Alt protein to all protein: The way forward for Asia

Hello, there!

It’s gotten very hard to defend animal protein, but I’m going to do just that.

Exhibit A:

Source: Food and Agriculture Organization/Our World In Data

As an Indian, I kind of resent being told I should shun dairy. And I’m extremely petty. 😉

So this week and the next, our deep dive looks at the importance of animal protein in the Asian dietary landscape. In Part 1, we’ll look at the protein gap in Asia versus other parts of the world and expand on the dairy sector in the region. Then we’ll move on to the less organized meat and eggs markets in Part 2.

Asia at the helm of protein insufficiency

By all accounts, Western markets consume way too much protein (see Exhibit A). A 2017 study of protein consumption across 142 countries found that the average protein intake in many Western countries is 150%–200% of the recommended amount. Animal products account for around 60% of the protein intake.

In Asia, on the other hand, protein from animal sources accounts for just 20%-35% of the total protein consumed on average. In fact, the Global Health Data Exchange showed that Asia had the highest prevalence of protein-energy malnutrition in 2019, led by South Asia (57.5 million), East Asia (26.1 million), and Southeast Asia (16.1 million). The prevalence of protein-energy malnutrition is projected to increase globally, from 148 million cases in 2019 to more than 160 million cases in 2044, with Asia once again coming up on top. 

The prevalence of protein-energy malnutrition and forecast for 2044

The protein deficiency in Asia is because most of the region traditionally relied mainly on grains and starchy vegetables for sustenance and nutrition. These are still a major part of the standard diets across the region. But plant sources don’t always offer the high quality or quantity of protein that animal sources do. The reality is you need a variety of protein sources – animal and plant – as part of a healthy diet.

In fact, a recent FAO report supported including a greater share of milk, eggs, and meat in diets in Asia and Africa to meet nutrition targets.

Protein consumption is on the rise is Asia

Protein consumption has been on the rise globally, growing by around 45% between 2000 (166 million tons) and 2019 (242 million tons). And countries in Asia were responsible for the bulk of this growth, accounting for 63% of the overall growth. Individually, China and India accounted for the largest growth of 26% and 14%, respectively.

The rapid economic growth in this region has created a middle class willing to spend their money, which has increased the demand for protein. This is consistent with studies that indicate that as income grows, diets tend to transition to protein-dense foods like meat. 

But most of Asia still consumes significantly less protein than the global average. The quality of protein consumed is also an issue since it relies mostly on plants; most plant-based protein sources are not complete proteins, i.e., they don’t have all the essential amino acids the body needs. Animal protein is a complete protein and thus an efficient source of nutrition. Read more about protein digestibility in our article on alternative protein.

This is why animal protein is so important for consumers in Asia. And it’s also why most governments in the region hang their hat on promoting local dairy and meat production.

We can connect addressing the protein insufficiency problem to the UN’s Sustainable Development Goal: (2) “End hunger, achieve food security and improved nutrition, and promote sustainable agriculture.” In lower-income countries, higher animal protein consumption could very well contribute to improving nutrition and closing the protein gap faster. 

But let’s be clear about one thing - animal protein may be the most efficient way to consuming quality protein but it most definitely is not exactly sustainable in terms of production. And this is why there’s such a strong push towards plant-based alternatives.

Also, meat and dairy companies are taking steps to become more sustainable. They recognize their impact on the environment and are acutely aware of consumer sentiment towards sustainability in food and drink. 

State of animal protein in Asia

As part of the move towards food security (part of the aforementioned SDG), Asian countries have started the march towards achieving self-sufficiency in food production. And Asia has become a significant producer and consumer of animal protein as a result. As such, this will drive the consumption of not just the quantity of protein, but also the quality – a really important aspect. 

The main sources of animal protein for the region are dairy, eggs, and meat. 

• We’ll look at dairy in a bit of detail because milk lends itself to so much innovation in multiple formats. It’s also perhaps one of the most accessible forms of protein for most of the region, as it tends to be the most affordable. 

