Scientific advancements, tech breakthroughs, shifting consumer priorities and regulatory trends are some of the forces fueling the next-gen materials market rise to an estimated $2.2 billion by 2026, according to a new report.
That value would account for 3 percent of the total wholesale materials sector seen worth roughly $70 billion, the Material Innovation Initiative (MII) found in its first-of-its-kind State of the Industry Report on future-forward materials.
“As we face potentially dire climate change, the next-gen material industry must be accelerated,” said Nicole Rawling, co-founding CEO of MII, which published the report Tuesday. “Significant investments, partnerships, and additional material companies and scientists tackling the issues facing the industry are desperately needed. Collaboration on sustainable innovation will result in both a prosperous future for successful material companies, brands, investors, and a livable future on Earth.”
MII has seen a significant increase in the numbers of material companies, investors and industry brands entering the next-gen materials industry, but said the market has significant room for more players. The report defined “next-gen materials” as livestock-free direct replacements for conventional animal-based leather, silk, down, fur, wool and exotic skins. These replacement materials use a variety of biomimicry approaches to replicate the aesthetics and performance of their animal-based counterparts.
MII said it has seen a significant increase in the number of innovators creating next-gen materials in the last seven years. The report identified 74 next-gen material companies. Of those, 49 focus on biomimicry of animal leather, nine on silk, seven on wool, six on down, five on fur and one on exotic skins.
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The market is still young, according to the report, with most of the companies established after 2014, and 30 of the 72 focused on leather biomimicry. Plants or plant-derived materials have historically been the main input for leather alternatives, but recently more new companies are using mycelium and microbe-derived materials to create their next-gen leather to better replicate the performance and aesthetic of animal-based leather.
MII said innovators looking to enter the space should consider next-gen silk, wool, down, fur and exotic skins “where there is currently significant white space in the industry.”
MII said $1.29 billion has been invested in next-gen materials since 2015, with 95 unique investors and 35 deals made. The investors vary from individual investors to venture capital, private equity, banks, foundations and fashion companies. MII said it sees “significant investment interest in next-gen materials but not enough viable deals.”
There was $504 million raised in 2020 alone, despite the pandemic, nearly the same as the previous four years combined, the report noted.
“We see the next-gen materials industry as five to 10 years behind the alternative proteins industry,” said Elaine Siu, MII’s chief innovation officer and author of “State of the Industry Report: Next-Gen Materials.” said. “The market size for alternative proteins was approximately 2.2 billion of a global meat market of 1.7 trillion in 2019. We estimate the next-gen materials industry will grow at a faster rate and reach approximately 2.2 billion of a global animal-based material market of $70 billion in five years.”
MII said it has seen significant interest from brands in using next-gen materials, noting Gucci’s recent internally developed next-gen leather.
“Fashion brands recognize the trend toward more sustainable and animal-free materials,” Jacqueline Kravette, MII’s chief brand officer, said. “We have met with 40 fashion, automotive and home goods brands, and all but two are actively searching for next-gen materials to integrate into their supply chains.”
Brands play multiple important roles in the next-gen materials ecosystem, including funding innovation initiatives, switching to next-gen raw materials and collaborating with innovator startups to create new products, MII said. There are a number of major brands using or investing in next-gen materials–Kering, Hermes, Gucci, Adidas, Lululemon, Stella McCartney, Ralph Lauren and Allbirds–that have the infrastructure, capital and distribution networks that startups need to scale their ideas and bring materials to market.
MII is a nonprofit that accelerates the development of high performance, eco-friendly and animal-free materials for the fashion, automotive and home goods industries. It serves as a critical connector along the path to market adoption for new materials, partnering with scientists, startups, brands and retailers to direct the industry toward areas of maximum impact.