Impact Blogs: If you build it, will they eat it? Understanding plant based meat investment risks

Raising livestock to produce meat and other animal products is responsible for up to 14% of worldwide greenhouse gas emissions, contributing to climate change and environmental volatility. New Plant Based Meat (PBM) products offer consumers alternative food products that can provide similar nutritional values as animal meat but with lower environmental costs. 

Despite the potential environmental benefits of PBM, investments in PBM production capacity have been limited in many countries. New research from Limestone Analytics analyzes the investment case for PBM in four countries: Brazil, China, Nigeria, and Vietnam. The analysis draws attention to the most important financial risks and highlights opportunities for reducing these risks and encouraging investment in the sector.

The investment cases show that in each country, increasing PBM production offers a positive-but-risky expected financial return. Based on the best-available projections around demand, supply chains, and financial market returns, building PBM capacity is expected to return a profit. But, the uncertainty and risks around these profits are preventing producers from expanding their investment in the sector.  

Digging into the report, we see that there are positive expected returns from PBM investments across the different countries. Over the life of any investment, the largest returns are expected in Nigeria, while the lowest are expected in China. 

Expected profits per 250g of PBM produced by country

If investors were certain about the projections around consumer demand, supply chains, and financial markets, then investing in PBM might be an easy decision.  But, they are not certain about these projections. They are not sure exactly how consumers will respond to the new products, and whether prices and market size will be higher or lower than expected. They are not sure whether input prices and supply chains will react as expected over the coming years. They do not know what will happen with currency prices and inflation. 

Any of these factors could turn a reasonable expected profit into a sizable financial loss. Looking at just one of the types of uncertainty explored in the report, we see how returns on investment hinge on how much firms are able to sell, and how much of their plant capacity is utilized on average, over time. 

Sensitivity of return on investment depends on scale of production (colours represent different levels of average plant production capacity utilization)
Sensitivity of return on investment depends on scale of production (colours represent different levels of average plant production capacity utilization)

Together, all of the uncertainty implies that PBM investments come with substantial financial risks, which discourage investments, even when a project offers positive expected returns and potential environmental benefits.

Governments or other social sector organizations may want to facilitate investments in cases like this where there are likely social benefits, but where the private sector is not investing due to low expected returns or high risks. In the case of PBM, the barriers are in terms of risks, and anything that can be done to reduce these risks may encourage greater investments in the sector. 

Two important considerations for reducing risks and encouraging investments in PBM are the following.

First, additional research can reduce uncertainty regarding how consumers and markets respond to the expansion of PBM in a market. Better understanding the determinants of demand, and how prices and market sizes are likely to respond to new PBM products will go a long way towards reducing the financial risks in the sector. Such research could be supported by firms, industry groups, or governments hoping to facilitate investments in PBM.

Second, blended or innovative funding arrangements can reduce the financial risks to PBM investors by allowing them to share some of the risks with public sector partners. Assuming that the social and environmental benefits of PBM production and sales justify the engagement of impact-driven actors such as donors, governments, and international development agencies, various forms of off-take contracts can reduce the market risks for the early years of operation and make such investments more attractive. Alternatively, grants and concessional loans could transfer the risk to other parties and cover the upfront cost or the working capital needs. 

The Limestone analysis provides guidance for future work looking to dig deeper into understanding PBM markets or to structure financial agreements to share risk and increase investment. 


Limestone Analytics provides economic and financial analysis, and advisory services around innovative financing and evidence driven decision making. The analysis of PBM was commissioned by Impossible Foods to provide guidance for investors and partners considering PBM. 

The summary was written by Christopher Cotton based on the Limestone Analytics report by Bahman Kashi, Sarah Carello, and Kaitlyn Vanderwees.

Picture Credit: Scott Beale/Impossible Burger Plant-Based Meat


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