The next wave: Alternative seafood solutions

(8 pages)

Billions of people rely on healthy oceans as a source of jobs and food, and demand for fish protein is only increasing. Projections show growth of 14 percent by 2030 versus 2020 levels, driven by growing markets in Asia, Europe, Latin America, and Oceania.¹ That said, the amount of wild-caught seafood remains flat, with more than 85 percent of the world’s fisheries pushed to or beyond their limits.²

This means future growth cannot rely on incremental growth in wild-caught seafood. And while aquaculture has been the primary source of new fish supply in recent years, it has not been able to keep pace with demand. So-called alternative seafood—substitutes for popular fish and shellfish such as tuna, salmon, and shrimp—provides one way to help scale seafood and provide high-end protein. Although still in its early days, alternative seafood shows significant potential across three production options, each with its own advantages: plant-based, fermentation-enabled, and cultivated.

In this article, we explore the constraints facing seafood markets, as well as challenges specific to popular types of seafood. Our research dives into solutions and products that are either on the market today or likely to be in the years to come. Throughout, our interviews with innovators in the alternative seafood space offer varying perspectives on how the industry can develop.

Global demand is increasing, but barriers to scaling production remain

Demand for seafood is growing quickly. Typically, when a country’s GDP increases, per-capita protein consumption also increases, with the breakdown of protein source varying widely by country. For example, a recent survey in Singapore showed a fivefold increase in the desire to purchase seafood compared with only ten years ago.³

This raises the question: as more nations develop, will there be enough seafood to meet growing demand? In many parts of the world, fish are harvested more quickly than their stocks are replenished. Since the 1990s, global catches have declined by about 1 percent per year, primarily due to overfishing.⁴ To achieve well-managed fisheries, many regions have limited existing fishing licenses, which has made new quotas a scarce resource.

Despite this, the OECD projects that global fish production will reach 203 million metric tons (Mt) by 2031, with aquaculture production accounting for 108 Mt, surpassing wild catch around 2024.⁵ In other words, seafood production will continue to grow despite the plateau in wild catch—but this may not be enough. Although the past decades have brought significant innovation and new technological solutions for farming fish, supply has not been able to keep up with demand for popular species, such as salmon. This lack of supply is primarily driven by regulatory constraints around new farming licenses, some of which are imposed to secure sustainable farming, as well as protections for wild fish.

Alternative seafood products don’t face these restrictions, making them one option for scaling production. Plant-based fish sticks have existed for many years. More recently, alternative seafood has seen the emergence of “whole cut” products and sushi-ready items, such as those that replicate smoked salmon. These and other innovations pose an attractive path forward for the industry.

How the alternative-seafood industry can learn from alternative meats

To date, alternative proteins have focused on three widely consumed meat types: chicken, pork, and beef.⁶ But seafood is a much more diverse food class, with several species consumed in large volumes around the world. In an effort to understand the potential value proposition for alternative seafood at the species level, we looked at several popular seafood varieties and made comparisons around total production, share by source, and market size (Exhibit 1).

Several popular seafood varieties are highly attractive for alternative production.

As an example, the tuna market is the third largest in terms of annual production. It is also among the most vulnerable to overfishing, the most difficult in terms of aquaculture production, and has a carbon footprint at the retail level of about 0.8 to 0.9 kilograms of CO₂ per kilogram.⁷ In addition, there are different price points and consumer expectations depending on the species, whether albacore, bluefin, or other premium tuna steaks. Players developing alternative-seafood products will need to consider all of these points when making strategic decisions.

Before alternative seafood can scale, it will need to strike a balance between overcoming challenges and finding potential sources of advantage.

Challenges to overcome

Alternative seafood faces several challenges in its efforts to scale:

Price. Perhaps the most significant challenge for the alternative-seafood industry is bringing the cost of production down to a level that’s comparable to what consumers are currently paying for higher-end species. In turn, these higher-end species are attractive for producers of alternative options, at least for the time being, because their target prices are more achievable. In fact, this is part of alternative seafood’s competitive advantage over meat: fish often sells at a higher price point. For example, some types of seafood, such as bluefin tuna, can cost $40 to $200 a pound for premium or superpremium cuts,⁸ which is a much easier price point to hit than $4.99 a pound for ground beef.

Customer acceptance. Simply stated, consumers will expect a high level of quality from alternative seafood. The wide variety of fish and shellfish adds an extra layer of challenge. As an example, whitefish, eel, and crab vary in their “fishiness,” saltiness, and texture. These particularities will be further influenced by regional relationships to seafood. Communities known for lobster fishing could have a harder time accepting alternative shellfish, while communities accustomed to high-quality sushi could have a harder time accepting sushi substitutes. All of these points will likely need to be considered when scaling markets and finding customer acceptance.

