The gigantic flop of insect-based food

Fly burgers. Grasshopper pizza. Cricket bars and snacks. The bizarre menu featuring insect-based foods seemed limitless, promising a complete paradigm shift in the agricultural and food economy, lifestyles, and even food priorities. A fever that, like locusts swooping down on green plants, attracted speculators from across the globe, from America to Europe, between 2018 and 2022. All under the banner of (false) sustainability. The ecological, green, and healthy myth of insect-based foods as a potential alternative to conventional livestock farming, especially beef, had also attracted many consumers because, so the messianic promise went, they would allow the production of proteins with a much smaller environmental footprint. Instead, the illusion and speculation collapsed, leaving a long trail of wasted money, expectations, and broken promises.

For years, it seemed that the future of food would depend on the transformation of cricket and fly larvae, raised in gigantic warehouses costing hundreds of millions of euros. But the market for insect-based food, as an alternative to traditional agriculture, never materialized, never took off. And around the world, companies that had bet on food produced with less land, less water, and fewer harmful emissions have gone bankrupt.

The new prophets of insect-based food promised a kind of economic miracle. Food for all, and of excellent quality. Produced with less water and land consumption. Fewer harmful emissions everywhere. All scraps transformed into other food, eliminating all waste. All lies, or fake news, if you will, fueled and inflated by the usual banks and consulting firms, ready, like vultures, to swoop down on the cake laid out with the latest novelties on the table. The British bank Barclays predicted a global market of $10 billion by 2030, while the consulting firm McKinsey predicted it would surpass it. In the report Alternative Proteins: The Race for Market Share Is On , McKinsey estimated the overall alternative protein market at around $2,2 billion , compared to around $1.700 trillion for the global meat market.

The main factors that led to the gigantic flop of the insect food industry were:

1. Producing insects on an industrial scale is too expensive.
   Livestock farming requires controlled temperature, humidity, and lighting, and is expensive for energy and feed. In Europe, production costs have remained higher than those of established proteins such as soy and animal meal. Even the Food and Agriculture Organization of the United Nations (FAO) has fueled the myth of the low production cost of insect-based food, claiming, for example, that crickets require about one-sixth the feed of cattle to produce the same amount of protein.
2. The quality of food produced by insects has never been acceptable. Some insects contain significant amounts of protein, fat, iron, zinc, and other micronutrients, but their taste, smell, and texture are unappealing to the vast majority of consumers. If not inedible.
3. The expected large market did not arrive.
   The idea was to sell huge quantities of insect protein as an alternative to meat, fish, and soy. But consumers continue to have a strong psychological resistance to insect consumption. Processed products—pasta, bars, flour—have more options, but remain a niche market.
4. In animal feed, price matters more than sustainability.
   This is perhaps the most important and least intuitive point. An insect meal may have environmental benefits, but if it costs significantly more than soy or fish meal, a feed manufacturer is unlikely to choose it.
5. Part of the “circular” promise also fell through. The idea was to create a system in which insects would transform enormous quantities of food waste into protein. In Europe, however, what can be used as insect feed is subject to restrictions: they can't simply be fed any organic waste. Consequently, some of the raw material competes with other existing uses.
6. Security requires specific controls. Bacteria, contaminants, residues, and husbandry conditions must be managed properly: it is not enough for an insect species to be edible in nature.

In the space of a few years, almost all the giants in the sector have collapsed:

• Ynsect (France): Over $600 million raised, ended up in liquidation. Ynsect had built a model based on gigantic industrial automation to raise the Tenebrio molitor (the mealworm) and turn it into protein and oil, but production and sales never reached levels that allowed the company to survive.

• Aspire Food Group (Canada): receivership. The factory it has never managed to achieve economically sustainable production and also caused heavy damage to the Canadian treasury by not paying the taxes due.

• Enorm (Denmark): Bankrupt. Demand for insect meal and oil was much lower than expected.

• AgroLoop (Hungary): Bankruptcy. The Hungarian startup producing insect proteins has gone bankrupt. just 13 months after inaugurating its approximately €30 million industrial plant in Üllő, near Budapest.

• Goterra (Australia): Voluntary administration. Its main goal was to install small modular plants near food waste sources and use black soldier fly larvae to transform the waste into feed and fertilizer. A very well-funded project, it never got off the ground.

These five companies alone raised and squandered nearly $800 million, and the entire sector saw about $2 billion in investment go up in smoke.