Entrepreneurs seek a plant-based slice of Southeast Asia’s $811 billion pie

The Covid-19 pandemic and heightened climate concerns have accelerated demand for environmentally-friendly alternative protein, and mission-driven Southeast Asian impact entrepreneurs are increasingly eager to tap into the market, and take a slice of the region’s US$600 billion (S$811 billion) food spending.

Indonesia’s Helga Angelina Tjahjadi is one of them. She was 15 years old when she decided to become a vegetarian to try to scale down the severity of her autoimmune disease, which she said “gradually healed” within two years of changing her diet.

After moving to the Netherlands to complete her undergraduate studies, she met a fellow Indonesian vegetarian, Max Mandias, who was to become her husband.

In 2013 the couple gave up dairy and became vegans. Now, they are the powerhouse behind Burgreens, the largest vegan restaurant chain in Indonesia, as well as Green Rebel, the country’s first, and biggest, plant-based protein brand.

Helga, now 31, said that Burgreens did not look like the prime establishment it is today, “but more like a canteen.”

At that time, demand for plant-based meat in the Southeast Asian nation was practically non-existent.

“Our first three years, it was like a desert. We were the only player [offering plant-based meat] and our effort to educate the market was really exhausting,” Helga said.

“Healthy food was not even trendy, let alone plant-based food,” added the co-founder and chief executive of Green Rebel and Burgreens.

Demand began to gradually increase in 2016, when healthy food players, which typically offer low-calorie meals using animal-based protein, launched more outlets. But the plant-based trend really only gained momentum three years ago, according to Helga.

The couple decided to create spin-off company Green Rebel – which uses non-GMO soy and shiitake mushroom for its chicken and beef alternative, respectively – from Burgreens in September last year.

By February it had closed an undisclosed amount in its seed funding round, led by New York-based impact fund Unovis Asset Management and Jakarta-based venture capital firm Teja Ventures.

Today, it offers at least 13 retail frozen food products, which include popular Indonesian food such as beefless rendang, chicken and beefless satay, as well as plant-based whole-cut steak – the first product of its kind offered by an Asian company.

“Last year, restaurants started to approach us for a collaboration to create a plant-based menu, and I think it was because of the pandemic,” Helga said.

Green Rebel’s plant-based chicken, beef, as well as mushroom patties, are now offered by multinational brands such as Starbucks, Domino’s Pizza, Ikea, and other popular restaurant chains.

Pandemic-boosted demand

Green Rebel is not the only plant-based meat provider created during the pandemic.

In Singapore, Karana, which offers whole-plant pork from jackfruit, was launched in January last year and expanded into Hong Kong in May last year.

In July this year, it bagged US$1.7 million in seed round funding from a number of investors, including Big Idea Ventures, a Temasek and Tyson Foods-backed venture capital firm focused on plant-based foods; as well as Hong Kong-based entrepreneurs Kevin Poon and Gerard Li.

While “the demand is there”, the pandemic has decelerated Karana’s business as lockdown affected their restaurant partners’ operations and forced a delay on their retail products launch, said Blair Crichton, the start-up’s co-founder.

The company plans to launch char siu bao and pork and chive dumpling to retailers in “the next couple of months”, he said.

“We are seeing a shift in perceptions that is taking place, and Covid-19 kind of accelerated that. People are looking at how diet and health interact and we see upwards of two thirds of consumers across Southeast Asian markets saying that they want to eat healthier. They may not actually be doing that, but at least the intention is there,” Crichton said.

“Awareness around the climate impacts things as well. You’ve got a huge chunk of the world population in Southeast Asia, so I think it’s imperative that we try and provide solutions that change the food system for the better for our planet and for all.”

According to a joint report titled The Asia Food Challenge 2021 by PwC, Rabobank, and Temasek launched in September, 43 per cent of Indonesian respondents said they were likely to become vegan or vegetarian within a year, higher than the 37 per cent of Thai respondents or Malaysia’s 20 per cent.