Potential sources of advantage

At the same time, alternative seafood has some distinct advantages that will help the industry scale:

Local production. For fresh seafood shipped via intercontinental air freight, transportation costs can exceed $1 per pound and produce about three times the CO₂ emissions as fish transported by road, ferry, or ship.⁹ By contrast, alternative-seafood products can be produced locally, eliminating the need for costly, time-consuming, and polluting transportation.

Mercury levels and overall health. Although fish and shellfish are excellent sources of protein and omega-3 fatty acids, they can also contain high levels of mercury. Because of this, the US Environmental Protection Agency advises people in certain vulnerable groups to avoid frequently consuming fish and shellfish that are high in mercury. And a recent report from the European Food Safety Authority explains that heavy consumers of fish meat could exceed the acceptable weekly intake of mercury six times over.¹⁰ Alternative seafood can incorporate the benefits of omega-3s while avoiding the risks of mercury.

Harvesting and farming licenses. Today, it can be difficult to obtain new farming licenses for popular species such as salmon as well as quotas for species such as cod. Alternative seafood does not have these supply limitations, enabling entrepreneurs to build new alternative-seafood businesses without having to apply for farming and fishing licenses.

Developing the alternative-seafood industry

There are three primary production options for alternative seafood: plant-based, fermentation-enabled, and cultivated (Exhibit 2).

Interview with Tal Golan of plant-based-seafood company Oshi (formerly Plantish)

Oshi is an Israeli food tech company developing plant-based seafood alternatives through an additive manufacturing platform that uses 3-D printing to produce whole-cut seafood fillets. Oshi follows a reverse-engineering approach to identify the specific molecules that give salmon its texture and taste and then find those molecules in plant-based materials. The company has secured $12.5 million in seed funding so far and expects to deliver commercial products to partner restaurants by late 2023.

McKinsey: What technologies enable your production of alternative seafood?

Tal Golan: Our approach to producing plant-based salmon fillets involves a combination of advanced formulation and proprietary additive manufacturing techniques. Our materials experts are dedicated to perfecting the texture and flavor of salmon using a biomimetic approach, while our engineering team has developed proprietary machinery that allows us to replicate the fish structure in a way that hasn’t been done before. This combination of expertise enables us to create whole cuts that are getting us closer to delivering the taste and texture of traditional salmon.

McKinsey: How do you optimize between taste and nutritional profile?

Tal Golan: Optimizing between taste and nutritional profile is one of our greatest R&D challenges. Our focus is on creating a product that is both delicious and nutritionally comparable to traditional salmon, with an emphasis on delivering high protein content and omega-3 fatty acids, which we’ve found most consumers are looking for when choosing salmon.

McKinsey: How do you define your sustainability goals?

Tal Golan: Our sustainability goals are defined by reducing our carbon footprint and promoting fair labor practices. In fact, we are a carbon-net-zero business, offsetting 150 tonnes [metric tons] of CO₂ per year. By measuring our progress against the negative impacts of traditional fishing practices, such as overfishing, bycatch, and greenhouse-gas emissions, we strive to not only be a leader in the alternative-protein space but also positively affect the environment and communities in which we operate.

Plant-based. This refers to vegan alternatives that make use of soy, seaweed, yeast, legumes, and various vegetable oils and starches. Plant-based seafood has already entered the market in the form of alternative tuna, salmon caviar, scallops, squid, crab, and shrimp. Plant-based products have led the alternative-protein market, in part because they make use of widely available ingredients and require less investment in biotechnology. These products are also subject to fewer regulations and barriers to market, as their technologies typically use GRAS–certified products and don’t require premarket approval. Regulatory issues have mostly focused on product names and labels. Biologically, these products are distinct from the proteins that they emulate—they are designed to look, taste, and feel like seafood but differ on a molecular level.

Fermentation-enabled. Plant-based fermentation has three production methods, with biomass the most applicable to alternative seafood:

Interview with Anne Palermo of fermentation-based-seafood company Aqua Cultured Foods

Aqua Cultured Foods is a US-based biotechnology company that produces seafood alternatives through microbial fermentation. The company has focused on production of the first whole-muscle-cut tuna, whitefish, squid, and shrimp.

McKinsey: What are your top production challenges, and how do you plan to overcome them?

Anne Palermo: Seafood is inherently delicate, so we had to develop completely new methods that yield a more delicate product with the textures of a whole-cut fillet. In terms of texture, what we’ve come up with is realistic enough even for raw applications like sashimi, nigiri, and ceviche. However, we didn’t want to limit the technology’s applications. So we’ve developed a method to fine-tune the texture to allow for textural differentiation by species—for example, shrimp, scallops, or calamari.

We also set goals around making products that not only are at least nutritionally equivalent to seafood but also taste good. The point around taste is the most critical for consumer acceptance. The mycoprotein we produce is intrinsically flavorless. Flavorings need to be added during the production process. Our team has development partnerships with some of the most well-respected flavor houses in the world to assist us in the development of our “Aqua owned” flavors and aromas.

McKinsey: How are you thinking about the next three to five years?

