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Euromonitor International analyst Hope Lee was present at the recent Food is Great business summit jointly organised by the Institute of Directors and the Department for Environment, Food & Rural Affairs, held in London. Professor Ian Noble, Senior Research and Development Director at Mondelez, summarised the global food trend in Food System 4.0, comprising four steps: provision (first), safe and affordable (second), wellbeing (third), sustainability (fourth). This summary perfectly reflects the market trends shown in different consumer markets at various stages of economic development. This is a follow-up piece to the podcast: Increase in Consumption of Plant-based Foods and Beverages, published on 9 August. This piece attempts to explore the topic of consumers’ rising awareness of meat consumption in relation to its impact on the environment in developed markets, a discussion derived from my observations arrived at via trade shows, conferences and trade interviews, highlighting the data sourced from our four systems: Packaged Food, Health and Wellness, Fresh Food and Ethical Labels.
Note: Packaged Food Database
Ten years ago, the United Nations published a report pointing out that cattle-rearing generates more global warming greenhouse gases than transportation. Put simply, when you eat a portion of beef, this act could be more damaging to the environment than driving your car in the street for a certain length of time. Rearing animals and the whole supply chain of the meat-based food and beverage industry requires more land and resources than for plant-based variants. While greenhouse gas emissions from livestock could be cut by up to 30% if farmers adopt better techniques, without having to overhaul entire production systems, some consumers are thinking of making a positive contribution by changing their everyday diet by increasing meat-substitute or plant-based foods. That is, they are reducing their dependence on taking protein from one single source – animals. Plenty of plants and grains may well provide similar amounts of nutrients – and food scientists continue to look for alternative plants, recipes and formulations. Ten years ago, the global chase for superfruits seemed to wind down slightly and now supergrains and supernuts as a fashionable source of protein are becoming ever more of a hot topic.
On average, consumers in developed markets spend a lot more on processed meat than those residing in developing markets. For example, our Packaged Food database shows that an average US consumer spends US$97 annually on processed meat, compared to US$9 for the average Chinese consumer. Besides the factor of retail pricing, consumers in Western markets eat more meat than those in developing markets. Globally, meat in general is priced higher than plant-based foods and the margin for meat is also higher. That said, plant-based foods are relatively affordable for consumers, even for lower-income households. Some high-profile food scandals were also related to meat-based foods, such as the horse meat scandal in the UK and baby formula milk contamination in China. Trading down to affordable plant-based diets appears to be both an economical and healthy personal choice. Excessive animal fat and sugar intake without adequate physical exercise can also cause health problems, such as obesity and diabetes. There is an epidemic of growth in the number of type two diabetes cases globally, resulting in large medical bills for national governments.
Note: Fresh Food Database
Our Packaged Food database noted that different consumer markets are showing varying meat consumption trends. India, with the world’s largest vegetarian population, will continue to see tiny sales of processed meat to 2020, while growth for fresh meat will be strong. China, the US and the UK will see increasing consumption of fresh meat, but China and India are likely to far outpace the US and the UK, according to our Fresh Food database. Unprocessed fresh meat is perceived to be healthier than processed variants. In both the US and the UK, consumer expenditure on fresh meat will outperform processed meat. The concept of “clean label”, natural and organic is spreading. According to our Ethical Labels database, China, Australia, the US, the UK and Brazil will see strong growth of sales of foods and beverages bearing at least one clean label in 2015-2020. Looking at the big picture, developed markets are likely to see slower growth of overall meat consumption (processed and fresh meat) than in developing markets, partly due to market maturity and environmental and sustainability campaigns.
NGOs and the media in developed markets appear active in promoting the concept of “saving the planet”, linking it to “go for flexitarian or vegan diets”. Thus, consumers in developed markets are more exposed to and aware of the environmental impact of livestock rearing and meat processing than consumers in developing markets. It therefore no longer comes as a surprise in the UK when the teenager living next door tells you that she has become a vegan. In some developed markets, there is seemingly an “anti-cow movement”, with some trade shows seeing an influx of cow’s milk alternatives derived from products such as almonds, cashews, oats and peas. The marketing message in relation to “saving the planet” is commonly seen. Our Health and Wellness (HW) database shows that HW milk alternatives is set to expand by around US$4 billion in absolute sales in 2016-2021, contrasting with HW cow’s milk’s US$676 million growth globally in the same period.
The “anti-cow movement” is not only being seen at NGOs but is also potentially being incorporated into governments’ food and agriculture policies. In Denmark, the Danish Council of Ethics recommended an initial tax on beef, with a view to extending the regulation to all red meats in future. It said that, in the long term, the tax should apply to all foods at varying levels, depending on their impact on the climate. The beef tax proposal shows that the Danish food market has reached the sustainability level. If this happens, other national governments may also consider introducing similar measures, particularly if a government was looking for new sources through which to generate funds. This is a bit like the “sugar tax ripple effect” seen in the soft drinks industry.
Note: Packaged Food Database
Needless to say that any commercial activities would need proper funding to start up, sustain themselves and expand. Many investors are interested in plant-based, natural and organic products. The plant-based food and beverage private equity firm Powerplant Ventures recently announced the closing of a US$42 million fund to invest in emerging plant-centric businesses. The fund is led by Mark Rampolla, founder of ZICO Coconut Water.
Acquisitions of plant-based food players are also on the increase, including Coca-Cola’s acquisition of AdeS in Brazil and Culiangwang in China, and Danone’s takeover of WhiteWave in the US, while Hormel Foods Corporation struck a definite agreement to acquire Justin’s LLC, a pioneer in nut butter-based snacking.
Boulder Investment Group Reprise (BIGR Ventures) is a newly closed fund, with its portfolio companies having access to a huge network of retail and natural food consumers. Bill Weiland, one of BIGR’s founders, said, “The strongest companies we see are those that have a mission or some form of social responsibility woven into the fabric of their purpose. We like to see success broadly defined to include shareholders, employees, suppliers, consumers, and the planet.”
With the investment from venture capital entities and major corporations increasing, plant-based foods and beverages will progressively raise their profile and consumer interest in the coming years. Enthusiastic start-ups are encouraged by the financial funding atmosphere and an influx of concepts and innovations are coming to the food stage. This trend is real and is happening in those countries at the “sustainability” level of the Food System 4.0. However, challenges should be not overlooked. In the next piece, we will discuss the opportunities, risks and challenges that brand owners should be taking note of when chasing “the plant-based money”.