For all the noise around the threat posed to the red meat industry by alternative proteins, this is only one of the challenges the sector has to confront over the next few years, notes Allan Barber.
Other key disruptive issues identified by government and industry leader groups include climate change requiring the reduction of greenhouse gases and progress towards net zero emissions by 2050, significant improvement in water quality, and the need to move agrifood production up the value chain.
All these issues signal the need for a major refocus of the New Zealand red meat sector’s approach to all aspects of its business. A number of global forces – environmental, technological, generational, sociological and economic – have all conspired to exert pressure on agriculture to reduce its environmental footprint while at the same time meeting the expectations of different groups of consumers.
Potential disruption by meat alternatives like Impossible Burgers and Beyond Meat should be viewed in the context of all the other challenges rather than being seen as an isolated competitor for a share of consumers’ wallets. Disruption will not be restricted to alternatives to meat, but also to co-products such as laboratory grown leather, so it is important for overall profitability to look at competitors for the whole animal carcase, not just the meat component.
The positive from this confluence of critical challenges is the availability of time to research, plan and take appropriate action. Work that Beef and Lamb New Zealand (B+LNZ Ltd) has already done in developing the Red Meat Story, Taste Pure Nature origin brand, Farm Assurance Programme and environment strategy, as well as research into alternative proteins, combined with the work of the Farming Leaders Group, provides a good foundation for the future of the meat industry. What is certain is farming in the next 30 years will be nothing like the last 30 which have in turn been massively different from the period before that.
Technological disruption in the form of alternative proteins has been around for a number of years, but the difference now is the extensive capital being invested in trying to produce products which can genuinely replicate the taste and textural properties of red meat. Research conducted by San Francisco-based consultancy Antedote, for B+LNZ, demonstrates the particular threat and opportunity presented by the move of alternative meat products into heavily branded consumer foods. Building production scale will not happen overnight, while at the same time the world’s population and demand for protein continue to grow. But the pressure is increasing on the meat industry, led by B+LNZ, to communicate the benefits of natural, grass-fed red meat while developing effective responses to the health and environmental claims of much better funded alternative protein products.
The Future of Meat report, released earlier this year, identifies seven underlying trends, particularly a generational change in attitudes to life and diet, a consumer backlash against factory farming, typified by feedlot raised grain fed beef in the US and factory-farmed chicken, and health concerns as the main inspirations for the move towards vegetarian alternatives. This in turn presents an ideal opportunity for New Zealand grass-fed, naturally raised beef and lamb to take the high ground and move upmarket to assume a premium position. The report states “It is a wake-up call to ensure we understand what is important to premium customers, that we protect our natural food production systems and products, and do more to ensure that our consumers and customers recognise that New Zealand’s red meat farmers are in the natural foods business.”
Antedote presents four potential scenarios to challenge the thinking of the sheep and beef sector on how it responds to the alternative proteins threat but these can equally be used to consider the response to the other environmental and economic challenges. In summary the four scenarios are red meat becomes a niche product, red meat moves upmarket, red meat is a reluctant choice and lastly it remains an everyday preference. Each scenario demands a quite different industry response, although realistically the probability is none of them will eventuate to the total exclusion of the other three. However the most likely outcome, at least in the initial phase, will be a gradual move towards the premium position proposed in the second upmarket option.
It will be important to identify the direction that makes most sense, avoiding expenditure of scarce money and resources on trying to compete in every scenario. B+LNZ market innovation manager Lee-Ann Marsh says it is necessary to remain agile, using the foundation of the Red Meat Story to create a strong value proposition while moving steadily towards the premium space.
There are two separate pieces of work to be undertaken following the Future of Meat alternative proteins report: firstly, an industry visit to China in August to investigate new pathways to market that would allow the sector to capture greater premiums, involving testing a number of scenarios in market with target customers and consumers, at least one looking beyond red meat; secondly looking at how to maximise the entire carcase, better understand the parts of the animal that may be prone to disruption and consequently maintain or create more value in those parts.
A big challenge for the sector is to ensure buy in from all industry participants at the same time, so no single segment either lags behind or gets too far ahead of the exercise. Getting the government onside with plans to mitigate climate change and creating a positive public perception of farming practice will be just as important as gaining support from farmers and processors for value enhancing market initiatives. Plotting the course which satisfies all four of these very different but important stakeholders will require very skilful leadership.