Plant-based meat in the US
In summer 2020, Beyond Meat reached a capitalization of USD 8.8 bln. In addition to entering the Chinese market, the company’s growth has been boosted by the collapsing US meat processing plants as their workers fell victim to COVID-19, as well as by introducing breakfast sausages and expanding their product line. Another US-based meat analogue producer, Impossible Foods, contracted Burger King in 2009, and starting June 2020, the restaurant’s retail outlets across the country have been using the company’s sausages for their breakfast sandwiches.
Plant-based meat is also winning the consumers’ vote: US-based convenient food delivery service Grubhub states in its annual report that the demand for plant-based burgers increased by 291% in the first 6 months of 2020.
China Defies Traditions
As the quarantine is being lifted, Chinese consumers in 2020 are showing an increased interest in alternative foods like plant-based beverages and meat. Traditional meat production in China has been declining since 2018 due to the spread of the African swine fever.
Demand for meat substitutes is also fueled by the availability of such products, which is increasing as investor-supported companies are growing. This April, Beyond Meat made a deal with Starbucks in China to supply their products to 3,300 network restaurants; Impossible Foods raised USD 500 mln from major Asian investors in March 2020 to extend their geographical reach, among other things. Major companies in the sector are doing their best to keep up: Nestlé has announced plans to build a plant-based food factory in China.
In the short term, consumers are going to stick to the habits they developed during the pandemic and choose large supermarkets over traditional food markets (poultry meat sales in major supermarket chains in China have grown during the pandemic by 30-80% year-on-year.) According to China Briefing, Chinese investors are positive that consumers will stick to meat substitutes, as its production ensures more safety.
Europe’s Food Strategy
In early June 2020, the European Commission presented a plan for the transition to sustainable food systems and is about to invest EUR 10 bln into research and development of food, agriculture, bioeconomy, fishing, aquatic culture and the environment. The European parliament assumes that the new strategy will help to build up a sustainable food system, mitigate its environment impact and dependence on agricultural chemicals, as well as ensure food safety.
This program utilizes digital and natural solutions to optimize agricultural and food-producing activities and focus on plant-based protein sources, including meat substitutes.
The market reach for alternative food products in Europe is larger than in the US, as the European association ProVeg International states in a report. The report concludes that the alternative food market is witnessing an excess demand. The most popular product among the survey participants is plant-based milk (more than 90% of the survey participants consumed it in the past 3 months); the runner-up is plant-based meat, with 81%. Most alternative meat consumers live in the Netherlands, Denmark, Belgium and the UK.
Barclays points out that consumers are increasingly preferring meat alternatives: they are concerned with animal abuse, health and life quality, the impact of agriculture on the environment (cattle emit more greenhouse gases than cars – 9% of all greenhouse gases.)
Baby Steps in Russia
According to a study by J’son & Partners Consulting, the functional food product market in Russia (which can be brought down to plant-based meat, as no other statistics are available) is currently valued at RUB 60 bln. Its growth rate depends on both major food producers and consumers. It will grow as the production cost for small enterprises will drop (after major companies enter this market), and the demand and the purchase volume increase. All this will happen after consumers learn about and accept the functional nutrition possibilities.
The Russian functional food market is 3-5 years behind that of Europe. There, the product range is so wide that specialized shops are already opening. Few companies in Russia are engaged in plant-based meat production technology. These include the startup Greenwise, Agricultural Complex Kukuika, VEGO, Veganov and Vyshiy Vkus.
Meat alternative startups in Russia have always been difficult for investors, as this type of production requires a special regulation policy. It is also important to note the great importance of value chains. Russia has competent scientists who are making concerted efforts to tackle the subject and come up with competitive technologies. However, when it comes down to marketing, promoting such inventions and entering the market, the value chain breaks.
Besides, the country’s market is regulated rather tightly, and if a startup comes up with a new product, it would take many years to test and register it. Moreover, the Russian market is small and price-sensitive, so developed countries would be a better choice to launch new premium products.
All value chains have undergone profound changes due to the COVID-19 crisis. Those who manage to make their products locally without foreign ingredients will be a step ahead of competitors. These will most likely be plant-based meat producers, among others.
Consumers’ interest is also growing, as innovations are coming to Russia as end products. The consumer begins to ponder whether it is tasty or unsavoury, whether they will like it or hate it, and whether it is expensive or affordable. This is why the market’s development in Russia relies heavily on quality marketing by producers, aided by related spheres. Restaurant chains aimed at a range of consumer categories add plant-based meat in their menus. White Rabbit, a hardly affordable restaurant, offered Beyond Meat’s products to their guests in April 2019. It was followed by T.G.I. Friday’s in September 2019. This means that the product appeals to different categories of restaurant visitors, as it is all-inclusive.
A Russian consumer would focus on the price category, taste, health benefits (whether people can substitute a part of their diet with plant-based protein), integrate into the plant-based product fashion in fast food restaurants (KFC, McDonald’s, Burger King.) The bulk of consumers will get to try these products, and the demand will grow. Only then will producers be able to provide retailers on a massive scale with meat alternatives for preparing at home.