• Eggs and meat are primarily consumed fresh and we won’t be covering this in great detail, but we will look at a few interesting products and potential opportunity areas.  

Dairy

Other than the Indian subcontinent, countries in Asia have historically not been major consumers of dairy. But this is changing due to growing affluence, health consciousness, and better cold chain systems. Governments in the region have also encouraged dairy consumption not just to improve health but also to provide employment. 

Asia now accounts for more than 40% of the world’s dairy consumption. 

• India is the world’s largest producer of milk (by volume), accounting for 22% of the global yield, followed by the US and China. It is also the fastest growing market for dairy consumption, anticipating a CAGR of 6.41% during 2023-29. 

• China is the largest market in the region accounting for nearly 38% of the value share. In both markets, value-added dairy products like yogurt and cheese are expected to see significant growth. 

• Dairy consumption in Southeast Asia is far less than China and India, but also growing. Indonesia and Vietnam are pegged as the fastest growing markets in the coming years. Across the ASEAN countries, yogurt and sour milk are expected to be the fastest growing categories. 

Key opportunities for dairy within the region

India

India has the largest population of vegetarians in the world and for them, dairy is a vital source of nutrition, particularly protein and calcium.

India is self-sufficient in terms of dairy production and it consumes a significant share of the milk it produces. It also exports to a number of countries. But importing dairy products into India is extremely difficult and attracts very high import duties ranging from 30-60%. 

Fresh milk is easily available throughout the country and is not taxed (GST), making it very affordable for consumers across the socioeconomic spectrum. Most Indians also consume a variety of dairy products practically everyday – in their hot drinks (milk), along with meals (yogurt, paneer, ghee, butter), and in traditional sweets.

• As Indian consumers start to demand more protein, innovation in value-added dairy products to meet this has taken off. The market is now seeing the emergence of high-protein milk drinks, yogurt and yogurt drinks, paneer, and ice cream.

• This is still a very small category, but is very likely to grow as awareness of the importance of protein continues to grow. 

• The country’s leading milk brand Amul recently announced the launch of high-protein fresh milk and yogurt. 200 ml of the milk will have 30g of protein versus standard milk that just has 6g. These have not yet launched, but Amul already has a range of high-protein RTD drinks that are sold through its website. 

• With this launch, consumers will be able to use the high-protein milk in multiple formats of their choice.

• A number of new ice cream brands have emerged in India focusing on healthy indulgence, which mainly includes high protein and low sugar offerings. 

• These are premium products but they are likely to appeal to a lot of consumers, especially in metro and tier 1 cities. 

• Many of these brands are startups and don’t have a wide reach yet, particularly in tier 2 and 3 cities. However, it is interesting to note that spending on luxury products online is being driven by consumers in tier 2 and tier 3 cities. 

• So having premium – potentially luxury – ice cream available to these regions is an untapped opportunity for ice cream brands. 

Whey protein is usually the protein of choice for the fortification of these dairy products.

Whey is another area that is likely to see growth, perhaps more as an ingredient to fortify foods rather than a mass market product by itself. It’s prohibitively expensive and is only available in large quantities, usually bought by the more serious fitness enthusiast (i.e., gym bros). 

Another protein-rich dairy product that is immensely popular and has a lot of potential for innovation is paneer. 

China

China’s milk production has grown by leaps and bounds since 2016 after a number of regulations were passed by the government to ensure the safety of local brands. The government has also promoted dairy consumption, with the latest Dietary Guidelines for Chinese Residents recommending “a daily intake equivalent to 300g of liquid milk”.

• China is now a major milk producer but it still still does not meet domestic demand. The country is the second largest dairy importer, with New Zealand, Germany, and Australia providing the bulk of imports. 

• Milk, infant formula, and yogurt are the main categories of dairy consumed in the country.

