“Meat industry ready for disruption”

Consumers are ready, the technology is rapidly advancing and investors see the potential: meat replacement turnover will reach 4.2 billion euro worldwide by 2020. The major multinationals are now also on board.

Futureproof

Albert Heijn wants to help Flemish people to eat less meat, we wrote last week and there is a “National week without meat” in the Netherlands right now. Beyoncé even announced she would become a vegan and that will definitely have repercussions among her fans. According to a new Greenpeace study, we have to cut our meat consumption by 50 % to limit greenhouse emissions and to make sure we will have enough food for an additional two billion people.

In the past fifteen years, global meat consumption grew 30 % and there is an estimated 13 % increase for the next decade because of increased wealth and population in the emerging markets. Traditional farming can no longer meet the demand in a sustainable fashion and its impact on climate and health is too large: deforestation, pollution, animal welfare, antibiotics, obesity, cancer, … It is becoming increasingly likely that governments will tax the effects: the livestock industry is ready for disruption and the demand for alternative, sustainable proteins will grow exponentially.

These statements come from a recent investor report called Plant-Based Profits. It details the potential of organic alternatives, published by Farm Animal Risk and Return (FAIRR), an investor initiative mapping livestock breeding’s risks and opportunities. An increasing number of (traditional) investors question how futureproof their participations might be.

Results speak for themselves

The report mentions some remarkable numbers: organic meat alternatives sell an additional 8 % every year since 2010 and should generate a 5.2 billion dollar (4.2 billion euro) turnover by 2020. Animal-based dairy sales stagnate as organic alternatives (like soy, rice or almond drinks) have captured a 10 % market share. According to Euromonitor, these products’ turnover doubled to 21 million dollars (17 million euro) between 2009 and 2015.

One in ten German consumers buys meat alternatives and looking at consumers aged between 16 and 24 years old, that number increases to 20 %. In the past decade, there has been a surge in Germans who call themselves vegetarians, from 1 to 7 %. Half of the Italians say they have reduced their meat intake and 24 % of consumers say they buy more vegetarian products. 39 % of Americans try to eat more organic products and the millennials are the generation that drives home this message: 30 % eat meat replacements daily, 50 % eats them multiple times per week. Health issues are often the main motivation, with the environment not that much of an issue.

Technological advances

An important part of these developments is the breakthrough of new food technology, which allows people to create healthier and tastier proteins or even laboratory meat. Companies that have become pioneers in this field have attracted significant investments: Impossible Foods, which creates an organic hamburger, attracted 258 million dollars (200 million euro) since its foundation in 2013. Beyond Meat received 50 million dollars (40 million euro) and Memphis Meats, which develops laboratory meat, received 17 million dollars (14 million euro). Bill Gates and Richard Branson are among the investors.

The companies are also rapidly growing and have managed to lower their production costs dramatically as a result. Beyond Meat’s products are already available in 20,000 American supermarkets, Impossible Foods in 500 restaurants. Memphis Meats lowered the cost of a laboratory hamburger from 18,000 dollars (14,600 euro) per pound to 3,800 dollars (3,100 euro) per pound. Dutch Mosa Meat, backed by Google co-founder Sergej Brin, hopes to have in vitro meat ready to market in two years’ time.

Tesco and Nestlé pave the way

It is also clear to see that major, traditional food companies have invested in innovative organic manufacturers: Danone for instance has bought Whitewave (which has Alpro as a brand). Campbell’s Soup acquired an organic dairy alternatives manufacturer, Kellogg’s invested in an organic smoothies manufacturer and Unilever invested to develop an organic steak. Monde Nissin, a food group from the Philippines, acquired Quorn in 2015 and generated a 16 % increase last year, a pace it forecasts for the next few years as well. Major retailers see the potential and have brought private label alternatives to shelves.

FAIRR contacted sixteen major food companies and asked them questions about their vision regarding sustainable food products. Tesco is leading the way for retailers, witch a clear program that connects emissions to livestock and the company also invests a lot in the development of organic alternatives. Looking at manufacturers, Nestlé is top of the class: about 25 % of its research and development budget goes towards organic protein research.