our agricultural system has developed to grow feed grains for animals. The increased consumption of alternative proteins has the potential to create significant pressure and potential disruption on this entire system.

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