Aidan Connolly, president of AgriTech Capital, analyses the battleground in the protein space
Who could have predicted that basic traditional foods, important parts of the food pyramid, would become laden with controversial adjectives? ‘Clean meat’. ‘Mock Milk’. ‘Fake eggs’. Such are the battlegrounds in today’s food world.
Critics point out that the world’s diets are already predominantly plant-based, and plants provide 57% of all protein consumed.
Plant-based protein producers and investors, however, are hungry to make an even bigger mark – replacing animal proteins represents a huge financial opportunity.
The definition of a ‘plant-based diet’ is itself a work in progress. While technically it is characterised as a diet consisting of predominantly plant foods, with meat and dairy products playing a supporting role, the term increasingly denotes a ‘plants-only’ diet and is becoming increasingly popular worldwide.
The growth of plant-based diet doesn’t necessarily spell disaster for global meat and dairy industries. On current projections, the global dairy products market will grow by a projected $129.4 billion by 2027, driven by a revised compounded annual growth rate of 3.6% – the milk sector is forecast to grow at over 3.1%, reaching a market size of $172.5 billion by the end of the same period.
The increasingly popular ‘flexitarian’ label allows for consumers to predominantly choose a largely plant-based diet while keeping animal products (including cell-cultured) in the mix.
So what changes do these plant proteins spell for the global food industry?
It’s interesting to note that most people buying plant-based meats aren’t vegetarians or vegans, but consumers who believe plant products are better for the environment.
While consumers are busy working out what to call them – fake, clean, alternative – companies such as Beyond Meat and Impossible Foods are working hard to manipulate plant products to replicate the taste and mouth feel of meat and milk.
Meat imitation is historically associated with substitution in times of scarcity. For example, during World War II, the Welsh Glamorgan sausage made from cheese, leaks and breadcrumbs became popular when meat was rationed.
The difference with new meat alternatives is that, thanks to developments in food technology, they are uncannily similar to the product they replicate.
The most convincing meat replacements have been found in the likes of soybean roots and pea protein.
Impossible Foods has achieved a ‘bleeding’ effect in its burgers by adding haemoglobin (a protein made up of iron molecules found in animal blood) while Beyond Meat counts on beets to create a similar outcome.
Big-name fast-food chains have also jumped on the bandwagon, with Burger King launching the ‘Impossible Whopper’ on April Fool’s Day and have now made it a permanent feature on their menu.
This soybean patty is not just aimed at vegetarians, but also at customers who want to eat burgers, but wish to cut down on their red meat consumption – 95% of those who bought the Impossible Whopper were meat-eaters.
On a recent visit to a quickservice restaurant, otherwise known as fast food, the server at Carl’s Jnr in California admitted to me that she wasn’t a fan. “I only sold three burgers this morning, but each time we cook them, the smell of burning soy makes everyone want to leave the kitchen,” she said.
Plant-based companies look to offer a more sustainable and nourishing product compared to traditional food companies. In the case of burgers, however, they contain multiple processed ingredients like soy concentrates, isolates, oils, and flavors, with similar amounts of saturated fat and much more sodium than regular beef.
Soy has become controversial because reports show increased global demand is pushing producers grow the crop in areas of the tropical savannas of the Cerrados and within the greater Amazon basin.
Patrick Holden, of The Sustainable Food Trust, warns also that the heavy reliance on soy is leading to a monoculture of plant-based cropping, which in turn depletes carbon levels. He argues that grass-eating livestock and production systems combined with crop rotation are vital to soil fertility.
The phrase, ‘to chicken-out’, has taken on a whole new meaning in the food industry. Outbreaks of diseases such as avian influenza have impacted the poultry industry resulting in product shortages and higher prices.
The fluctuations in egg prices have incentivised innovation as food technology companies brainstorm viable alternatives to the egg.
Remove chickens from the production of egg products is the goal of companies such as Just Egg, Fumi Ingredients, and Plantible.
