There’s been a lot of hype around plant-based foods and alternative protein in the last couple of years. Beyond Meat’s IPO wildly exceeded expectations in 2019 (offered at US$25 and currently trading at US$131), the explosion of plant-based milks in the dairy aisle, and the proliferation of plant-based alternatives from ice cream to cheeses, to burgers and sausages. These products have found their way onto restaurant menus, supermarket shelves and, more recently, offerings from fast food companies, while more and more big food companies are either buying or producing plant-based food brands.
According to the FAIRR investor network, 40% of 25 giant food retailers and manufacturers -- with combined annual revenues of US$459 billion -- now have dedicated teams to develop and sell plant-based alternatives to meat and dairy; with Tesco and Unilever ranked at the top.
These two companies were praised by investors for their commitment to shifting food portfolios to more sustainable protein sources, demonstrating board-level support for a climate-aligned protein transition (the shift away from animal proteins towards plant-based and new protein sources), and completing a climate ‘scenario analysis’ on their commodity supply chains. In total, seven of 15 retailers now sell, or plan to sell plant-based meat alternatives ‘on the meat aisle’.
The twin threats of the climate crisis and the widely accepted probability of future pandemics have ramped up the urgency for fundamental changes to our current food system – proven to be a major contributor to both of these crises. But, the meat industry isn’t too concerned because the demand for animal-based meat globally continues to rise as people in less wealthy nations become more affluent.
Nonetheless, it’s hard to ignore the news coming out of different parts of the world as evidence that plant-based eating is gaining ground. As detailed in Open Philanthropy’s Farm Animal Welfare Newsletter, Beyond Meat recently signed five new major partnerships in China including with Starbucks, Alibaba and Yum China (which owns KFC, Pizza Hut and Taco Bell there). Meanwhile, one of the largest US food companies, Cargill, has started producing meat alternatives for the Chinese market, and Nestle says it will be sending plant-based meat there by the end of this year. Its CEO has called plant-based foods “a once-in-a-generation opportunity”.
In other parts of Asia, Thailand’s largest meat company CP Foods has launched a plant-based line, and two Japanese meat giants have started selling plant-based meat. And a South Korean investor just led Impossible Foods’ latest US$500 million funding round.
In Latin America, Brazil’s agribusiness giant Marfrig, plans to roll-out its plant-based burger by year end after Brazil’s two biggest food companies Seara and JBS rolled out plant-based burgers last year. Meanwhile, Chile’s NotCo, possibly the highest valued non-US plant-based start up, has closed a new US$85 million round of funding.
In Europe, the UK’s largest retailer Tesco, has launched 30 new own-brand plant-based products while French dairy giant Danone, has plans to double its plant-based sales worldwide to €5 billion by 2025. And Unilever says one-third of its products is now plant-based.
In the US, Impossible Foods has started selling its products in Walmart, Beyond Meat is into Sam’s Club, and these brands are now available in 9,000 and 25,000 respectively of the US’s approximately 40,000 grocery stores. US retail sales of plant-based meat are averaging between 40 and 50% above last year which puts them on track to exceed US$1 billion this year.
These expansions mean more accessibility, choice and convenience for the customer looking to eat less meat and dairy. This in turn should increase demand and drive down one of the barriers to eating plant-based — price (this applies typically to processed food rather than whole food which tends to be cheaper). Up to 5% of US supermarket refrigerated meats are now plant-based, and while between 2013 and 2018 US plant-based meat retail sales rose 1 – 3%, now they are growing at 16 – 18% a year.
Nevertheless, market share for plant-based options is still a fraction of the overall market – especially for meat alternatives – but everything has to start somewhere and, in the early stages, that inevitably means small. The trend lines are clear and there are two primary drivers that, unfortunately, are forecast to exert even more pressure – the climate crisis and fear of future pandemics. This could mean plant-based eating is not only a “thing”, it is the thing that will help us get out of our current predicament.