Unlocking the commercial potential of edible insects

Transcription

1 MAKING THE UNWANTED DESIRABLE Unlocking the commercial potential of edible insects At a time when first-world consumers are hungrier for proteins and the global food crisis is escalating, edible insects offer potentially one of the best solutions to meet these demands. They are high in nutrients, especially protein, and can be produced efficiently with extremely low environmental impact. To be a real solution, insects need to become big! Within animal feed, insects can deliver a big sustainability impact already in the short term. But to harness the true sustainability impact insects can offer, they should be used in human food as well. That requires quantity and penetration across many categories. Insects need to impact the mainstream, because quite frankly, the snack bars on the market today with 5% insect protein are not going to save us from a food crisis. This whitepaper explores the potential paths to unlock the wider commercial potential of edible insects for human food.

2 Rise of the responsible consumer Without a doubt responsible food is an increasing trend, which is a perfect fit with edible insects! There are two major trends that are creating opportunities for insect protein: THE SHIFT TOWARDS MORE SUSTAINABLE PROTEINS HAS ALREADY STARTED While consumers in industrialised countries may not actually be protein-deficient, protein fortification and high protein claims have become a huge trend in the past few years. While Western Europeans have the highest protein consumption globally at 49 grams per capita daily sustainable proteins are gaining increasing attention. Europeans are spending more on meat alternatives. For example, in 2015 Swedish and U.K. consumers spent more than double per capita, about 5, on meat alternative foods compared to the USA. The meat substitutes market value in some European countries is even experiencing growth rates higher than 20% yearly. (Source: Euromonitor International, 2016) Meat Substitutes - Retail Value mn United Kingdom Figure 1. Meat Substitutes market size and forecast*, retail value mn at year-on-year exchange rates (source: Euromonitor International) Protein Types, Western Europe, Volume mt Sweden * 2017* 2018* Plant proteins Animal & Dairy proteins * 2017* 2018* 2019* 2010* Figure 2. Animal/Dairy and Plant proteins, Western Europe, All Packaged Product Categories, volume tonnes (source: Euromonitor International)

3 WILLInGneSS to PaY for PoSItIve SocIaL and environmental IMPact Taste, price and other core benefits still matter. However, more than half of global consumers are willing to pay more for products and services from companies that are committed to positive social and environmental impact (Source: The Nielsen Company, 2014). But consumers who take sustainability aspects into consideration in their buying decisions do it in different ways. Some rely on ecolabels like organic or Fair Trade, some are flexitarians, vegetarians or vegans, and some consciously avoid products they deem unsustainable. Evidence of growing interest is strong, as every second consumer checks product packaging to ensure sustainability (Source: The Nielsen Company, 2014.) Key Ethical Purchasing factors, Global, retail value mn Vegetarian/Vegan Sustainable Trade and Farming incl. Fairtrade * 2017* 2018* 2019* 2010* Figure 3. Key ethical purchasing factors, Global market size and forecast*, mn at 2015 fixed exchange rates (source: Euromonitor International) START WITH A DREAM Anything is possible. Big dreams are the reason why the world changes for the better. Let s explore your future growth opportunities together, and make your better business ideas a reality.

4 The death valley of insects Despite the big media hype, the edible insects industry is still in its infancy. There are only a few larger scale edible insects producers globally and even those are small companies who produce small quantities. Existing production is mostly low-tech and includes a lot of manual labour. The lack of industrialisation is one of the major roadblocks preventing larger scale use. Another obstacle in the EU is restrictive regulation, which is holding back many players from actively developing insect-based products. In fact, there s a big risk insects will never take off sizeably in human food. The main reasons are: SCALE BARRIER: TOO BIG A CHASM TO CROSS currently the average price for edible insect powders is times higher than whey or soy proteins. for the mainstream food industry, prices need to be competitive and supply volumes comparably big. Most food players want ready to use new ingredients, without taking the risk involved in time and money consuming scale-up. also, the food industry doesn t desperately need a new protein source. Soy rules with its low price, whey with its good amino acid profile. The driver for quick scale-up of production is simply lacking. MENTAL BARRIER: LACK OF MARKET PULL Let s face it! No one really WANTS insects. They disgust most people and we re not used to eating them. There s no consumer demand, no market pull. And although some industry professionals can see the big opportunity, most are reluctant to work with insects. Neophobia is practically hindering the developments. Many believe plant-based proteins are all that are needed as sustainable alternatives. SYSTEMIC BARRIER: BROKEN FOOD SYSTEM Altogether, the traditional food value chain will be an extremely slow route for commercialising insects. Insect farming won t leap into big volumes quickly, due to the resistance and lack of demand at every step in the long value chain. In fact, the traditional food value chain could even be a trap for the insect opportunity. Long and complex value chains with poor transparency could easily create new sustainability problems such as adulteration and social injustice, as well as safety and hygiene risks. These problems would hinder gaining consumer trust and acceptance even further. To conclude, traditional commercialisation paths and food value chains are full of barriers and lacking the drivers to make insects big. If insects are seen purely as an alternative protein ingredient, they can t compete with existing solutions - therefore the commercial potential is limited!