• However, it is important to note that Chinese consumers prefer smaller packs of milk due to the high prevalence of lactose intolerance (over 90% of the population).

Protein is expected to play an important role in the expansion of the dairy market in China in the coming years, with locally produced protein RTDs especially seeing significant growth.

• Mengniu has introduced its first locally produced protein milk drink range that has an interesting gender-based proposition. 

  • Called M-Action, the range has a “mid-active” product with 15g of protein aimed at women and a “high-active” product with 25g of protein aimed at men. 

  • The first variant contains aloe vera and avocado extracts while the second one has banana and avocado extracts for a greater energy boost. 

• Another area of innovation that is emerging in China is age-based products. Danone has launched milk formulas for consumers over the age of 40, while Nestlé has launched products specifically for schoolchildren.

• Given how this is seen as an important area of growth, the government has proposed a set of guidelines for stricter protein requirements for milk and milk powder products designed for consumers of different age groups.

• According to the proposal, dairy solids from the main raw materials cannot be less than 70%. It is thought that this is to ensure that the protein content in the milk is derived from milk solids rather than non-dairy sources. 

• There is also significant scope for innovation for protein fortified dairy products for China’s aging population. 

Just as an aside and because I think it holds some interesting synergies for feed producers, China’s protein push for dairy starts with the cows. Dairy cows in China are fed three types of feed: forage grass/alfalfa, concentrated feed, and supplementary feed. Alfalfa is of particular importance as it is said to help milk yield and protein content. 

Southeast Asia

Milk and milk products are not really part of the dietary culture across this region, but the industry has been growing as a result of government support. Local milk production is on the rise, it is still fairly small. Southeast Asia has a significant milk deficit and relies on imports to meet the growing demand. 

As with China, there is a significant level of lactose intolerance in this region, but consumers manage the issue either through moderation or, more recently, by switching to plant-based alternatives. One train of thought suggests that as children are drinking milk from an earlier age, they will retain the ability to digest lactose for longer. And this means growth in the long term. 

As a result, the dairy industry in this region is expected to see a significant boom in the coming years and has even started to attract private equity. In 2023 alone:

• Growtheum Capital Partners announced an investment of US$100 million in Vietnam-based International Dairy Products (IDP).

• Growtheum also invested US$70 million into Indonesia's KIN Dairy.

• General Atlantic made a US$130 million investment in Indonesia’s dairy products and foods company PT Cisarua Mountain Dairy (Cimory). 

• Vietnamese colostrum milk producer VitaDairy is looking for a buyer for 30% of its stake.

GourmetPro expert Rob Hall told me that a really strong opportunity for the dairy category in Southeast Asia is yogurt and yogurt drinks, over plain milk. 

• The cold chain in this region is still underdeveloped, which makes storage and transport difficult. So ambient yogurt and yogurt drinks have been a unique innovation for this region (a trend started in China).

• For dairy companies looking to enter the region, Rob cautions against immediately jumping to products like lactose-free milk. “Milk doesn’t have as much utility here, except to add to coffee or tea. People just consume normal milk and deal with the issues or are increasingly switching to plant-based alternatives.”

• Another area that is likely to get a lot of traction in SEA countries is ice cream. Most of the region has a strong sweet tooth and enjoys the indulgent treat. Companies could look at high-protein versions to launch here.

Want to explore dairy opportunities in Asia?
Our experts can help!

Key opportunity areas: Dairy protein

• High-protein milk drinks: in India

• High-protein yogurt and yogurt drinks: preferred format for dairy in Southeast Asia but also popular in China and India

• Better-for-you indulgence products, like high-protein ice cream: likely to be popular across the region, but also may be priced at a premium

• Gender-based products: underscoring the different needs based on gender and activity levels, relevant across the region

• Age-based products: for babies, children, adults, and seniors, also relevant across the region

• Whey protein: for advanced users or for fortification

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See you next week as we look at the meat and eggs for protein!

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