Investment in alternative dairy proteins is picking up again after a brief lull last year, according to industry insiders.
In the past year, precision fermentation dairy players including All G (lactoferrin), Those Vegan Cowboys (casein), Vivici (whey, lactoferrin), and Verley (whey) have all secured fresh funding.
Just this week, French foodtech firm Verley closed a $38m round as it gears up to scale up its whey protein production.
Meanwhile, Belgium outfit Those Vegan Cowboys is on the cusp of completing a record-breaking crowdfunding campaign which will take its investment round to $14.48m.
Australian foodtech firm All G recently attracted capital of around $6.6m and has set up a joint venture with a Savencia’s ingredients arm Armor Protéines; and Dutch firm Vivici added a fermentation-derived lactoferrin to its range, having secured $38.4m in funding last year.
In a challenging foodtech investment landscape, this is a marked resurgence. But what’s causing this shift: and why is it coming now?
Protein demand is at an all-time high
Protein is no longer a trend: it’s necessity. Products with protein claims are growing at double the rate of those without, and in the US, foods with protein claims are growing at over 7% CAGR compared to nonprotein products, at low single digits.
This is being accelerated by trends such as weight management, which is moving protein beyond sports nutrition and into snacks, beverages, bakery, meals and foodservice.
High-value ingredients such as whey protein concentrate and beta-lactoglobulin are sought-after for specialist and more mainstream applications alike, but so are other dairy proteins such as caseinates and milk protein concentrates.
With supplier stock often being booked months ahead, there’s a clear opportunity for alternative production streams to unlock existing bottlenecks. And dairy ingredient suppliers are working on expanding capacities imminently, but that may not be enough beyond the mid-term.
Market research agencies project the protein ingredient space will nearly double in the next decade – and investors are looking for a sustainable long-term solution. For an increasing number, this solution is precision-fermented proteins.
The process involves programming microorganisms such as yeasts to produce complex biomolecules such as proteins, which are then extracted from the fermentation mix and purified for use in food and nutrition products. All this takes place in a laboratory and is much less energy-intensive than traditional agriculture while deriving ingredients that are bioidentical to traditional dairy: meaning that cheese made with fermentation-derived casein has the same functionality and stretch.
Despite its promise, animal-free dairy is yet to firmly establish itself as a viable alternative due to a mix of market, regulatory and consumer perception barriers. But a perfect storm of high-protein and cheese demand coupled with production bottlenecks is enabling the sector to gain traction.
“Investor enthusiasm has been strong over the past few years,” Those Vegan Cowboys CEO Hille van der Kaa told us. “Over the last year, general attention shifted toward AI and defence. By now, many of those investors have returned.”
With fresh investment being pooled into foodtech firms, activity is picking up. “I see that a significant number of precision fermentation companies are accelerating right now,” she added. “It shows that companies like ours can keep going and succeed, even if it means moving against the current.”
But if dairy companies are racing to expand capacities, start-ups are facing different kind of constraint: the need to reach industrial levels of production in the first place. Demand for protein, paired with renewed investor confidence, could finally unlock this.
“You can see that companies currently reliant on animal-based dairy are urgently searching for alternatives to secure their future,” Van der Kaa said.
“We are noticing that the demand for animal-free casein continues to grow. We have way more demand than we can currently supply, and it’s coming from unexpected corners, beyond the traditional dairy world.”
Food security and sustainability remain relevant
Van der Kaa also noted that increasingly, precision-fermented ingredients are seen not just as a lever to achieve sustainability objectives, but as a long-term solution to food security.
This view is shared by leading manufacturers including Mars, Inc. as well as ingredient suppliers such as Kerry Group, which is among the global suppliers leaning into biotechnology to create solutions that can withstand climate and supply chain shocks.
Still, there’s no hiding the fact that precision-fermented dairy is less energy-intensive than traditional farming.
This is highly relevant to food and beverage companies, which remain under pressure to meet climate targets not just to appease retailers and consumers, but to reduce operational risk.
There’s also a case for supply chain stability. In Israel, where a large number of dairies remain on strike, cow-free dairy is emerging as a resilient alternative for consumers curious enough to try the products.
As investment returns and demand grows, cow‑free dairy may be entering its most pivotal phase yet.
