Food for Thought: The Untapped Climate Opportunity in Alternative Proteins
Our latest research shows that consumers are embracing alternative proteins and that protein transformation is one of the best tools available to combat the climate crisis.
Give credit to the consumer. Our latest research shows that people around the world are buying into alternative proteins—and are very happy with what they find. The market share projections that we made in our first Food for Thoughtreport in 2021 are bearing out: current forecast models indicate that alternative proteins will represent 11% of all protein consumption by 2035, and with some help from technology, investors, and regulators, alternative proteins could command 22% of the global market over this time frame.
This is good news for everyone involved in the global effort to combat climate change. The food system accounts for 26% of current global greenhouse gas (GHG) emissions. Animal agriculture, the largest GHG emitter within the food system, is responsible for 15% of global emissions, roughly matching the emissions from the transportation sector. If we remain on track for an 11% share for alternative proteins by 2035, we will see a reduction of 0.85 gigaton of CO2equivalent (CO2e) worldwide by 2030—equal to decarbonizing 95% of the aviation industry. In comparison with other solutions, such as flying less or retrofitting existing housing stock, the economic and individual consumer tradeoffs involved in shifting to alternative proteins are relatively small. Our survey shows that consumers understand this: more than 30% of consumers consider having a major positive impact on climate to be a primary reason to switch to alternative proteins.
And this is exactly what alternatives proteins do. Investing in the segment has one of the biggest impacts on decarbonization when assessed in terms of the market value of avoided CO2e emissions per dollar invested in mitigation efforts. We call this impact of capital employed (IoCE)—and investments in alternative proteins produce IoCE that is magnitudes greater than corresponding decarbonization investments in other high-emitting sectors of the economy, such as transportation or buildings, can achieve.
The protein transformation is one part of a broader remodeling of the food system. As value pools form around new technologies and processes that help address such critical issues as taste, health, and cost, the need for some long-standing processes, such as animal slaughtering and meat packing, will decline. Every stakeholder along the value chain is likely to feel the impact of the transformation, and many will find big opportunities in contributing to building a sustainable food system.
Consumers Are Enticed
Alternative proteins have made substantial strides with consumers, who are broadly aware of this emerging food category and are favorably impressed when they try available products. (See Exhibit 1.) A 2022 survey by BCG and Blue Horizon, encompassing more than 3,700 respondents in seven countries, reveals that consumers in most markets appreciate the product attributes of taste, nutritional value, and health the most. We also found that improvements in three key areas—health, taste, and price—are key to boosting demand. Approximately 75% of respondents said that having a healthier diet is the primary motivator for them to start consuming alternative proteins. When it comes to making a purchasing decision between several products, though, taste emerges as a key criterion. Price remains a sticking point in all markets. Consumers are not prepared to pay a premium for a product that offers only taste parity with animal-based products.
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