Alternative proteins have been around a while, mostly serving the vegetarian or vegan markets. Those markets are small compared to the market for conventional meat products. But the market is expanding and some big names are taking notice.
Last year, Tyson Foods—one of the largest meat protein companies in the world—bought a 5 percent stake in the company Beyond Meat. This company decided to bypass the cow with its plant-based protein alternative “Beyond Burger.” These things use pea-protein, coconut oil, and beet juice among many other things to try to get the texture, taste, and look of a real burger patty. They even sizzle and “bleed.”
Tyson says it not an “either-or choice” about protein products; it’s more about the “and” when it comes to its investment. Other traditional protein companies have made similar investments in alternative proteins, too.
The largest segment of the alternative protein market is plant-based products that are made to resemble and taste like patties or sausages. These products are sold in mainstream grocery stores and have been for a while. But companies making “meat” products at the cellular level are also emerging in the alternate protein market. Products like this will certainly have marketing challenges. Companies like Memphis Meats are producing something most of us would consider “FrankenFood,” made entirely in a laboratory.
Another segment is insect- and algae-based protein products. Insects are widely consumed throughout the world, but when you hit the North American and the EU markets, they are not widely accepted. There has been some work using those products and they already available to some extent; “Chirps” chips made with cricket flour are on shelves in some weird stores across the country.
Companies making “cultured meat” or pushing bug protein have a long way to go before getting any relevant market penetration. But the fact that these protein alternatives are getting the attention of big-name investors like Bill Gates and buy-in by big meat names like Tyson is remarkable.
Typically, these protein alternative options have targeted the vegetarian and vegan market, but a new consumer segment has been identified; flexitarians. These are folks taking conscious steps to reduce their meat consumption. How big this market has become is a guess at best.
Rabobank, in a recent report, identified several drivers to the flexitarian market. The most popular reason is health concerns around eating animal protein. Then there are the ethical and sustainability concerns around animal treatment and environmental impact related to meat. Investor interest in alternative proteins is also helping grow these markets. Rabobank called these “push drivers.”
Then there are what they call “pull drivers.” These include curiosity, convenience and nutrition. This boils down to consumers looking for something different for the center-of-the-plate experience. The Millennials are the most curious and they are the prime audience for the existing alternative protein market.
Rabobank says the current market is substantial and growing. They estimate the current volume of alternative protein products in the European Union is about 130 tons per year, and 120 tons in the U.S. and Canadian market. They think the EU market will grow 8 percent a year while the U.S. and Canadian market will grow at 6 percent per year, which is substantial. However, meat products are more expensive in the EU rather than North America, which might explain the larger existing market and higher projected growth across the pond.
Should the animal protein market be alarmed? Perhaps not, but we should at least pay attention. Rabobank thinks the alternative protein market will be substantial in five years, and that conventional animal protein companies should pay attention. These young companies are small and scrappy marketers and will be able to get their products into the marketplace.
But then again, these alternative protein companies are trying to produce look-alike products, yet the plant-based meat alternatives and the lab-grown “cultured meat” have only made ground patties or sausage-like products. I wouldn’t think they would gain much market share with those things. However, a lot of high profile people have invested in these companies and they certainly have a vision.
At the end of the day, consumers’ buying decisions will be about taste, convenience and price. For consumers to overcome the yuck factor on some of these products, they’re not likely willing to pay a premium.
For the real animal protein market, we will have to be innovative and produce new products that can fit some of these niche markets. Perhaps lab-produced products can be used to enhance the value of trimmings. Maybe they can produce semi-meat products with enhanced nutritional value. Seems to me that we’re headed into a whole new protein world. — PETE CROW