How meat companies can rise to the challenge of alternative proteins

A report from Beef + Lamb New Zealand offers suggestions for suppliers to remain relevant and innovate.

14 March 2018
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Alternative proteins are marching closer and closer to overtaking red meat. Okay, that’s a bit dramatic. But according to a new report there are seven emerging forces that make it likely alternative proteins will continue to gain momentum in the future.

The report from Beef + Lamb New Zealand says the UN, governments and the private sector are searching for the next innovation that could help create scalable food production and avoid food and health crises across the globe.

With 30% of the world’s landmass going to meat, dairy and egg production, alternative proteins like plant-based foods, cultured meats and edible insects require less natural resources to produce.

So what are these emerging forces and how can meat producers meet the challenges head on?

From millennials to money

Millennials’ eating patterns are reshaping the food industry, companies are responding to consumer demands for new products and vegan diets are gaining greater visibility from professional athletes, food bloggers and celebrities, the report says.

But it’s not just consumers pushing for it. Global and government institutions have put meat consumption’s impact on the environment on the agenda, and the medical industry is highlighting the health risks of eating red meat.

And money talks. Capital is flowing into alternative protein development, while the technology is already available to produce consumer-ready, vegetarian-friendly burgers, the report says.

But there are hurdles to overcome. All alternative proteins are faced with production scale challenges in order to achieve mass distribution.

These include operational and product development hurdles as well as availability of ingredients. Currently, most of the options are premium priced, although all companies are aggressively seeking ways to reduce the cost of production, with all achieving significant reductions in cost year on year.

The expense of producing cellular meat has fallen dramatically, making the possibility of a commercially viable product more likely. Lab-grown beef and pork prices have dropped 30,000 times in less than four years.

Memphis Meats, which produces meat from animal cells, has reduced a pound of meat to less than $2,400, down from $18,000 last year, its CEO Uma Valeti said.

The alternative protein landscape is expected to diversify in coming decades, while consumption is expected to rise to 300 million tonnes by 2054.

 

The ways meat-free alternatives are being made

  • Synthesised meat: creating products that are indistinguishable from animal products by either mixing plants together to create a product or extracting the protein molecules.
  • Cultured meat: using stem cell technology. The process of developing a lab burger starts with extracting stem cells from cow muscle tissue, which are then cultured with nutrients and growth-inducing chemicals for them to multiply.
  • Novel alternatives: sourcing or farming protein-rich ingredients. For example, crickets are farmed, roasted and ground into a fine powder. Similarly, a standard industrial fermentation process is used to grow algae, and the ingredients are then washed, dried and milled into a soft, fine powder.

Innovating outside of meat

So how can meat companies plan and respond to these potential changes?

There are four ways suggested in the report, but it warns they can’t all be done.

The first suggestion is moving away from red meat production.

This could include partnerships, acquisitions, new product development, strategic collaboration and a shift away from farming livestock. Meat companies could piggyback off the development already made in alternative proteins and innovate in areas like working on making the sensory feel better.

The report uses Unilever as an example: it diversified by taking its most famous ice cream brand, Ben and Jerry’s, into the non-dairy space. Sales of non-dairy ice cream in the US leapt by 44% in 2016, while dairy ice cream rose only 3%, according to Nielsen.

“The focus of plant-based alternatives is no longer reduced to functionality,” says Mintel. “The new wave of products focuses strongly on taste and indulgence, rather than on health.”

The second option is to use existing farm land for new foods or other ventures like medicine, tourism, wine or wool.

And it’s been done before. In 2016, after years of financial losses and a continuing decline in the consumption of regular milk, New York’s Elmhurst Dairy closed its plants. One year later, it re-opened and had completely shifted its positioning and business model to focus on vegan nut milks.

 

How meat companies can respond to alternative protein demands

  • Diversify portfolio and protect current market share
  • Innovate using funding from short-term revenue growth
  • Premiumise by building tiers of value and investing in product development
  • Expand share in red meat via differentiation and speed to market

Repositioning meat

But what if meat becomes a rarity?

This is one scenario floated by the report that could benefit meat companies if the consumer desire for red meat is high and there is scarcity of supply due to regulation. Players could reinvent their meat as premium, with tiers of value, the report says. It could even include heritage meat.

The dairy industry is well versed in tackling this issue already. In the United States, Fairlife Milk created an ultra-premium offer in dairy milk, which directly competes with nut milks. They produce ultra-filtered milk which creates concentrated nutrients.

Finally, a company could ignore the march to alternative proteins and focus on their biggest fans.

For example, after 20 years of promoting itself as “the other white meat” in the US, the National Pork Board launched a new advertising campaign to increase consumption among existing consumers in new and varied ways.

They said: “Our best opportunity for growth was our biggest fans, they are heavy protein users [but] there was a lot more headroom that they could eat more pork."

Hopefully, this gives meat manufacturers the prime ribbing they need.

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