The South African plant protein market presents strong growth opportunities for both incumbents and new entrants. Increasing adoption of plant-based foods has led established players, foodservice start-ups, and retailers to shore up their respective offerings to cater to the demand from the millennial generation, and emerging flexitarian consumer.
Players in the plant-based protein market seek to enter and grow in the market through direct investments, potential M&A, and investment activities. The majority of the large agricultural players are expanding their plant-based protein ingredient offerings, while animal protein players are investing in R&D to develop plant-based meat alternatives. Investments and fund-raising activities are also growing as part of the expansion strategy.
Globally the investment in alternative protein companies has been on a rise, as per The Good Foods Institute (GFI), the Q1 2020 investments have already surpassed the 2019 full-year totals, indicating a strong growth potential for the sector.
The private equity, venture capital landscape in the continent has been growing and agribusiness sectors is one of the key investment themes.
For instance, in March 2020, The LIVEKINDLY co., backed by Blue Horizon Ventures, a Swiss investment firm, acquired a majority stake in The Fry Family Food Co. These investments are further sustained by a growing culture of entrepreneurship. The government is enabling this further by streamlining business regulation for start-ups and small businesses.
Similarly, existing agricultural companies are expanding their portfolio to include more plant-based protein ingredients to help their clients capitalize on emerging plant-based food trends. These offerings are expected to provide retailers, restaurants, fast food outlets, etc., with a wider range of options to cater to evolving consumer trends. Cargill invested an additional US$75 million to propel PURIS pea protein production to meet surging market demand.
As the industry grows, expansion of plant-based protein offerings will continue to require investments to build larger distribution networks, marketing, and branding which smaller pure-play startups may not be able to scale up on time and this may result in consolidation and buyouts in the space.
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