France's Ynsect targets food market with Protifarm buy

By Sybille de La Hamaide

PARIS (Reuters) - Ynsect has agreed a takeover of Dutch firm Protifarm, the French supplier of edible insects for animal feed said on Tuesday, marking a move into the food market amid rising demand for healthy, eco-friendly eating.

Protifarm is a leader in insect ingredients for human food, and the deal follows the European Food Safety Authority's (EFSA) clearance in January of mealworms as safe for human consumption.

"They are one of the rare other actors who also raise mealworms like us but they were in human food and we were not, (we were) only in food for dogs, cats and fish," Ynsect co-founder and chief executive Antoine Hubert told Reuters in an interview.

Ynsect will start focusing on high protein supplements for athletes and the elderly and work on the taste aspect aiming to serve the booming market for meat substitutes within a few years, Hubert said.

The edible insects market is expected to rise at an annual growth rate of 26.5% to reach $4.63 billion by 2027, according to Meticulous Research.

Actor Robert Downey Jr.'s Footprint Coalition was among the backers of Ynsect's capital raising from global investors, which totalled $425 million, it said.

Ynsect is due to open what it says will be the highest vertical farm in the world in northern France next year.

The company is aiming for revenue of at least 500 million euros ($595 million) within five years, with the food market accounting for about 5%-10%, Hubert said.

Insects, mostly fed with waste, can be used as an alternative to grain and oilseed-based proteins.

Other large insect protein producers include France's Innovafeed and Dutch maker Protix.

Consolidation in the sector is inevitable with big agrifood groups likely to step in within a few years, Hubert said.

Protifarm's plant east of Amsterdam would be Ynsect's third and take its capacity over 100,000 tonnes per year with the possibility to rise to 230,000 tonnes in the medium term.

Ynsect aims to have more than 10 factories within 15 years, mainly targeting the booming U.S. pet food market while looking at projects in Canada, Mexico, Asia, Africa and South America, Hubert said.

($1 = 0.8403 euros)

(Reporting by Sybille de La Hamaide; editing by Jason Neely)