Alternative protein startups are going mainstream in LatAm

*By Charlotte Paratre

Instead of Chilean salmon, turkey from Mexico, or a fancy French cheeseboard, how about choosing a plant-based alternative for your holiday menu this year?

You might have already given it a thought. Alternative protein (or alt protein) startups are booming worldwide: $3.1Bn were invested in this industry in 2020, representing more than three times the amount invested in 2019, according to the Good Food Institute. Big names include Impossible Foods, Beyond Meat, and Perfect Day, all based in the U.S. But how do Latin American startups measure up in this new industry?

The most prominent is NotCo, the Chilean plant-based protein startup that grew ~400% during 2020 and was last valued at $1.5Bn during its Series C $235M round led by Tiger Global. The first Latin American alternative protein unicorn is making plant-based milk and meat replacements a reality. 

Saying “alt protein” is important since plant-based alternatives are not the only type of food-related technology that is being developed in Latin America, and NotCo is not the only startup disrupting the food industry in the region.

Three categories of LatAm alt protein startups

At ALLVP, we’ve been increasingly intrigued by the alt protein space. We have identified three categories in LatAm.

First are the aforementioned plant-based startups, which are gaining ground on supermarkets’ shelves. For example, you can now see plant-based burgers from Plant Squad in Mexican grocery stores. From beetroot burgers to seitan BBQ ribs and nuggets without chicken, it’s amazing how quickly this Mexico City-based startup has managed to develop a wide range of plant-based products.

When it comes to the dairy department, Heartbest Foods has managed to make a name for itself using amaranth, peas, and quinoa to produce alternative milk, cheeses, and creams. 

The second category is full of companies taking on the complex challenge of using fermentation to create healthy and tasty plant-based products. The scope for innovation is broad: going from protein texturizers, preservatives, and coloring to flavoring. Michroma, a biotech company based in Argentina, is using fungal biofactories to produce the next wave of natural colorants.

Done Properly, from Chile, produces 100% natural flavoring enhancers to improve products in terms of health implications for the consumer. As an example, the company has managed to reduce sodium by up to 40% by enhancing the natural flavor of food. 

And, though still running on beta, we are now seeing the third category of alt protein startups whose focus is on cultured meat. Companies such as Micro Meat in Mexico cultivate animal cells directly, thereby eliminating the need to raise and farm animals. The company joins a squad of brilliant scientists in Latin America who are racing to build the future of meat. 

Why is Latin America primed for alt protein startups?

We’ve come up with three answers that can offer a good explanation for this recent boom:

• Land of proteins. Compared to global big Foodtech hubs, Latin America has a unique plant-based sourcing. The agricultural wealth of the region offers a cheaper, more local, and more diverse supply of ingredients. From edible fungi to Peruvian quinoa or Mexican amaranth, Latin American startups benefit from unique sourcing, combining different plant-based proteins and thereby making innovation even more interesting. 
• Unique geographical position. It’s no coincidence that Mexico has birthed several alt protein companies. The country has become a strategic location due to its proximity to the North American market and profound expertise when it comes to exports. Startups developing innovative ingredients can tap into this opportunity by exporting their products to a $30Bn market by 2035. 
• Attractive prices. Alt- protein product costs remain high worldwide, often allowing only a small part of the population to access them. Latin American startups can differentiate themselves by making these products accessible to many. With cheaper supply and production costs, they could make plant-based products more affordable to the whole population.

You might also be interested: Q&A |”The potential of foodtech in LatAm is huge, but it needs more investment”; Enrico Robles, Endeavor

Charlotte Paratre is an investment analyst at ALLVP