Portfolios may be littered with the bones of first generation biofuels startups, but for strategic investors, the biofuels industry as a whole is far from cold in the grave. In fact, if you ask experts like John May, managing director of the investment banking firm Stern Brothers & Co, he’ll tell you that bio-based energy and consumer packaged goods (CPGs) are embarking on a technological reinvention of industry.
Combined with shifting consumer preferences, the adaptability of this industry will have a substantial impact on what the world of fuels, chemicals, and consumer goods look like 10 years from now.
Consumer Demand Opening Doors for Biofuels to Succeed
May is optimistic about the bio industry: “It’s going to take decades, but over time the technology advances, consumer preferences for green aspects are going to drive the industry forward.”
And they already are. Consider, for instance, consumer interest in bioplastic soda bottles. Since Coca-Cola Co. launched its bio-based PET bottles in 2009, the company has sold more than 15 million of their PlantBottles in 25 countries around the world. And demand is rising, which is driving the growth of PET resin containing bio-based monoethylene glycol (MEG).
“Coke wants a totally green bottle. Consumer focus groups are telling us that if they don’t get on board with this, whoever does is going to take a big bite out of their profits,” comments May. “Those who are under 40 want everything to be green, organic, clean, and healthy.”
Likewise, interest in natural flavors is a rapidly growing, with the industry worth $3.5 billion in 2011 and predicted to rise to $5 billion by 2017 according to a recent MarketsandMarkets report. Similar upward trends are found in the natural cosmetics and personal care product space.
Consumer preference for bio-based fuels is also rising for passenger vehicles, commercial fleets, and within the airline industry. A recent Propel Fuels SoladieselBD B20 pilot program survey in California, for instance, found that 92% of participants would be more likely to buy algae-based biofuels for their vehicles because their eco benefits.
From bioplastics to natural cosmetics, bio energy to organic flavors; in virtually every industry, consumer demand for greener, more natural products is fueling a surge of research into biological alternatives. As such, bio products will continue to make inroads into spaces traditionally held exclusively by petroleum-based options, and that means a boost in potential for a wide variety of startups – whether they’re working in biofuels, renewable flavors and fragrances, or bioplastics.
In today’s Digest, Richard Herbert explores the Features of Bio-Based Goods that Make it a Uniquely High-Potential Industry; the “right kind of investors” and how technology transformation, alternative financing, and consumer demand are driving success for Biobased materials and goods – by following the page links below.
More background on the story from the Digest
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