When the insect protein industry emerged in the 2010s, it was met with an overwhelming sense of excitement over its potential as a healthy and sustainable food source. Within the decade, venture capital tracking sites identified over 100 insect protein startups, each championing insects as the ideal alternative to animal and human food.
However, the past 4 years have proved otherwise. As the hype faded, the realities of high costs, investor pressure, competition, and operational challenges have set in. Since 2020, many of the high-profile companies leading the insect revolution have had to shift operations, scale down, or close altogether. As the industry scrambles to hold on, faith in the power of insect protein has diminished substantially. Despite the initial excitement, the future may not be insect-fueled after all.
Insect protein gained popularity at a time when demand for alternative protein sources, health consciousness, and ethical considerations for animal welfare were high. As climate change became a mainstream issue, so too did a growing awareness of the environmental toll of traditional livestock farming. Additionally, in 2013, the United Nations published the report “Edible Insects: Future Prospects for Food and Feed Security,” which drew global attention to the potential of insect consumption, further kindling consumer excitement. This enthusiasm was by no means misplaced. Compared to conventional livestock, insect farming saves around 100
times the CO2 emissions, requires between 50% and 90% less land, and provides significantly more protein.
In a world where food consumption is a primary contributor to the global ecological footprint, these statistics are promising for an increasingly eco-conscious world. The excitement surrounding the industry’s development was understandably immense; however, over 10 years later, insect products have yet to dominate store shelves. So what happened?
Insect protein might be more efficient in its land, water, and feed use with an overall far lower environmental impact, but it does not have the upper hand in generating profit for companies at the early stages of development. Major companies that began during the insect-loving frenzy of the 2010s struggled with scaling, high costs, and regulatory issues. For them to turn a profit, production had to be rapidly scaled. Driven by investor pressure and eager consumers, premature scaling became fatal for overly optimistic companies due to their below-capacity operations and the resulting debt.
Ynsect, the French poster child of insect farming, was forced to file for insolvency this February. Beta Hatch, after having built North America’s largest mealworm farm, closed its doors in 2023. Enorm Biofactory, too, entered a reconstruction process due to bankruptcy this April. These are just a few examples, amid a slew of failing companies over the last few years, victims of over-hyped expectations. As a result, investors became reluctant to continue supporting a declining industry, which left companies further susceptible to failure.
Before the COVID-19 pandemic caused businesses worldwide to realize the reality of its feasibility , annual investment flows into insect farming were growing rapidly due to the initial enthusiasm surrounding the industry. This rapid growth was expected to continue. A prominent Rabobank report at this time predicted businesses would reach 500,000 metric tons of insect protein per year by 2030. However, a 2024 report by Rethink Priorities, a research and advocacy group that conducts in-depth studies to help policymakers and foundations make decisions, projects a median production capacity of only 221,000 metric tons by 2030. Within just 3 years, the estimated projection for the insect protein industry reduced by more than 55%.
This analysis is concerning, reflecting the downward trajectory of the industry. Despite that, it’s necessary to note that the insect protein industry is still expected to grow, and by 2030, insect protein is projected to be larger than it is today. This expected growth is predicted with the assumption that while some companies fail in the face of actual production feasibility, others will prevail and steadily grow through strategic, phased developments.
Furthermore, some companies like InnovaFeed, a French biotech company rearing insects for animal and plant production, have already proven that success is possible. Recently, in July 2024, the company completed its third phase of expansion. A few months later, it received an $11.8 million grant from the U.S. Department of Agriculture to continue its expansion, becoming the world’s largest insect production site. Many of the initial challenges afflicting the industry were the result of its relative novelty in the world market. Moving forward, as the enterprise matures from its infancy stage, InnovaFeed may become one of many companies overcoming the previous challenge of upscaling.
Nevertheless, scaling is only part of the battle for these companies, including InnovaFeed. A reassessment of consumer demand is necessary to move forward from the industry’s initial hiccups. Many insect startups made the over-enthusiastic assumption that consumers would be open to new food alternatives; in reality, Western culture in particular has instilled a psychological barrier to eating insects. In response, companies like Protix, Ynsect, and Entomo Farms have transitioned from the human food market to feed for aquaculture, poultry, and the pet food industry. Although this wasn’t their original goal, feeding insects to livestock or pets draws in a more reliable consumer base while still achieving a more sustainable food culture. Insects as animal feed offer a variety of benefits, such as promoting a circular food system, upcycling byproducts into sustainable ingredients, converting food waste into protein, and reducing CO2 emissions and the environmental impact of farming.
Although the production focus has shifted, the result remains a positive step towards a healthier future. Insect protein may not become a staple in human consumption, but patrons are still genuinely interested in its alternative uses. Companies may be forced to reevaluate their strategies, but there is still viability in insect protein.
The current rampant overconsumption and desire for future sustainability is not an easy fix. Following the industry-wide premature failures of the 2010s, expectations shifted. Insects will not be a simple solution to global issues, but their potential is unmistakable. Now more than ever, it’s crucial to reflect on mistakes, pivot, and try again. Scaling, overestimating market demand, and underestimating production costs may have slowed initial progress yet that does not negate the potential within the industry. Insects may become a market success story if growth continues steadily, investor confidence is rebuilt, strategy and approach to consumer preferences are reevaluated, and production is scaled up rationally.
This important industry has the potential to be revitalized by focusing on what works, such as utilizing insects as feed or waste recycling and avoiding over-ambitious pursuits like shifting Western diet culture. Insect protein hasn’t failed yet; it’s just begun a transition phase. Insects may still take their place on the world stage as a leading sustainable solution to pressing global concerns.