22 September 2020 - With all the news about COVID-19 that we've seen from around the world, much of it has been regarding the global protein market, from impact on supply and demand impact to each part of the supply chain. But what about the alternative meat industry?
Back in April, Australian food futurist Tony Hunter noted that the pandemic’s impact on this sector - particularly plant-based items and cultivated meat - showed that, like any other food industry segment, there are winners and losers.
So now, after living with COVID-19 for six months, how has the alternative protein market fared? The short of it, he said, is plant-based products are not only doing well, but they’ve perhaps become even stronger through COVID-19.
Plant-Based Products Sales, Investments on the Rise
Some have seen the empty meat shelves versus the full plant-based ones as indications that plant-based products are not selling. However, it’s more likely that this represents the fact that the plant-based supply chain is far more resilient than conventional meat, argued Hunter, illustrating his point with data from Nielsen showing that year-to-date refrigerated plant-based meat sales to Aug. 1 have been $139.1 million - some 2.5 times the sales year-on-year.
Another indication of the rise of plant-based meats is that Impossible Foods has increased its distribution from 150 to 11,000+ grocery stores and supermarkets in the middle of the pandemic.
“If funding is any indication of the amount of interest in plant-based products, then there’s no lack of interest,” Hunter said. Some examples are Rebellyous Foods raising USD 6 million in April, NotCo raising USD 85 million in September, and at the big end of the scale, Impossible Foods raising USD 500 million at the start of the pandemic (and in August raised a further USD 200 million in Series G funding). Impossible also announced that not only does it have several more alternative meat products in the pipeline, but dairy products as well.”
As Paul Shapiro of The Better Meat Co said, “My own experience is that the pandemic initially did cause a clamming up of investors, but eventually that clamming converted to overall enthusiasm about the alt-protein world and its ability to offer a more stable supply of protein than the conventional animal industry.”
“It’s true that while plant-based meat products represent less than 1% of conventional meat sales, this means that large sales increases for these products come off a small base. The upside of this, though, is that a doubling of sales volumes is relatively easy, and it’s good to not forget the experience curve where a doubling of volume leads to a 10-to-20% cost reduction,” Hunter went on to say.
According to the food futurist, this was demonstrated when Impossible Foods dropped their Foodservice prices by 15% in March. In another move, Beyond Meat is currently selling a value pack of their burgers for USD 6.40 per pound versus USD 5.26 for conventional burgers. A 15% drop would make the Beyond product USD 5.44 per pound and another doubling in volume would, even at a 10% drop, be USD 4.90 per pound.
Hunter went on to comment: “Will 2022 or even late 2021 see parity between conventional and plant-based meat? Add on the currently surging meat prices and, it certainly wouldn’t be surprising.”
“Looking at the international scene, Beyond Meat inked an agreement in September to build two production plants in Shanghai. They’ll be in full production in 2021 and most interestingly will make pork products as well as beef and chicken. Pork is the most consumed meat in China and with African swine fever (ASF) still fresh in people’s minds (especially given the recent news in Germany), this is a savvy move. Add in local companies OmniPork, Zhenmeat and many others, and plant-based products could reap the rewards of peoples’ growing concern about the link between animals and zoonotic diseases,” he added.
Hunter also asked the question, will Chinese consumers buy the products? He showed that searches for “plant-meat” on Alibaba’s online platform TMall surged 40% for the 12 months ending May, according to a report by CBNData and TMall.
Cultivated Meat and Seafood on Track for Commercialisation
The cultivated meat and seafood industries are quite a few years behind plant-based meat in commercialisation, so has their progress been hindered because of this pandemic?
“One thing COVID-19 has exposed is the fragility of the conventional animal agriculture supply chain,” argued Hunter. “Millions of animals have been killed and buried as well as millions of litres of milk pumped down the drain. All the while countries that import most of their food have scrambled to ensure supply.”
Recently Yoav Reisler of Aleph Farms said that such “supply-chain disruptions caused by the COVID-19 viral outbreak have spurred an increased interest in the research of cultivated meat, as the food systems targets to build back better, a more sustainable and resilient ecosystem that withstands but also prevent such disruption from happening again.”
And as George Peppou of Vow Foods put it: “National sovereignty for food has made governments and investors more acutely aware of the risks of not commercialising cultured meat."
Asked if consumer food responses to COVID-19 will stick in the long-term, Lou Cooperhouse of BlueNalu said, “Yes, because of COVID, consumers have become increasingly aware of the vulnerability of our planet. Our seafood supply chain, in particular, is extremely vulnerable, and we need to find new solutions to feed the planet in the decades ahead.”
For Hunter, another indicator is how investment has fared. Some examples of investments in cultivated meat during the pandemic included BlueNalu raising USD 20 million in March, Mosa Meats USD 5.6 million in July, Shiok Meats USD 3 million in June and New Age Meats USD 2 million in July. All of this occurred during the pandemic and confirming Yoav’s view that “venture capital and corporate investors from the traditional meat industry, have accelerated their interest.”
Looking longer term, cultivated meat and seafood are still on track for commercialisation. Cooperhouse says that their “pilot production facility represents phase 3 of our five-phase commercialisation plan, in which we enter into commerce for the first time with limited capacity during late 2021. We plan to initially produce about 500 pounds per week of finished product, and we will sell these products to selected food-service establishments in the United States.”
In the cultivated meat space, CEO of Aleph Farms, Didier Toubia, has mentioned in several media outlets building out bio-farms for their meat production this year, with launches planned within three-to-four years.
Lastly, legislation is still a conundrum for companies and legislators, as companies want to know what legislators want. But legislators simultaneously want to know what companies are going to do. Some cultivated meat producers hope that the pandemic may push regulators to implement frameworks for the approval of these products. This could help to accelerate research and commercialisation of cultivated meat by providing a concrete framework for new and existing companies.
A Strong Outlook Moving Forward
“Looking at all of the above, it’s fairly safe to conclude that alternative meat and seafood have, if anything, come out strengthened by their COVID-19 experiences. Research is on track, and funding and commercialisation are continuing unabated,” Hunter claimed. “2022 and 2023 are most certainly going to be very, very interesting years for this space.”