The meat of the matter

How to survive and thrive in the ever-changing protein industry

Tuesday, 24 March 2020


It’s no secret that in the past few years the meat free industry has experienced a huge boom as consumer attitudes have continued to drive increased demand for meat substitutes and meat free products. This has resulted in an abundance of new market entrants poised to cash in on the gold rush, a wide range of competing technologies vying for recognition and investment, and huge hype, perhaps only matched by the heady valuations being reported and realised.

However, beneath the noise it’s important to recognise the fundamental shifts in consumer behaviour that are driving the rapid growth and the knock-on effects of which could cause major disruption to the protein industry. This is a pivotal time for the industry to engage in the debate as it represents both the biggest threat and the biggest opportunity for businesses in the sector.

The rise of meat-based alternatives

Plant-based protein alternatives are no longer niche products, they are now widely accepted and available alternatives to meat, with mainstream retailers increasing shelf space for the category. According to The Grocer, the UK meat free market is now worth £474.5 million and continues to display strong growth, and this trend is expected to continue in 2020.

The rise of plant-based protein alternatives is widely attributed to a shift in consumer attitudes and behaviours that was initiated by an uptake of various non-meat, or meat-reducing diets. However, these consumer groups are not homogeneous, they are driven by different motivations and so have diverse attitudes towards a plant-based diet.

  1. Health considerations – Growing perception of the health benefits of plant-based versus meat and dairy diets
  2. Environmental awareness - Increased concern of the environmental impact of the farming and consumption of meat-related products
  3. Animal welfare concerns – Growing awareness and concern about modern farming methods has led to more people factoring animal welfare into their purchase decisions
  4. Cost of animal-based products – While the cost of meat alternatives is currently higher than meat equivalents, the gap is closing as the price of traditional cuts of meat rises and the cheaper meat free options become more widely available.

This growth is supported by the leading retail and foodservice operators further broadening their offer to capitalise on the trend. The enormous potential value of the market is evidenced by the success of Beyond Meat, one of the world’s largest meat-free alternative brands. Beyond Meat went public in 2019 at a valuation of $1.5bn.

What will the impact be for the protein industry?

As the meat-free trend gains momentum, there will be further disruption in the protein industry, and it’s expected that 10-20% of current protein production will be displaced by meat substitutes. However, given differing consumer drivers, attitudes and motivations, this penetration and growth will vary across meal occasions, meal types, product categories and proteins. Indeed, there will be a wide range of different competitive scenarios which play out reflecting very different consumer requirements and preferences. The products and technologies that appeal to vegans may vary significantly to those relevant to meat-reducing “flexitarians”. This will have differing impact across protein players, depending where they are positioned across categories, channels and consumers. How will this play out across channels, customers, products? What will be the impact on my capacity and carcass balance? What is the exposure I need to protect against versus the opportunity to leverage? Each player in the industry, therefore, needs to understand its specific exposure to plan its response and the perfect recipe for success.

How can protein businesses respond?

Businesses that have a clear view on the likely implications on carcass economics and capacity decisions will be able to manage the disruption that will occur will create. Similarly, businesses that are agile and able to adapt quickly to changing demands and trends will seize the opportunity by responding to the trends with new and improving products. There are also considerations about where to play in the value chain – by owning raw material technologies and supplying to a range of end product converters or by developing products and brands and to sell directly to the market?

Businesses need to keep track of the emergence and commercialisation of new protein sources and technologies as it is progressing at a dizzying rate and there will be clear winners and losers. These technological improvements will have a profound impact on their economics. Those players who take the time to consider where and how to participate will hold relative advantage as the industry shifts. Indeed, many major players across the protein industry are already taking positions and placing their bets. Now is the time for all businesses to act to ensure that their business survives and thrives in the new industry environment.

Find out more about James McDonnell, Partner

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