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 Canaccord Genuity Corp.

Alternative Protein: Another Use for Mushrooms

Delwin Graham - Sep 14, 2021
As the planet’s growing population (estimated to reach 9.8 billion by 2050) requires more and more food, its food production will need to be increasingly sustainable and efficient, and mushrooms might offer an attractive path forward.

Mushrooms are amazing. The hallucinogenic properties of psilocybin mushrooms, commonly known as magic mushrooms or shrooms, are being studied for treating alcohol addiction and clinical depression, as well as facilitating artistic creativity. Now mushrooms are being developed as a source of alternative protein. As the planet’s growing population (estimated to reach 9.8 billion by 2050) requires more and more food, its food production will need to be increasingly sustainable and efficient, and mushrooms might offer an attractive path forward.

Significant advances are being made across the food industry when it comes to alternative sources of protein. Demand for emerging meat and dairy alternatives has continued to rise over the last few years as consumers embrace healthier diets and become increasingly conscious of where their food is sourced and how it’s made. To this point, Impossible Foods announced in early August that it is launching a new sausage product – “Impossible Sausage Made from Plants” – in grocery stores across the US, including Safeway, Kroger, Albertsons, and Stop & Shop. Beyond Meat Inc. (BYND:NASDAQ) launched its “Beyond Chicken Tenders” in July and has entered into a partnership with A&W to distribute its “Beyond Chicken Nuggets” across Canada. Protein alternatives are also being used to patch over disruption in the global food supply chain. Leading plant-based egg producer, JUST Egg, recently announced that it would be launching operations in South Korea to curb the country’s ongoing egg shortage due to an outbreak of avian flu. The company processes mung beans as an egg substitute. (Cf., Bobby Burleson, “Agtech and Sustainable Food Monthly”, US Equity Research, Canaccord Genuity Capital Markets, September 2, 2021)

This is big business. The plant-based foods market could make up to 7.7% of the global protein market by 2030, with a value of over US$162 billion, up from US$29.4 billion in 2020, according to a report by Bloomberg Intelligence (BI). With this forecast, meat alternatives stand to claim a substantial share of all plant-based food opportunities through 2030. If the meat-alternative market follows a similar growth pattern to that of plant-based milk (e.g., soy milk and oat milk), BI projects that the meat-alternative market will grow from US$4.2 billion to US$74 billion in the next ten years, representing over 45% of the total plant-based market by 2030, up from just 14% last year. (Cf., Burleson, “Agtech …”)

According to Canaccord Genuity’s leading sustainability analyst, Bobby Burleson, harnessing the capabilities of mushrooms and fermentation could provide a catalyst for transformation of the global food system as it evolves to become more sustainable. The root-like spores of certain mushrooms may be fermented to produce mycoproteins, a flavourless biomass that is high in protein. These mycoproteins can then be used in the formulations of meatless alternatives to conventional animal-based products like hamburgers, sausages, and more.

While there are significant environmental benefits to using mycoprotein as an alternative protein source, the most significant aspect for its acceptance by consumers is taste (or lack of it). MycoTechnology, based in Colorado, is using mycoproteins as an effective bitter-blocker for improving plant-based food and beverage formulations, as well as producing protein-rich biomass for human consumption, and is already to market, supporting a private-label meat alternative.

But fermentation technologies extend well beyond mycoproteins. Through precision fermentation, ingredients are being developed to dramatically improve the taste and mouthfeel of plant-based foods. For example, the texture of meat products is characterized by the connective tissue which results in a specific mouthfeel that has been challenging for operators in the space to replicate. Motif Foodworks uses plant fibers and proteins to create a similar feel and has developed a plant-based burger called “Better Burger”. Wild Earth is using the fermentation of a specific fungi (koji) to create a source of protein for plant-based pet foods. Clara Foods has successfully developed an animal-free egg white with the same utility as a conventional egg white, and it can be incorporated into baking or consumed on its own. The company has used the same process to produce a substitute for pepsin, which is typically derived from pigs and other animals. Pepsin is used in food applications such as the processing of soy protein and gelatin, and it can be used in certain chesses as a substitute for rennin. Clara’s pepsin results in end-products that are kosher, halal, and vegan, opening additional market opportunities.

Because we are on the cutting edge of food production, these companies are typically early stage and private. Whole Earth Foods (FREE:NASDAQ) is a publicly traded company that focuses on natural food products and alternative ingredients. Beyond Meat (BYND:NASDAQ) is quite famously a plant-based meat producer. Sunopta Inc. (STKL:NASDAQ) is a Canadian-based company that produces fruit-based and plant‑based food and beverages, including dairy substitutes like soy milk and oat milk. Please contact me at or 780-408-1518 to discuss.