Anne Palermo: In the near term, we are working on scaling up to be able to distribute through restaurant and food-service partners this year. In the longer term, one thing that excites me about our method of production is that it completely decouples the demand for seafood from proximity to a body of water. Our products can be grown nearly anywhere in the world, and they are a complete protein with complex vitamins and minerals.

Finally, the low cost of production is another potential breakthrough. When production is fully at scale, we expect our products will actually be more cost-effective to produce, and cost less to consumers, than wild-caught or farmed seafood. This technology could provide a vital source of nutrition to food-insecure regions.

Traditional fermentation refers to the practice of using microbes in food. To make protein alternatives, this process uses live microorganisms to modulate and process plant-derived ingredients. Nonseafood examples include fermenting soybeans for tempeh or using lactic-acid bacteria to make cheese.
Biomass fermentation involves growing naturally occurring, protein-dense, fast-growing microorganisms, typically algae or fungi. Examples outside of alternative seafood include mycelium-based steak.
Precision fermentation uses microbial hosts as cell factories to produce specific ingredients, such as enzymes, vitamins, and natural pigments. Examples include using hemeproteins to improve the taste of plant proteins and using microbes to produce dairy proteins, such as wheys and caseins.¹¹

Interview with Mihir Pershad of Singapore-based biotechnology company Umami Meats

Umami Meats cultivates premium fish that are on the IUCN Red List of Threatened Species, such as Japanese eel, yellowfin tuna, and red snapper, and produces the world’s first cultivated laksa (fish ball). Today, the company is scaling from a lab to a demonstration plant.

McKinsey: How does your company differentiate itself from other alternative meats, such as beef, chicken, and pork?

Mihir Pershad: Umami Meats is developing a platform for producing cultivated—not caught—seafood to enable local, price-competitive production of cultivated fish that keeps endangered species in the ocean while providing consumers with healthy, low-emission, sustainable seafood. And we intend to partner with traditional seafood producers to license our technology platform to enable them to make cultivated fish in key markets.

In addition, we developed a novel type of mesenchymal stem cell [MSC] line from fish that can produce muscle, fat, and connective tissue from the same stem cell. We’ve also established an algae extract–based growth media to grow these cells in, and have a machine learning–based automated control system to enable efficient, low-cost production for our partners around the world.

McKinsey: How are you defining your sustainability goals, and what metrics do you use to compare yourself to traditional fishing?

Mihir Pershad: We assess our impact on key sustainability metrics that cover biodiversity, greenhouse-gas [GHG] emissions, and human health. For biodiversity, we track the offset, or reduction of catch, of endangered, threatened, and protected marine species for our target species and the bycatch species. Our GHG metrics consider the production process and transportation, and we also intend to track transportation distance to market to evaluate whether we are achieving our goal of distributed, local production. For human health, we evaluate reduction of pollutants consumed, including heavy metals, PCBs [dioxins], and microplastics, from our production compared to that of wild-caught fish.

Cultivated seafood. These seafood alternatives are produced from cells harvested from popular fish (salmon and tuna) or shellfish (crustaceans such as shrimp, crab, and mussels). The cells are then cultured within bioreactors and grown on biocompatible scaffolds, which provide structure to create three-dimensional tissues. The resulting mix of muscle and fat cells tastes similar to live-caught fish and does not require harvesting or farming live fish. These products are still in development and require high degrees of regulation and certification, as they rely on technologies that are new to the food space. With both high potential and high development costs, these products have captured significant interest and funding in alternative seafood.

The next wave: How the alternative-seafood industry can break through

Although alternative seafood offers significant potential for changing consumer preferences by meeting a demonstrated need, the industry still must work to identify target core consumers and develop messages that resonate with them. For example, the issue of ocean health is deeply important to many seafood consumers, yet it remains to be seen whether those consumers will bypass traditional fish for its alternatives. There is also additional opportunity for high-value products, which are the most susceptible to overfishing. While ultrapremium products may help with price parity, they are not well positioned to make a dent in traditional fish supply and demand.

Alternatives can also provide new sources of seafood while reducing the pressures on fragile aquatic ecosystems. However, there is major work ahead on scaling to levels that meet consumer taste and nutrition demands while delivering lower price points to better engage with nonpremium consumers. If companies can achieve wider distribution, they will be better able to reduce existing pressures on oceans and other aquatic ecosystems.

Finally, as with other alternative proteins, the alternative-seafood industry must navigate broader macroeconomic pressures affecting consumers and investors while continuing to innovate in order to improve taste and cost. Once these products are more established in the market, it remains to be seen how consumers will respond, and how products continue to develop accordingly.

Clearly, alternative seafood offers significant potential impact. It can not only reduce the environmental impact of fishing and reduce pressure on fisheries but also provide a healthy alternative and expand access to protein in a more efficient manner. Understanding the barriers to scaling and learning from previous strides in alternative proteins will be critical to capitalizing on potential sources of advantage.