Alt-Seafood Splash #1: Japan vs. The World

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Happy Wednesday Market Shakers! Today we begin a new cycle about alternative proteins, starting with alt-seafood. 

Dubbed a “market white space”, alt-seafood is a new trend, swimming with opportunities for innovation. It’s an exciting world to explore, but what potential does faux fish have to capture the space between consumers' chopsticks in Japan?

Seafood consumption is rising

The market for alt-seafood must be understood in the context of changes happening in the seafood market in general. Global per-capita seafood consumption has more than doubled in the past 50 years. By 2030 it’s expected to increase by 20%, driven by awareness about health benefits and advances in aquaculture. 

Estimated to be worth $113 billion in 2020, the value of the global seafood market is expected to hit $139 billion by 2026. This demand comes at a cost, however.

The sinking feeling about seafood

Recently, SDGs, media focus, and Netflix’s hit documentary Seaspiracy have raised consumer awareness about the damage caused by the seafood industry to our oceans. As a result, stakeholders at all levels are increasingly demanding sustainable seafood.

So what exactly is rocking the boat about seafood? 

• Fish stocks are being depleted at an unsustainable rate. 90% are fully exploited according to UN data. Popular varieties like the Pacific bluefin tuna have plunged 97% from historic levels due to overfishing. 

• Aquaculture is increasingly coming under scrutiny. From harmful chemical use to disruption of local underwater ecosystems, the excessive use of aquaculture has negative consequences for our oceans.

• Revelations about ocean pollution have made consumers sensitive to the problems of microplastics, high levels of chemicals and heavy metals, such as mercury or Polychlorinated biphenyls, in seafood.

Environmental costs aside, there a serious concerns about whether our ocean and aquaculture can produce enough fish to meet projected demand, especially as more and more consumers swap meat for marine life.

In this context, alt-products are seen as one solution to the problems of conventional seafood. Players are starting to try and capture chunks of the burgeoning seafood market with faux fish.

Alt Seafood is seeing a wave of growth…

In 2021, investors increased their investments in alt-seafood by 92% from the year before. The alt-seafood wave is set to keep rising, with the plant-based alternative market alone projected to grow at CAGR 28%, reaching $1.3 billion by 2031.

Though it’s early days, the market is swimming with exciting players. Big whales, like Nestle and Thai Union, have launched plant-based alt-fish. Startups like Sophie’s Kitchen have found success in launching independent lines of quality plant-based fish products. And companies like Blue Nalu are shooting for the starfish by forging the next generation of seafood from cells. 

The old adage “teach a man to fish..” may need a 21st-century update to “teach a man to make a fish”.

The market is still small and players are looking to Asia

We can’t get ahead of ourselves though. The alt-seafood space is tiny. In the U.S., the most developed market for alt-seafood, faux-fish makes up only 0.1% of the total retail dollar share of seafood products. Plant-based meat occupies 1.4% of the general meat market’s value. In Europe, it’s a similar story.

Asia, while lagging, is seen as a high potential market. The region with the world’s highest seafood consumption is an attractive prospect for alt-seafood companies. With countries such as Singapore, China and even Japan showing signs of favourable regulations for cell-based products, in particular, alt-seafood has the potential to be snapped up in Asia. 

What’s in an Alt-fish 

In a couple of weeks, we’ll bring you a dedicated feature about how alt-proteins are made. For now, we’ll share a brief overview of the main tech used to make alt-fish.  

Plant-based

Ingredients lists are vast; tapioca, legumes, konjac flour, to say the least. Seafood flavour is most commonly created with algae extract, rich in omega-3s. Texture is achieved using technologies like extrusion or bio-printing. 

Plant-based products have the advantage of riding on the coat-tails of alt-meats success for quick adoption by consumers. They have the most potential to make an early market splash, with current products on the market falling into the category of plant-based. Replicating taste and texture are still key challenges for plant-based alt-seafoods, however. Because of this most plant-based products imitate processed fish products like Vegan Zeastar’s calamari and Future Farm’s canned tuna.

Cell-based

Cell-cultured seafood is made by taking muscle-tissue cells from a fish and reproducing them in a bioreactor. You can imagine the output as sheets of edible fish meat, minus the head, organs, skin, bones and fins. 

Shoals of startups have entered the cell-based seafood space in recent years. Of the $175 million invested in alt-seafood last year, cell-based startups netted two-thirds of that. Cultured seafood has not been regulated anywhere yet, and the bulk of investment is going into development and scaling up pilot production.

Challenges that cell-based seafood startups must overcome include engineering proper cell-culture media to grow fish cells, bringing down the cost of highly specialized production, and negative consumer perception about the safety of cell-based products.