JUST Egg products are the most developed alternative, and are based on mung beans. The company has recently announced the arrival of its newest offering with a splashy multimedia advertising campaign – a fluffy, folded egg. The company is trying to prove that vegan egg products are a plausible (and profitable) investment.
As of January 2020, Just has sold more than 20 million plant-based eggs. The company hopes to become a cost-effective and sustainable source of egg-like protein on the market.
Fumi Ingredients produces vegan egg whites from the yeast remaining after beer is made,while Plantible uses duckweed, an aquatic plant that doubles in size every 48 hours and is considered more digestible than soy, pea or algae.
Supermarket shelves are bursting with a wide variety of different ‘milks’ on offer. It seems there isn’t a nut, fruit or vegetable safe from becoming a frothy white liquid in this plant-based milk-alternative movement.
Plant-based milk is the largest category in the plant-based sector and is expected to reach $21.52 billion in 2024.
The most popular plant milk is currently almond, which makes up 65% of dollar sales.
Oat milk is the fastest-growing segment in the alternative milk market, estimated at $3.7 billion in 2019 and is expected to grow at an annual rate of 9.8% from 2020 to 2027.
However, there are challenges. The dairy industry is trying to get courts (in the EU) and government regulators (in the US) to rule that milk can only refer to milk from an animal, on the grounds that consumers are being misled.
In the EU, although studies show that consumers are not confused, words such as milk, butter, and cream may only be used for animal products, with specific exceptions for coconut milk, almond milk, peanut butter and ice cream.
A June 2020 report by the Food Safety Authority of Ireland warned parents against giving young children plant-based alternatives such as almond, coconut and rice milk, deeming them ‘nutritionally inadequate.’
Instead, it recommended parents of toddlers should give them 550ml of cows’ milk a day. President of The Irish Creamery Milk Supplier Association, Pat McCormack, celebrated this, saying that it was ‘good news’ for Irish farmers who have faced challenges in recent years from vegan activists and environmentalists who promote plant-based diets.
Perfect Day Foods has taken another approach, fermenting milk-like proteins from genetically altered yeast. The company is focused on replacing the high-value components extracted from milk and sold for energy drinks, sports bars, infant formula etc.
Food producers are looking for other forms of protein as well. There is an argument that the most sustainable form of animal protein is bivalves (oysters, mussels, clams), as having the best balance between ecological impact and animal welfare grounds.
Increasing attention is also being paid to edible insects and algae, which contain similar amounts of protein to animals, but with lower greenhouse gas emissions and resource requirements.
Eat or be eaten
A variety of factors are driving changes in the food industry. Consumers are increasingly concerned about sustainability in the food chain and more adventurous in what they will eat.
As resource costs (land, water, inputs) and operational costs (especially food security in the food chain) go up, there is more incentive to look for more efficient approaches. And as food processing technology evolves, new approaches become possible.
This is a time of dramatic change in the food industry, what McGahan called ‘radical change’. For those already in the food industry, maintaining the existing business while carefully experimenting in the emerging areas is the challenge.
The food markets are so finely tuned, in terms of demand and supply, that an increase in supply or a drop of 2% in demand for meat, milk or eggs can lead to a decline of up to 20% in the price of these commodities.
What should farmers, food marketeers of milk, meat and eggs do? Focus on answering the hard questions. Create the metrics to show that animal proteins are sustainable.
Ensure livestock farms are transparently animal welfare friendly. Sponsor studies that demonstrate scientifically the nutritional benefits of animal proteins for humans, especially children, developing adults and geriatric nutrition.
Is it expensive? Time-consuming? Disruption makes for uncomfortable change for incumbents, but it’s the price of survival.
About the author
Aidan Connolly is president of AgriTech Capital, a strategy and investment firm specialising in innovation and technology in the agribusiness sector based in North Carolina.
He specialises in international business, talent management, human capital, supply chain management, agribusiness, nutrition, sales and international marketing.
Date published: 21 January 2021