Why Venture Capital Is Hungry for Plant-Based Meat in Asia-Pacific

As international brands seek market share in Asia-Pacific, venture capital funding is helping domestic players to expand aggressively

Food-related venture capital deals in Asia-Pacific reached record levels in Q1 2021, crossing $900mn in aggregate value, as Fig. 1 shows. Most of the largest transactions in the past three years have been for assets in the fresh foods and grocery supply chain. However, Preqin data is recording a new wave of deals in the niche segment of alternative meat. Alternative proteins – typically made of soy, pea, or fungi protein – are designed to emulate the texture and taste of meat, and can be used in conventional dishes such as ‘beef’ burgers and ‘chicken’ tenders.

So, what’s behind the growing demand for alternative meat? More and more people around the world are aiming to reduce meat consumption, typically for health reasons, to protect animal welfare, or to lower their carbon footprint. Indeed, venture capital directed to alternative protein companies worldwide tripled in 2020 to reach $3.1bn, which was also 4.5x greater than 2018. The growth is even more staggering in Asia-Pacific, where there was a sixfold increase in investment capital in the alternative protein sector from 2019 to 2020, totaling $206mn last year.

The Big Players
Several large deals have been completed in recent years. Notably, Australian alternative meat company v2food has just closed a Series B funding round worth $72mn this month, raising its value to $500mn (Fig. 2). The funding round is the largest for an Asia-Pacific alternative meat company, and was led by Astanor Ventures, China Renaissance Capital Investment, and Main Sequence Ventures. The funds will be used to develop new products and for overseas expansion in Europe and China. Previously, the company raised $55mn in October 2020, led by Goldman Sachs, China Renaissance, and Temasek Holdings. 

In another significant deal concluded in September 2020, Hong Kong-based Green Monday Holdings raised $70mn, in a round led by TPG’s The Rise Fund and Swire Pacific. The company produces alternative pork products OmniPork and OmniMince.

Internationally, the market leaders in this sector are arguably Beyond Meat and Impossible Foods. Their products can already be found on the menus of popular fast-food restaurants in North America and Europe, such as Burger King, Subway, and Pizza Hut. After entering the markets of Australia, Singapore, Hong Kong, South Korea, and Taiwan by partnering with various restaurants a couple of years ago, their products were launched in supermarkets across Singapore and Hong Kong over 2019 and 2020. 

Both brands now want to expand into China. To this end, Beyond Meat has so far been more successful. The company signed a deal in September 2020 to open a production facility near Shanghai and has successfully established partnerships with Chinese e-commerce store JD.com, Alibaba’s Freshippo online supermarket chain, and Starbucks. 

Impossible Foods, on the other hand, is currently awaiting regulatory permission to enter Mainland China due to the inclusion of heme, made from genetically modified yeast, in its beef and pork products. But Impossible Foods’ CEO has said that China is the company’s highest priority for future expansion. In a move that might possibly aid this mission, the firm is planning to launch chicken nuggets made from soy protein and sunflower oil in fall 2021, which will not contain heme. 

Domestic Players Fight for Market Share 
To expand in the diverse region of Asia-Pacific, international alternative meat brands will have to contend with domestic brands that are more familiar with local taste. For instance, Green Monday’s OmniPork was specifically designed for Asian cuisine, in dishes such as dumplings. Chinese firm Zhenmeat has also released plant-based pork and crayfish, which are highly coveted by Chinese consumers. Indeed, specialization in alternative pork is important in China, where pork consumption doubled that of all EU countries combined in 2020.

Interestingly, plant-based meat substitutes are no new phenomenon in China. They were invented a millennium ago for Buddhists who ate a meat-free diet out of compassion for animals. Such foods, usually made of soy and wheat gluten, are widely consumed in places like China, Hong Kong, Taiwan, India, and Singapore. However, these products were not made to taste as close to real meat as the patties of Beyond Meat and Impossible Foods, which even contain beetroot extract and soy leghemoglobin respectively to mimic ‘bleeding.’

Another predecessor to today’s like-real alternative meat is Quorn, which was founded in 1985 in the UK and has been sold in the US since 2002. Quorn, which was acquired by Monde Nissin in 2015, helped its parent company successfully list on the Philippine Stock Exchange in April this year via an IPO. The IPO was backed by investors including Singaporean sovereign fund GIC, Singapore-based asset manager Eastspring Investments, and Hong Kong insurer AIA. Monde Nissin has stated that a significant portion of the $1.4bn in IPO proceeds will go toward the global expansion of the Quorn brand. 

Could There Be Roadblocks Ahead?
Appetite for all kinds of alternative meat looks likely to continue growing in Asia-Pacific. Competition should be fueled by a rise in specialized venture funds focused on investing to cater to unique flavor palettes in the region. 

Among these are Hong Kong-based Lever VC, which previously invested in Beyond Meat, Impossible Foods, and Memphis Meats. The firm completed its first five investments in Chinese alternative protein start-ups in September 2020 via its RMB 200mn Lever China Alternative Protein Fund. Another venture firm, Princeton-based Big Idea Ventures, started a New Protein Fund to invest in producers of plant-based meat, seafood, dairy, and snacks. It currently runs start-up accelerators in New York and Singapore. The fund, which fully closed in May this year, is committed by Temasek, Enterprise Singapore, and Tyson Foods. 

Asia’s rising meat consumption is en route to a potentially unsustainable level, projected to grow 33% by 2030 and 78% by 2050. The ballooning demand for real meat presents both a challenge and an opportunity for the alternative meat sector. Converting this massive population of carnivores into herbivores will be no easy task, but the sector is continuing to innovate extensively; plant-based meat companies today offer a wide variety of enticing products that can appeal to a range of customers. And with the climate crisis an ever more pressing concern for consumers, investors willing to bet early to capture just a small piece of expanding shopping-cart space could realize significant dividends for years to come.