A new report entitled Plant-based profits is urging major global food brands move away from their reliance on animal proteins - and look at creating plant-based products instead.
The report, which is backed by a $2.4 trillion coalition of 57 large investors, features an analysis of 16 multinationals.
It concluded that Nestlé and Tesco were best positioned to benefit from a transition to alternative plant-based proteins.
Other companies engaged included Kraft Heinz, General Mills and Unilever.
The investor coalition is coordinated by the FAIRR initiative, founded by private equity pioneer Jeremy Coller. It includes institutional investors like Aegon, Aviva Investors, Coller Capital and Nordea.
FAIRR launched a sustainable protein engagement in September 2016, and has since engaged with 16 large food retailers and producers.
The investor coalition backing this engagement has grown from 40 investors managing $1.25 trillion in 2016, to 57 investors with over $2.4 trillion in AUM [Assets Under Management] today.
More than 42 percent of investors backing the engagement were from the US.
What is the FAIRR initiative?
The report features projections which say the alternative protein market could reach $5.2 billion by 2020, growing at a compound annual growth rate [CAGR] of 8.29 percent.
The sector includes foods such like the Impossible Burger - a high-tech patty made entirely from plants.
Just 18 months after launch, the Impossible Burger is now available in over 500 US restaurants and has received funding of over $250m from mainstream investors including Singaporean sovereign wealth fund Temasek.
It also includes 'clean meat' startups like Memphis Meats - which recently announced investments from meat industry players Cargill and Tyson Foods.
The 16 multinationals were evaluated on areas such as business strategy, monitoring processes, R&D investment levels and consumer engagement to understand how companies are positioned to capitalise on the rising demand for alternative proteins.
The report found that Nestlé and Tesco (which recently launched a major plant-based range with chefs Derek and Chad Sarno) are best prepared for the plant-based shift.
It found all companies market at least one own-brand alternative protein product, but only three companies have set some type of goals to increase their portfolio of alternative proteins (M&S, Nestlé and Unilever).
It also found that all companies lack a coherent strategy for how to market and promote alternative protein products on supermarket shelves to drive sales.
Rosie Wardle, Head of Investor Engagements, FAIRR, exclusively told PBN: "The plant-based proteins market is booming, and consumers are sending a strong message with their wallets to the global food industry.
"The companies that get ahead of this curve and proactively invest in the development and marketing of plant based foods are those that investors will be looking at to generate stable long-term returns.
"The significant environmental and public health benefits of alternative proteins, in stark contrast to the global meat industry, are key factors in driving the 8 percent annual growth that is attracting the attention of shareholders."
Sasja Beslik, Head of Group Sustainable Finance, Nordea said: "Sustainable protein is a fast-emerging issue for the food industry, and it is important for long-term investors to know if the companies they invest in understand the related risks and opportunities.
"FAIRR’s sustainable protein engagement offers practical guidance to companies to ensure they have a business strategy that is robust enough to respond to a changing food supply chain.
"For us as investors, this engagement also helps us to be on top of the developments in this space as well as to identify food companies that proactively invest in innovative solutions."
Taste testing alternative-protein burgers
Jeremy Coller, Founder of the FAIRR Initiative and CIO of Coller Capital, added: "Today’s Plant-Based Profits report shows that alternative proteins are rapidly going mainstream.
"From meatpackers to supermarket stackers the global food sector is rapidly taking notice of plant-based alternatives to animal protein products, and that is driving 8 percent annual growth in the alternative proteins market.
"It’s significant that all of the food producers and retailers engaged by investors now market at least one own-brand alternative protein product.
"Ultimately, this trend is driven by the inability of the global meat industry to manage the environmental, public health and animal welfare challenges that the world’s current demand for animal protein creates; and that is generating remarkable opportunities for food companies and their shareholders."
Duncan Pollard, AVP, Stakeholders Engagement in Sustainability, Nestlé, said: "At Nestlé, we recognize that for a business like ours to be successful, we must take a long-term view.
"We have the responsibility and the opportunity to shape the sustainable production and consumption of food to preserve our planet for future generations.
"The development of the protein supply chain is an issue with the potential to radically reshape the supermarket shelf of the future. We very much welcome the support of those investors who want to act today to stay ahead of the curve in the economy of tomorrow."