Australia’s first commercial manufacturer of plant protein went into voluntary administration this week. Its first creditor meeting was yesterday (30 May) so we will see what comes from that. But the fall of a pioneer in an emerging food industry at a time the government is investing heavily in those it sees as being in the national interest begs the question, has it missed a major, lucrative and critical industry altogether?
Proform Foods was founded by Stephen Dunn and launched from a partnership with CSIRO in 2006, with the goal to pioneer the technology needed to manufacture plant proteins at scale.
Dunn had been working in cereals production for decades before this venture, his knowledge, experience, and innovative eye well established.
From 2008 to 2020, more than $8 million was invested in R&D, with Proform becoming a key supplier of plant-based meat to the food industry, before launching its own consumer brand, MEET.
This investment in time and research culminated in 2020, when Proform commissioned its $11 million state-of-the-art plant on Sydney’s northern outskirts, just as PBMF (plant-based meat fever) was gathering speed.
The year before, in 2019, v2food launched, born from a collaboration between CSIRO, its deep tech venture fund Main Sequence, and Jack Cowin’s Competitive Foods Australia – the company behind Hungry Jack’s.
Alternative protein think tank, Food Frontier, released reports putting forward the case for Australia to take the lead in this emerging market, and outlining the $3 billion opportunity with economic modelling by Deloitte Access Economics.
At the time, Food Frontier’s founder and then CEO, Thomas King, told Food & Drink Business it had been supporting six Australian start-ups in the sector as well as advising large Australian meat manufacturers on diversifying product lines.
If you weren’t already looking up just what was precision fermentation or starting to dabble with a legume or two, then events across the Pacific might have spurred you to action.
On 1 May 2019, Beyond Meat – a 10-year-old company that had not yet turned a profit – went public. It had the best debut session of any US listing since the 2008 financial crisis and in one day, raised US$241 million on 9.63 million shares for US$25 each. It then rallied 226 per cent. As one trader said, “absurd”.
Five years on, Proform is still operating but by administrators from KPMG, some companies have gone, some have merged, and some have even acquired companies and created new ones.
The sector is impacted by the same challenging macro-economic landscape as everyone else, but with the handicap of being a capital-intensive disruptor in a low margin industry, particularly for those plant-based meat companies where set-up costs are extremely high, product taste and texture still being developed, and consumers just not buying it – the product or the marketing around it.
The fact is, finding the funds to scale and commercialise is complex and more difficult as investor excitement wanes.
And I haven’t even mentioned the novel protein industry incorporating precision fermentation and cultivated meat that are advancing biomanufacturing processes using yeasts, fungi, algae, and insects . We’ll get to that.
Here’s the kicker. Just because it’s hard and traditional VC channels don’t get it, doesn’t mean the industry isn’t worth backing or is going to fail.
This is where the innovation that drives food and drink manufacturing has to come to the fore. New investment channels need to be found because the value in developing the sector is huge.
And I say this as the federal government announces a major new policy and shift to greater investment in emerging industries and those that will shore up the country’s economic and national security interests.
As it delivers a budget introducing a National Interest Framework to “better align economic incentives with our national interests”.
As it stands, that’s been assigned just over $27 billion, with critical minerals, clean energy, green technologies the recipients.
What appears to be a gross oversight at this stage, is the recognition – and investment – in the food and drink industry, which is kind of the most critical industry of all.
Back in 2019, Food Frontier released its Meat The Alternative: Australia’s $3 Billion Opportunity report, with economic modelling by Deloitte Access Economics projected against conservative, moderate, and strong growth scenarios.
Its most recent State of the Industry report presented recalculated 10-year scenario models by Deloitte that forecast the plant-based meat industry to be worth $1.65 billion in FY33, contributing half-a-billion dollars in value to the economy, and supporting more than 6000 jobs.
And again, that is just for the plant-based segment of the protein market.
Food Frontier’s report, Meat Re-Imagined: The global emergence of alternative proteins – what does it mean for Australia, put forward the case for Australia to position itself as the APAC leader in developing, manufacturing, and supplying alternative proteins.
It said there were 32 research centres in Australia producing work directly relevant to R&D for plant-based meat alternatives, including plant genetics and molecular biology, crop science and production, and food science and product development.
There were also “at least” 17 research institutions producing work directly relevant to the R&D of cell-based meats including bioprocess engineering, food science and product development.
In 2022, CSIRO released its Protein Roadmap, saying there was a $13 billion market opportunity for Australia to grow and diversify its high-quality protein products from various sources.
Its Reshaping Australian Food Systems identified 27 opportunities and a series of R&D priorities that may enable Australian food systems to become more sustainable, productive, resilient, and equitable for participants and consumers alike.
The sector needs to seek out strategic partners and ambitious investors who understand it is a long game and its untapped potential.
I can’t be the only one asking why this untapped potential is not being invested in?
We have remarkable companies, R&D, and resources to finally stop talking about how Australia could be the food bowl for the region (and beyond) and actually do it.
Will it take Australia falling as low on a food index equivalent as it has on the Harvard Economic Complexity Index before the missed opportunity is realised?