Fermentation-based

Fermented alt-seafood products mainly use biomass-type fermentation which uses the high-protein content and rapid growth of microorganisms, like mycelium*, to grow large amounts of protein. Microbes are reproduced in fermenters, either dry or in nutrient-enriched liquid, themselves becoming the food.   

Fermentation based alternative seafood such as are promising. Thanks to the success of brands such as Quorn, customers view fermented products as healthy and nutritious. Rapid production time and scalability are also appealing points for businesses and investors. 

It’s not plain sailing for alt-seafood

Alternative seafood may be appearing on all the lists of big trends in 2022, but as we’ve just seen, there are challenges. Replicating texture, taste and nutritional content, scaling production and reducing cost, and regulations are the urgent focus of many faux fish makers. If the industry can find solutions, however, alt-seafoods have the potential to be allergen-free alternatives to fish, and competitively priced - especially as analogues to expensive varieties like lobster. They will hook sustainably conscious consumers too.

With that said, let’s explore the alt-seas and meet global players who are defining the market. We’ve also added our exclusive database of the top 50 alt-seafood companies identified by our research team. Check it out with our 7-day premium trial.

North America

North America leads the world in alt-seafood companies with a total of 34 and counting. Faux fish started going mainstream in 2021 when its retail market value hit $13.9 million. Consumer interest in the category is driven by concerns about overfishing and ocean pollution, and widespread interest in vegan products.

There are several large plant-based seafood products on the US market. Gardein, The Plant-Based Seafood Company, and Sophie’s Kitchen are some of the big names in vegan seafood. Most products are frozen and breaded, like the Plant-Based Seafood Co’s award-winning “Mind Blown Coconut Shrimp”, or canned, like Good Catch’s tuna. 

Cell-based and fermentation-based alt-seafood startups are also reeling in money from investors. BlueNalu raised $60 million in 2021 to speed up development of their cultured bluefin tuna. In 2022, WildType netted $100 million to do the same for their cultured salmon. Cultured meat and fish companies are waiting for regulations before they can bring their products to market in the US. Increasingly, they are forming partnerships in Asia, where regulations look to be progressing faster.

AquaCultured Foods caught $2.1 million in investment to scale production of their microbial fermentation based seafood. They formed a partnership with Swiss retailer Migros to speed up development in 2021.

In Canada, alt-seafood took off in 2021 when Good Catch Foods launched its vegan seafood products across 600 stores. Smallfood, a startup that produces a marine organism rich in protein, omega-3s EPA and DHA, and seafood flavour, has the potential to accurately replicate the nutritional profiles of real fish. 

Latin America

There are interesting alternative seafood developments happening in Brazil and Chile.

The Good Food Institute recently allocated funds to The Brazilian Agricultural Research Foundation to investigate cultivated seafood with local partners. Brazil’s Future Farm (Fazenda Futuro) launched a plant-based tuna product in 2021, enriched with algae oil to give it a burst of omega-3s. 

In Chile, unicorn NotCo is seeking to add alt-fish to their existing product lineup of plant-based animal products using some of $235 million in series D funding they raised last year.

Europe

The European alt-seas are home to a thriving shoal of plant-based seafood companies. Big players include Novish, Hooked, Vegan Zeastar, and Betterfish in addition to others.

Novish, a Dutch-based company earned investment to bring their plant-based fish products into restaurants. They also ventured across the pond in 2021 to debut their products in the US at Natural Products Expo East.

Sweden’s Hooked, a graduate of the prestigious ProVeg incubator, has attracted almost $4 million in investment in 2021 to develop plant-based smoked salmon. Their tinned tuna product is already available at retail. 

Some of Europe’s biggest F&B companies have also waded into the alt-seafood space. Schoten-Europe launched an alt-tuna product across retailers in the Netherlands in 2021. Nestlé has launched canned tuna and seaweed-based shrimp, VRIMP, in European markets and Asia.

The Middle East and Africa

Israel’s Plantish is working on developing the world’s first plant-based salmon whole cut to snap up a chunk of the $50 billion salmon market. They unveiled their first prototype earlier this year which is nutritionally and texturally similar to actual salmon but made entirely from legume proteins and algae extracts. The commercial release is slated for 2024.

South Africa’s Sea-Stematic is Africa's first cultured seafood startup. With fewer than 15 companies globally working in the space, Seastematic wants to serve its product to the global market, especially in Asia where demand for seafood is high.