More plant-based food and drink have also become easier to find in the past year on two of the country’s biggest food-delivery services, GoFood and GrabFood.

Demand has also increased in developed countries such as the United States.

According to the Plant Based Food Association (PBFA) and The Good Food Institute (GFI), sales of plant-based food in the US rose 27 per cent to US$7 billion last year, more than double the growth rate in 2019.

From 2016 to 2020, Southeast Asia, home to more than 600 million people, saw a 440 per cent increase in vegan and vegetarian plant-based product launches, according to a new report by Forum for the Future, an international sustainability non-profit organisation.

Market education

Aside from plant-based meat, the region has also seen an increasing number of start-ups adapting other technology to produce alternative proteins, such as cultivated protein, or meat and seafood produced directly from cells.

A niche in the sector is insect farming, which will then be used for aquaculture and livestock feed or plant nutrition.

A well-known start-up in the cultivated protein sector is Singapore-based Shiok Meats, which has produced shrimps, crabs, and lobsters in the lab.

In this regard, the city state has led the world after passing a regulatory framework in 2019 that allows the selling of alternative protein products that do not have a history of being consumed as food.

Eat Just, a San Francisco-based alternative protein firm, has established a new production facility and sold cultured chicken nuggets in Singapore.

In the insect farming vertical, there is Singapore’s Inseact and Vietnam’s Cricket One as well as Nutrition Technologies, which is available in Singapore and Malaysia.

Other plant-based meat producers include Let’s Plant Meat in Thailand, Worth the Health in the Philippines, and Next Gen Foods in Singapore.

The market potential is sizeable.

The Asia Food Challenge report estimated that consumer-driven food spend in Southeast Asia will rise by US$500 billion in 2030, with compound annual growth rate projected at 4.7 per cent from 2019.

In Indonesia, where poultry is more widely consumed than beef, the poultry market size is worth some US$30 billion, while the seafood market is about US$7 billion in size. Thus, investors believe that high returns await those who are ready to disrupt the industries today.

Michal Klar, a New Zealand-based investor focusing on alternative protein start-ups in the Asia-Pacific, and one of Green Rebel’s investors, said that he is “bullish” about the market’s prospects.

“Asia overall is the largest protein market in the world, and it is actually the fastest growing. It is, to a big extent, driven by what’s going on in Southeast Asia, with people moving towards the middle class and consuming more and more meat,” he said.

“There are actually fundamental problems, such as inefficiency, in this market. You need to feed animals many calories to get only one calorie in food out.

“So for chicken, for example, it’s nine calories in feed to [produce] one calorie. I think, ultimately, the whole animal protein market as we know it will be replaced with these alternative protein solutions.”

Investors and industry players agree that market education is key to ushering in a major shift towards more sustainable, plant-based dietary habits.

The price of alternative proteins is also still expensive compared to subsidised meat from slaughtered animals, although it is predicted that the two will reach price parity within three to five years.

“In Indonesia, the awareness about [the link between] environmental and personal health is still quite low, especially in third-tier cities and below

“We think the ‘alt protein’ products, that are currently on the rise in the West, will [succeed if being sold] in big cities such as Jakarta and Bali, where the environmental and health awareness are high,” said Andri Wardhani, researcher with Golden Gate Ventures, a Singapore-based VC firm.

The current level of awareness does not deter Helga of Green Rebel in her goal to encourage more people to switch to plant-based meat.

In the near future, her company is planning to grow the business with Series A funding, to expand into other Indonesian major cities, as well as to Singapore, Malaysia, and the Philippines.

“I’m not the kind of entrepreneur who sees potential in the market and then creates a business. Mission comes first,” Helga said.

“This must be done because, by 2030, we have no other options. Everybody must cut their animal-based meat consumption as we don’t have enough resources to produce the meat for the growing population.”