Meat substitute market to grow tenfold by 2029

Meat alternatives are an as yet underdeveloped but very promising category: according to a new study, this segment could make up for ten precent of the worldwide meat market within ten years, meaning a turnover of 125 billion euros – ten times what it is today.

Advantages

After the recent successes of such players as Beyond Meat, Impossible Foods and Garden Gourmet (Nestlé), it seems clear that meat substitutes are well received by consumers. A new market study by Barclays analysts says that the products have several advantages: they tend to be healthier, they are animal-friendly and they can contribute to a deceleration of climate change. While today the market share of meat substitutes worldwide is barely 1 %, by 2029 that might have turned into 10 %: ten times as much as the current estimated turnover of 12.5 billion euros.

This estimation is based on the market share evolution in other alternative food categories such as plant-based dairy alternatives (already 13 % of the dairy market) or craft beer in the United States (12 %). The market share will not rise much higher after that, though: while the products can currently replace minced meat, burgers or sausages, they can not yet emulate steak, for example. On the other hand, who knows what technology may soon be capable of? The study is much more careful about laboratory meat, where matters such as regulation, ethics and consumer acceptance are still an issue.

Favourable prospects

It i becoming ever more apparent that meat alternatives can appeal to all consumers, not just vegetarians or vegans. The fact that major players such as Nestlé, Tyson, Conagra and Kerry are entering this market is a clear sign, states the report. Even fast food chains are beginning to see the potential: Burger King is planning the roll-out of the Impossible Whopper in the United States and McDonald’s is closely following the trend as well. Retailers meanwhile are continuously expanding the shelf space of meat alternatives. 

Californian startup Beyond Meat recently surprised the world with what might have been the strongest initial public offering since the financial crisis of 2008: the company grew by 70 % in 2018 and recently set foot in several European countries, including the Benelux. Its rival, Impossible Foods – creators of the Impossible Burger – has struck a deal with Burger King. Tyson Foods, the biggest American meat manufacturer, recently sold its interest in Beyond Meat in order to develop its own meat substitutes: the first products will see a limited release this summer. Major names in the traditional FMCG industry are investing in plant-based startups: Kellogg’s, Kraft Heinz, General Mills, Nomad Foods…

In Europe, the market share of meat substitutes is a little smaller than in the United States, but its penetration is higher. Growth prospects are very good in this area, even more so because a number of leading companies firmly believe in this market. Unilever bought De Vegetarische Slager and has already made a splash with its Vegan Magnum. Nestlé sees a lot of potential in Garden Gourmet, which recently launched its Incredible Burger in Belgium.

Opportunities and risks

Manufacturers are making big steps in the field of taste and texture, two vitally important criteria for the consumer. Nevertheless, the analysts’ report also sees risks: possible restrictions concerning the names of the products could slow down growth. After all, several countries are considering a ban on all names that refer to meat (burger, sausage, steak) for meat substitutes, similar to what happened in the dairy alternative industry – a soy drink cannot be called ‘soy milk’, for example. The price might be another issue: while meat alternatives are not much more expensive than quality meat, there is a notable difference with cheaper fast food.

In addition, the question remains whether meat alternatives are quite as healthy as their reputation suggests. The newest generation of vegetarian burgers contains less cholesterol than lean beef, about the same amount of fat, slightly fewer proteins and more salt. Importantly, the product also contains more saturated fat due to the use of coconut oil. Some plant-based burgers also contain a lot of carbohydrates and some manufacturers use additives such as flavour enhancers. The Impossible Burger even contains an entirely new ingredient: soy heme, a substance that can be found in haemoglobin in blood. In this case, it is extracted from soy by fermentation. This substance is what makes the plant-based burger resemble meat so much, but some consumers may be suspicious of such newfangled technology.

Less ‘alternative’

The study concludes that if meat substitutes are to become a true breakthrough success, food companies will have to continue to improve the products with an eye for taste and nutritional value. Marketing will be important to reach a wider audience, using arguments such as health, animal welfare and sustainability. The health sector can also become involved in information campaigns. Correct and detailed product information is essential. Both restaurants and retailers will be important channels needed to boost market share. In the end, the target should be for meat alternatives to become less ‘alternative’: mainstream is around the corner.

Source: Barclays Research, Euromonitor