5 The three potential paths to better business Insects can t be just as good as existing solutions for sustainable protein. They need to be superior! Rationally thinking, it is easy to understand the benefits insects could offer: a complete protein source with a mild and nutty taste, and the possibility to produce them efficiently and sustainably. But there s much more to insects than just that. To unlock the full potential of insects both technically and commercially the business models to commercialise insects should be reconsidered. In fact, the opportunities are unlimited, if you start searching business opportunities through the following paths: BE A LEADER OF CHANGE When you decide something is important, that s the moment you start to lead change. Invenire can help integrate growth and sustainability into your company s Dna to be strategic, effective and thrive. 1) AIM FOR INCREASED EFFICACY AND SAVINGS Stop seeing insects (only) as a protein ingredient. The beauty of them is that they are also great natural bioconverters and waste managers. Well-designed circular economy solutions based on insects could offer enhanced efficacy and cost savings - with a sustainable and nutritious protein ingredient as a bonus! Think about new business opportunities through Reducing waste streams and their costs Maximising the use of material and energy flows On-site circular economy solutions

6 2) ProvIDe a SoLUtIon and an experience Stop asking Why would consumers want to eat insects?. Forget insects and think about what burning consumer problem you could solve. Don t force them to make a conscious decision to eat insects. Insects will thrive in good-tasting solutions that make intrinsically sustainable choices easy. This is about social innovations that can alter demand and consumer behaviour. 3) ADD VALUE BY RETHINKING PRODUCTION Insects can technically be grown anywhere in homes, restaurants, cities, communities, farms etc. Forget long value chains; insects can and should be produced close to the point of consumption, whether it is in developed or developing countries. There is an opportunity to start building the value chains from scratch, with the possibility of embodying transparency, traceability and trust. Think about new business opportunities through Making life easier and more meaningful Providing new experiences Utilising services and digital technologies Think about new business opportunities through Giving power within food production back to consumers Utilising robotics and automatisation for growing insects anywhere Producing food within cities and communities

7 Why better business needs new thinking Businesses in the current food value chain are struggling with competition, profitability and poor long-term growth prospects. At the same time, businesses can no longer ignore their responsibility to our planet and people. Sustainability opens up new opportunities for future business! So far, sustainability has been an underutilised asset to make profitable business. The problem is that it s difficult to create good business with a slightly greener or more socially conscious version of an existing product. Instead, the real sustainability business makers are creating innovations that disrupt existing categories. and this doesn t mean merely creating sustainability innovations, but improving other product features just as drastically. also, for the top sustainability performers, sustainability isn t a separate function or department within the company. Instead, it is integrated into core structures of the business, including organisational structure, cost structure and governance structure. this means sustainability then becomes a revenue driver, not a drag. Lastly, to create bigger impact, sustainable businesses should target mainstream customers and consumers, not only the super green niche groups. Better business is not built in the same way that current problems are. new ways of thinking are imperative for the future! Further reading: Williams E.F. (2016) Green Giants: How Smart Companies Turn Sustainability Into Billion-Dollar Businesses.

8 MAKE REAL IMPACT THAT MATTERS Better business starts by taking action. Hire Invenire as your Chief Marketing Officer (CMO) of the Future. Together we can build brands with purpose and conversations that sell with customer happiness at the core. We wrote this whitepaper Get in touch and see us at the HiEurope Conference! Virpi Varjonen Strategist and Ingredient Market Expert LinkedIn: virpivarjonen Johanna Tanhuanpää Sustainability and Market Intelligence Expert LinkedIn: johannatanhuanpaa THE FUTURE OF NUTRITION Unlocking the commercial potential of insect proteins Monday 28th November, 13:30 14:00 MODULE 3A: NATURAL TO THE NEXT LEVEL New natural: embracing the potential for organic claims Tuesday 29th November, 15:30 16:00 MODULE 8B: PERSONALISED NUTRITION Explaining bio-hacking: is there a marketing opportunity for food companies? Thursday 1st December, 11:00 11:30 As CMO of the Future, Invenire empowers leaders to make change happen. Better business for People Planet and Profit. Through excellent Design, Strategy and Conversations, we help leaders act on their values and purpose. Together we craft innovative business strategies that enable profitable growth with sustainability at the core. We create impact that matters. HEALTH. HAPPINESS. RESPONSIBILITY. EMPATHY. CREATIVITY. EFFECTIVENESS. doorbell@invenire.fi