Public Investments Drive Surge in Plant-based Industry in APAC

Global Investments into Plant-based Alternatives

According to Good Food Institute (GFI) data, the global alternative protein industry raised USD 14.2 billion between 2010 and 2022, nearly doubling investments on average every year, though with high variability from year to year. However, funding for plant-based companies slowed down in 2022, alongside a broad global deceleration in investment across multiple sectors. Several macroeconomic factors contributed to this funding decline, including falling public equity markets, rising interest rates, high inflation levels, the lingering effects of the COVID-19 pandemic, severe climate events, and the Russia-Ukraine war.

Figure 1. Invested capital in plant-based companies from 2010 to 2022

The challenging market environment is likely to continue for some time. However, the downturn provides potential upside for investors. Deal valuations are starting to come down, and startups are more willing to make deal term concessions, shifting dealmaking in favor of the investors. The United States attracted the bulk of invested capital between 2010 and 2022, at around 30%. However, since 2020, the Asia-Pacific (APAC) region has also attracted large capital injections.

Private Investments in APAC

The APAC region is the fastest-growing region in terms of invested capital, with the vast majority of capital injections occurring between 2020 and 2022, as illustrated in Figure 2. The APAC region experienced the most significant regional growth in 2022 at USD 556 million. This compares to the total invested capital of USD 1.18 billion until 2022. Thus, investments into the plant-based food alternative industry in the APAC region grew 88.68% in 2022, with 47% of total investments occurring in 2022.

However, investment trended significantly down in H1-2023, which is in line with the drop in global venture capital funding. In the first half of 2023, the APAC region attracted only USD 47 million in investments, 9% of the total global private investments during this period. To put this into perspective, the broader downturn in macroeconomic conditions brought global venture funding for all sectors to a 13-quarter low. Despite this drop, the majority of active investors in the APAC region see the long-term potential of plant-based food alternatives and plan to continue making investments in the future.

Figure 2. Private sectors investments in APAC from 2016-2023

Private Investments by Country in APAC

Investments across the APAC region are spread across several countries, attesting to the region’s diversity and individual countries in terms of developing their plant-based food industries. Australia and New Zealand lead the region in terms of all-time investments at USD 399 million. As illustrated in Figure 3, the vast majority of these investments occurred in 2021 and 2022, with investments tapering off in 2022.

Figure 3. Private sector investments by country from 2020 to 2022

Despite its small size, Singapore is another powerhouse in the plant-based food industry in the APAC region, with USD 320 million in total investments. Investments into Singapore have ramped up in recent years, reaching a peak of USD 170 million in 2022, the highest in the region for this specific year.

Mainland China is another major player in APAC in the plant-based industry. Total investments of USD 220 million have been made, with the largest investment of USD 152 million made in 2022. However, considering its large population, China has not invested heavily in plant-based companies. Thus, there is still room for growth should China decide to seriously invest in plant-based food alternatives or if plant-based food becomes widely adopted among Chinese consumers.

South Korea has also experienced significant, albeit more subdued, investment compared to the aforementioned countries. Total investments in South Korea amount to USD 132 million, largely occurring in 2021 and 2022. Total investments in Hong Kong amount to USD 76 million, with the vast majority (USD 72 million) invested in 2020. Japan has also invested USD 71 million into the plant-based food industry, with other APAC countries accounting for the remaining USD 11 million. In conclusion, the APAC region is experiencing significant growth, which is likely to continue into the future as the plant-based market in this region experiences a surge in growth. However, growth is likely to slow down in the coming years as the plant-based industry in APAC matures.

Public Investments in APAC

Governments in the APAC region are also supporting the plant-based food industry in terms of public funding. As of 2022, all-time public funding for the plant-based food industry stood at USD 162 million, with USD 85 million or 52.2% of these investments designated for commercialization purposes, while the remaining USD 78 million or 47.8% of investments were designated for research and development. This accounts for around 16% of all-time global public funding. Of this public funding, USD 94 million occurred in 2022, with all-time public funding in APAC until 2021 only measuring USD 68 million. Thus, governments across the APAC region are stepping up their involvement and support for the plant-based food industry across the region. Several countries across the APAC region have also implemented supportive policy frameworks in favor of plant-based food alternatives to encourage the research, development, manufacturing, distribution and adoption of plant-based alternatives.

Conclusion

In conclusion, the plant-based food industry in APAC experienced significant investment growth in recent years, particularly in 2021 and 2022. Tridge expects investments to continue into the future but at a more subdued rate as the global venture capital market is under pressure and the plant-based industry in APAC matures. Furthermore, governments across the region are expected to continue investing in the plant-based industry and introduce supportive policy frameworks to aid the plant-based industry.