There’s great potential for alt-seafood in the Middle East. Demand for alt-meat has been hotting up as well as conventional seafood. In our exclusive interview with SeaSpire Co-Founder Varun Gadodia, he expressed optimism for the UAE as a high potential alt-seafood market.  

Oceania

Demand for alt-protein products is rising in Australia and New Zealand, with many more people practising vegan diets. Despite this, we found few alt-seafood products were being developed in the region. 

The only whiff of local alt-seafood we found was canned vegan calamari, a mushroom-based product made by Australia’s Nature’s Charm. In New Zealand, SeaSpire is developing plant-based fish products using bioprinting technology.

The bulk of alt-seafood products in Australia and New Zealand are imported and sold through online and physical retailers, like Australia’s Vegan Grocery Store which sells VISH plant-based seafood products. 

Asia and our top 50 alt-seafood players

Asia is seeing growing interest in alt-meat and dairy products recently and seafood may not be far behind. Japan’s Mitsubishi and Thailand’s Thai Union are already partnering with alt-seafood startups, showing the market is swimming with potential.

From a regulatory standpoint, Asia is progressive. Singapore is the first country in the world to allow the sale of cell-based chicken. They are working on authorizing other cell-based meat and seafood products too. Likewise, China’s government has incorporated the development of alternative seafood, including cell-based, into its 5-year development plan.

Asia is home to several startups that are working to create a market for alt-seafood. Singapore is home to cultured shrimp maker Shiok Meats and Umami Meats, who develop “low-cost” cell-based “exotic” seafood. Hong Kong’s Avant Meats has secured funding to develop undisclosed cultured-fish fillets. They partnered with Vietnam’s Vinh Hoan Corporation to speed up the production and release of their products. 

Plant-based fish players swim the seas of Asia also. Hong Kong’s Omni Meats launched its lineup of 6 plant-based kinds of seafood, designed to be adaptable to Asia’s various seafood-based dishes. Thai Union has also launched its own plant-based tuna in 2021 and is investigating cell-based products. 

There is currently a whitespace when it comes to fermentation-based seafood in Asia. Most recently China’s New Singularity secured nearly $1 million in funding to develop fermentation-based vegan fish. Singapore’s MyCovation seeks to develop alt-proteins from mycelium.

Japan

A small pool of products

If alt-seafood is young in advanced plant-based markets like the U.S. and Europe, it’s truly a tadpole in Japan. A small number of products have hit the market to date. NEXT MEATS launched a plant-based canned tuna alternative in 2021. In the same year, Azuma Marche, a sustainable brand of Azuma Foods, launched konjac and seaweed-based alternative sashimi on their online store.

Deats, a company we introduced in our last cycle, launched a plant-based fish fry in 2021 made from konjac and okara powder. Fuji Oil, a company that makes soy milk used by Starbucks in Japan, developed a soy-based sea urchin (not 100% vegan). 

The number of examples is too small to use the term trend, but so far products are noticeably Japanese in flavour compared to the breaded products, like fish fingers and fishcakes, that are popular overseas. The difficulty of making realistic sashimi with plants means canned fish and processed foods, like fish-fry or takoyaki (octopus balls), will dominate the first wave of plant-based seafood in Japan. Until the arrival of cultured fish that is.

Signs of Cell-based success?

Asia has been lauded as the potential front-runner in developing the first market for cultivated meat and fish products. Like Singapore, the Japanese government has been taking steps to develop regulations for cultured products, by drafting regulations for “food-tech” proteins for example. 

Companies in Japan have already partnered with startups to fund the development of cultured proteins. Blue Nalu signed partnership agreements with Mitsubishi Corporation to investigate market entry in Japan in 2021. The startup has also secured a deal with Food and Life Companies, Japan’s largest operator of sushi restaurants, to bring cultured tuna to conveyor belts in the future. Singapore’s Shiok Meats is collaborating with Japanese cultured meat startup IntegriCulture to use their quality cell culture medium and cost-saving culture system to scale. 

What else is on the alt-fish menu in Japan?

Given Japan’s historic expertise in fermentation, like koji - a media featuring prominently in some overseas products such as Kuelana’s alt-tuna, it’s surprising that there are no players using the process to create alternative proteins. There are startups on the opposite end of tradition, however, like OpenMeals who are developing 3D printed sashimi.

For a detailed list of 50 startups and companies check out our exclusive list of alt-seafood startups.

List of the top 50 + Alt-Seafood Companies

That’s all folks

We hope you enjoyed this overview of alt-seafood globally and in Japan. Next week we’ll be hearing from real Japanese consumers about whether they would ever consider incorporating alt-fish into their diets.

Made with ❤️ by GourmetPro - Food & Beverage experts in Japan.

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