Israeli food-tech is relatively fine amid wider market slowdown - report

It has seemingly been a while since the last major breakthrough in alternative protein development, and at a time where breakthroughs in other fields — namely artificial intelligence — are coming at a breakneck pace, that kind of lull in the technology’s advancement could very likely lead to a lull in interest in the field altogether.

However, according to a new report from the Good Food Institute (GFI) Israel, investors and consumers alike are still interested in food-tech despite larger trends of market slowdown. For the second year in a row, Israeli companies ranked second in the world in terms of investments in the alt-protein sector, accounting for approximately 15% of total global investments for 2022 with $454 million.

Per the report, the market slowdown has negatively impacted Israeli tech and led to a decrease of approximately 42% in investments between 2021 and 2022, but investments in food-tech companies (including the alternative protein sector) saw a significantly lighter decline of only 18%.

“Israel continues to lead as a global hub for startups in alternative proteins with over $1 billion in VC funding in the last two years and an increased share of climate tech investments,” said Aviv Oren, GFI Israel Director of Business Engagement & Innovation.

Oren also noted the appearance of several new startups within the field — the report records the tally of new food-tech startups at 12. “As these companies scale and reach global markets, growth rounds become more challenging due to the global market slow-down. This is an opportunity for different non-equity funding models and governments to step in to support infrastructure and scale up in order to meet climate goals and to attract the future of the food tech industry to their region,” he said.

Despite its position in the shadow of the hugely popular AI and climate-tech sectors, food-tech n 2022 also saw quite a few exciting deals: CHKP launched its chickpea-based yogurt in the US as part of the Whole Foods incubator; Remilk’s dairy proteins became available in the US and featured in General Mill’s Bold Cultr cream cheese; the cultivated meat company SuperMeat signed an MOU with Swiss supermarket chain Migros to expedite the production and distribution of SuperMeat’s products; and Rilbite signed a deal with French retailer Monoprix to distribute its products across Monoprix’s 700 stores.

The alt-protein underdogs are climbing the ladder to success

Worth noting is that, within Israeli markets, plant-based milk alternatives accounted for nearly one fifth (18%) of all milk sales in 2022; sales of plant-based milk increased by about 15%, indicating an increasing interest in moving away from traditional dairy.

The report notes that traditional milk saw a 0% increase in sales in the same year, and that Israeli sales of plant-based products increased by 8% this year, compared to a 1% increase in equivalent animal products. This is likely due to the total market saturation enjoyed by traditional meat and dairy products, which have had centuries to cement their positions in the market.

Alt-Protein is getting big support

Per the report, the Israeli government had been very active in supporting the local alternative protein ecosystem in 2022. The Israel Innovation Authority announced a government bid to provide up to $14.6 million in funding for fermentation infrastructure, with particular emphasis on fermentation for alternative proteins.

As well, GFI Israel has done a lot to promote alternative protein development in the past year. A group research grant from the Science and Technology Ministry, the Agriculture Ministry and GFI Israel supplied $1.2 million to the field of alternative proteins.

In January, the Technion-Israel Institute of Technology and GFI Israel announced their plan to establish a Sustainable Protein Research Center (SPRC), which will function as a hub for fundamental and applied research in the field of alternative proteins, commercialization and entrepreneurship as well as research support to the industry.

“Over 50% of the investments in start-up companies in Israel went to companies that were based on research that began in academia. There is no doubt that the establishment of such a research center that will be the first of its kind in the world is important to maintaining Israel's leadership [in the alternative protein sector],” said Dr. Michal Halpert, Director of Academic Relations at GFI Israel.