Analysis: Why Tyson Foods invested in insect supplier Protix?

A bit more than a month after the announcement of Tyson Foods’ €55 million ($58.7M) investment in Dutch insect supplier Protix, GlobalPETS analyzes the factors that prompted the decision and what the future looks like.

Opportunity to boost finances

In the 9 months to 1 July, the Arkansas-based business hit net sales of $39.53 billion (€37B), falling flat compared to the same period in 2022, meaning the insect protein sector could be a good option to boost its performance.

According to finance expert Andrew Lokenauth, insect protein is a rapidly growing market, and Protix’s technology and expertise in the field will help Tyson stay “ahead of the curve.”

“Protix will likely have a positive impact on Tyson’s financial performance, as it diversifies the company’s protein offerings and provides access to a growing market,” Lokenauth told GlobalPETS. He added that this is something that Tyson may be enticed by following the slump in yearly growth in the company’s net sales.

On the other hand, Tyson’s reputation and expertise will help Protix scale its operations and expand its reach. Under the investment, the 2 companies have plans to construct and operate a low-footprint insect ingredient facility. The new plant is expected to produce up to 70,000 tons of live larvae (LLE) annually.

Sustainability goals

Lokenauth points out that the partnership “aligns with Tyson’s sustainability goals, as insect protein is considered more environmentally friendly.”

“The partnership will also help Tyson reduce its dependence on traditional meat products, which are subject to fluctuations in market demand and supply chain disruptions,” he adds.

In addition, Tyson “sees the potential” for insect protein to play a significant role in meeting the growing demand for alternative protein sources.

Following pet industry trends

The food processing company’s interest in alternative proteins follows ongoing trends in the sector.

“Tyson’s interest also probably stems from the role insect proteins can play as a potentially less expensive and environmentally sustainable alternative to meat protein,” Alexandra Kazaks, Ph.D., from the RDN Nutrition Division at the Chicago-based Institute of Food Technologists (IFT) tells GlobalPETS.

However, stepping into the insect market does not come without its challenges. Kazaks highlights that “perhaps” the most substantial challenge facing insect-based-ingredient feed businesses is gaining consumer acceptance.

“This challenge is particularly pronounced in the context of pet food, where consumer preferences play a significant role in product choices,” she adds.

For Kazaks, it is important that businesses “employ innovative education and marketing strategies to shift consumer mindset and promote the benefits of insect-based ingredients.”

The Pet Food Institute (PFI) believes consumers have become more willing to buy products made with insect protein. “Consumer acceptance has reached a tipping point, where more than 50% of pet parents would consider trying insect-containing pet food. There is a 10 to 15% growth in demand every year,” PFI president Dana Brooks told GlobalPETS in 2022.