European investor interest in the plant-based food and protein sector is at an all-time high.
This is due to increased merger and acquisition activity, robust venture capital investment, changing food consumption and demand and strong EU Government incentives and legislative tailwinds.
Within the plant-based food sector the focus is increasingly shifting to plant-based protein and protein diversification for the potential to make the greatest contribution to reducing greenhouse gas emissions, improving health and wellbeing, and reducing problems such as deforestation.
Proteins are essential macronutrients that play a vital role in human nutrition, as they contribute to a healthy and balanced diet.
Consumers are becoming more aware of the health and environmental benefits of plant-based proteins. This has seen a surge in demand for plant-based meat alternatives such as burgers, sausages, and meatballs, made from ingredients like soy, pea, and wheat protein.
This has led to further examination of some of these alternative proteins and their environmental costs. For example, the EU imports of soy were around 15 million tonnes in 2019 with Brazil’s contribution around 35%.
In Europe there is growing awareness of the environmental damage caused by soy plantations.
According to Friends of the Earth Europe “Over 24 million hectares of land were dedicated to soybean harvesting in Brazil in 2012, 19 million in Argentina and three million in Paraguay. This has resulted in the loss of millions of hectares of forest, savannah, and grassland, destroying communities, biodiversity and ecosystems and contributing significantly to climate change”.
Around 74% of soybeans grown worldwide are genetically modified and involves the use of pesticides, herbicides, and fungicides – all of which have negative effects on human and environmental wellbeing.
The European Union, farmers and consumers are very much aware of the environmental effects of soy production – both imported and domestically grown and determined to reduce the protein import dependency.
In 2023 The EU Commission released a guideline on a protein strategy saying increasing EU protein production and supply could reduce dependency on imports from third countries that generally have lower environmental standards, and thereby contribute to a decrease in deforestation”.
The European Commission is expected to review its protein policy in the first half of 2024, reviving hopes for a comprehensive EU protein strategy.
In November 2023, the Budget Committee of the German Bundestag announced funding of €38 million in 2024 for the sustainable protein transition.
The measures adopted include a stronger focus of the German protein crop strategy on human nutrition, the expansion of the public research funding for plant-based foods and cultivated meat, support in the transformation for farmers and the establishment of a Proteins-of-the-Future centre.
Alternative proteins are also a fast-growing market within the sports and active nutrition sector. Due to rising consumer demand for meat alternatives, there is an increase in sports foods businesses investing in plant-based products and food-technology alternatives to animal protein.
Venture capital investors have been following the sector closely in Europe and there have been some strong merger and acquisition activity in the sector.
According research from Alternative Proteins Global in H1 2023 there were 95 investment deals across the alternative protein industry for a total deal value of around USD $1 billion. Europe saw more investment in 1H 2023 than 1H 2022 and European deal flow leads the way with over 67% of global deal value conducted here.
The legislative tailwinds, consumer demand and deal flow all indicate strong buoyancy in the plant-based protein market in 2024 and beyond.
For retail investors, there are few options in the small-mid cap space with many plant-based protein companies being owned by venture capital.
There is one ASX listed, German based company that looks very interesting for retail and strategic investors interested in the plant based protein space.
Wide Open Agriculture (ASX: WOA; FSE: 2WO) is Australia’s leading ASX-listed plant-based protein company, which is scaling up manufacturing capabilities in Germany, targeting global food brands for potential sales orders of their patented, water-soluble Buntine Protein made from lupins.
The Company is on a mission to assist Europe reduce dependency on imported plant-based protein, assist improve global biodiversity and increase human health and wellbeing.
Wide Open Agriculture has developed a patented plant-based protein product – Buntine Protein – made from lupins. Buntine Protein is a versatile protein powder than can be used to create plant-based dairy, meats, baked goods, and protein supplements.
The IP of Buntine Protein is that it is water soluble with a neutral flavour – perfect as a protein additive for food and drinks and as a soy replacement.
In October 2023, the Company announced a game-changing acquisition to acquire the business assets of ProLupin GmbH – a leading European lupin protein producer based in Grimmen, Germany.
This provided Wide Open Agriculture immediate commercial scale manufacturing capabilities in Europe together with experienced staff.
The potential production from the facilities at Grimmen is 1,000 tpa of Buntine Protein.
The addressable market for plant-based protein in the EU alone is significant – estimated to be USD $3.45 billion in 2024 and to reach over USD $11 billion by 2029.
The German operations will focus on a Business-to-Business strategy, leveraging ProLupin’s already established network in the European plant based dairy market to supply global ingredient and food manufacturing companies.
Testing is now underway by major global food brands of the Buntine Protein, which if successful would be expected to lead to significant sales orders.
With a growth rate of around 49% from 2020 to 2022 for plant-based foods in Europe, the market potential for Wide Open Agriculture’s lupin protein looks substantial.
Wide Open Agriculture's 2024 Investor deck can be downloaded here