The rise of alternative proteins – on the verge of mainstream

Tim Hunt, Rabobank
Rabobank's Tim Hunt.

Alternative proteins are on the verge of becoming mainstream and ‘stealing’ growth from traditional meat products as they play a growing role in meeting consumer needs and preferences, according to a recently-released global research paper.

The report, ‘Watch out…or they will steal your growth’ by agribusiness banking specialist Rabobank, examines why alternative proteins – including plant-based meat substitutes, emerging insect or algae-based products and lab-grown meat products – are starting to successfully compete for the ‘centre of the plate’.

Report author, Rabobank global sector strategist for animal protein Justin Sherrard, says it is the ‘growth’ – rather than the current market size – of alternative proteins that is of greatest significance.

“The strong and persistent drivers supporting the current growth of alternative proteins is set to continue for at least the next five years,” he says. “And as such, alternative proteins have the potential to capture a material share of animal protein demand growth in the European Union, and an increased market share in the US and Canada.”

And this momentum – along with increasing interest from start-up companies and investors – is also likely to see the market share of alternative proteins grow and become more established in other mature markets, including New Zealand, says Sherrard, a Netherlands-based Australian.

“Three of the strongest demand drivers for alternative protein products are essentially those that are ‘pushing’ consumers away from regular animal protein consumption, namely concerns around health, animal welfare and sustainability,” he says.

“That said, there are also a number of ‘pull drivers’, such as curiosity to try new products, convenience and personal nutrition.”

And with alternative protein companies adept at tapping into these drivers, says Sherrard, market share growth is set to rise, particularly for meat substitutes – the most mature of the alternative protein products. There are also opportunities for insect or algae-based products, and lab-grown meat products, but in many cases in-roads still need to be made to gain consumer trust and regulatory approvals.

“Rabobank’s initial projection is for the market of alternative protein products to grow at a compound annual growth rate of eight per cent in the EU, to reach a level of between 200,000 and 250,000 tonnes by 2022.”

Based on these growth rates, and the outlook for relatively flat consumption growth of traditional meat products in the EU, Sherrard says alternative proteins could represent one-third of total EU protein demand growth in the next five years.

“In the US and Canada, alternative proteins are forecast to grow at a slightly lower rate of six per cent to reach 165,000 to 200,000 tonnes by 2022,” he says.

“In terms of the projected market share for alternative proteins in the US and Canada it is a different story, however, with it expected to make up just two per cent of total protein demand growth over the next five years, largely due to the strong growth prospects for traditional protein products.”

New Zealand

For New Zealand (and Australia) though, local food industries are “not at the pointy end of the trend towards substitute food”, says Rabobank’s general manager of food and agribusiness research in Australia and New Zealand Tim Hunt.

“Rabobank believes that domestic market penetration of alternative proteins and substitute foods in New Zealand and Australia will lag behind that in the EU and US, where current market development efforts are focused,” he says. “Similarly, their adoption in the emerging markets that we export to are also likely to lag – with most consumers still trading up to traditional protein products, like red meat and dairy, rather than embracing meat ‘analogues’.

“That said, the trends in New Zealand and Australia often eventually follow what unfolds in the EU and US, and it would be a waste not to learn from the experiences of producers in these markets.”

Emphasising the naturalness of traditional food products is a useful strategy, Hunt says, but in many cases isn’t likely to be enough in itself.

“In line with their processing partners, meat producers need to recognise what is driving these substitutes, and do what they can to tap into the desire for healthy, sustainable and novel products delivered through a supply chain that consumers trust,” he says.

Options for industry response

On an international level, Justin Sherrard says, animal protein companies servicing the EU and US markets have several options to help avoid stagnating sales, or worse, in these regions.

“These include investing in product innovation to improve the health benefits of their products, managing animal welfare, and improving the sustainability and transparency of their business operations and supply chain” he says.

“Alternative proteins are not the only answer to the question the market is asking right now. But right now they are the answer that is attracting the most attention.”


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