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The rapid surge of the meatless food industry – and it seems to be just the start


  • Overview of the global meat substitute industry
  • A look into the growing number of players in the meatless industry
  • Future outlook of the meatless industry

 

The meatless food industry, also known as the meat substitutes industry, (featuring seafood substitutes, lab-grown meat and insect proteins), though not an entirely new concept, has gained much traction in the recent years and is growing at a rapid rate. Although these substitutes have similar appearance, taste and texture as that of meat, they are made from non-meat ingredients. As per the report by Research and Markets, the global meat substitute market is valued at approximately $4.5 billion as of 2018 and is expected to reach $7.6 billion by 2025, registering a CAGR of about 7.7% from 2018 to 2025. Meat substitutes are healthier, cheaper, cholesterol free, along with a longer shelf life, which is driving the growth of the global meatless market. Among the different type of product types in the meat substitute market, the tofu segment accounts for the highest market share and regionally, Europe is the leader of the global meat substitute market, accounting for about ~40% of the total revenue.

With the growing demand for meat substitutes, number of meat alternatives are being rolled out. In fact, even leading meat industry leaders themselves have ventured their business segments into meat substitutes by investing into the sustainable cultured meat and plant-based companies. Some prominent transactions include one of the largest food giant Cargill investing in Memphis Meats’ (a food technology company to grow sustainable cultured meat) series A funding. Even, Nestle acquired prepared vegan foods producer Sweet Earth in 2017. Also, there were rumors in 2018 that the meat industry giant Tyson Foods was considering buying the company Beyond Meat, one of the leading new generation plant-based meat substitute producer. But the company stayed as an independent company only raising funds from Tyson’s investment arm in multiple series of investment rounds, while Tyson Foods launched its own meat replacement brand, Raised & Roasted. Beyond Meat has since then gone public in May 2019, becoming the first plant-based to have an IPO and this has been a remarkable success for the company so far. Its stock price has soared nearly 560% since its May 2, 2019 IPO, to $167 per share (as of Aug. 30th, 2019), giving the company a market capitalization of more than $10 billion. As per Beyond Meat’s executive chair Seth Goldman, the company has seen fast growth in all its segments from grocery stores to restaurants, where it has signed with Carl’s Jr., Del Taco, and most recently KFC. Even internationally the company has expanded to Europe and Canada. As per the executive, the biggest problem is to meet the growing demand. “We had tough years both 2017 and 2018 because we weren’t able to keep in stock,” Goldman said. Apart from these companies, there is Impossible Foods, a company the develops plant-based meat substitutes which has been making waves with its new round of funding for $300 million in 2019, valuing the company at $2 billion. Impossible Foods also announced partnerships with chains such as Burger King and many other restaurants and franchises.

There are multiple macro-economic reasons for this shift towards a more demanding meatless future. Urbanization, population growth and a rising middle class had led to greater meat consumption. As of 2017, 54.8% of the global population lived in urban location and this is expected to increase to about 60% by 2030, as per the United Nations study. While the global population is expected to reach 9.6 billion by 2050 (requiring an increase in food calories by 69% by 2050 from that of 2006, as per World Resource Institute), this will lead to an increase of about 60% in food production. This growth is expected to be driven by the emerging economies with China, the largest consumer of meat in the world leading the way. The rising middle-class population is expected to increase the protein consumption by 3% - 4% yearly. Increasing demand brings up the question as to how the society will be able to meet the future generations in a sustainable manner, and this is where the meatless and meat substitute companies are looking to fill the gap with.

The meatless revolution is not only noticed in the advanced economies alone, but it is a global revolution. While it is evident that the concentration of meat substitute deals has occurred in the United States, the home to the most developed food and beverage sector, with Europe following closely. Even Asia has witnessed healthy growth in the meatless sector in recent years with China leading the pact. China, in September 2017 announced a $300 million deal to import lab-grown meat from SuperMeat, Future Meat technologies and Meat the Future, all Israel-based companies, as part of the country’s plan to decrease the meat consumption. While the meat substitutes, especially the plant-based products, have been accepted by consumers with less hesitation, there has been a few obstacles for lab-grown meat with their acceptance by its consumers (due to psychological barriers) and for it being more expensive. Growth of the meat substitutes industry in both market size and investment has been massive and growing at a faster rate in comparison to traditional meat industry. If we compare the absolute numbers in terms of total investments and market size of the plant-based meat substitutes and cultured meat, the sector remains a tiny fraction of the conventional meat sector and it will take a while before it catches up. But despite the few obstacles and short comings faced by the industry, the meatless companies are proactively looking to fill in the gap on how the society will cater to the increasing demand sustainably, while feeding the future generations. Also, emphasis by the global leaders of the meat and food industry in the investment and acquisition of meat substitute companies indicates that even meat producers foresee the possibility of a meatless future.

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