Hedge funds bet that the foliage is where our next meals are coming from
LAS VEGAS, LONDON––Food industry leaders placing investment bets on what they believe will be the next big trend in eating are putting more and more of the money on alternatives to animal products and byproducts.
Three paths away from meat
Three distinctly different approaches to displacing animal products and byproducts are gaining not only consumer but investor favor.
These approaches range from the traditional vegan/vegetarian approach of simply substituting plant-based foods such as nuts and whole grains for animal-based protein, to the high-tech approach of cultivating “real” meat from cell cultures instead of whole sentient animals.
In between are the fast-growing “meat analog” and “milk substitute” industries, which use plant-based ingredients such as tofu, tempeh, and coconut milk to produce vegan or vegetarian foods that emulate the look, feel, and taste of animal products.
Cultured meat aims for the big end of the food market
The high tech approach might be described as the glamor end of animal product displacement, attracting the most concentrated investment, and at times the most publicity, when there seem to be real breakthroughs in product development.
“On any given day, 96% of the U.S. is eating meat, and the global demand for meat will double by 2050,” predicted senior scientist Eric Schulze of the cultured meat development company Memphis Meats to a panel at the Institute of Food Technologists conference in Las Vegas on June 26, 2017.
90% less gas
“Schulze said this demand poses a huge market opportunity for protein producers,” reported Emma Liem of www.FoodDive.com. “But the challenge for the traditional animal agricultural system is that the majority of money made must go back into the production process to pay for feed, medicine and other commodities, while producers wait for cattle, pigs, chickens and other livestock to grow large enough for slaughter. This opens up an opportunity for companies working to produce meat in a laboratory. Schulze estimated his process requires up to 90% less greenhouse gas emissions, land and water than conventionally-produced meat.”
Hampton Creek takes the R&D lead
Memphis Meats, founded in 2015, has reportedly raised at least $3 million in development capital from five investors.
The apparent leader in animal product displacement, Hampton Creek, has by contrast reportedly raised more than $120 million since 2011.
The original and most successful Hampton Creek product, Just Mayo, is a plant-based alternative to traditional egg-based mayonnaise which has already displaced egg-based mayonnaise in broad sectors of the fast food and food service industries, and has won shelf space and sales in mainstream supermarkets too.
But Hampton Creek is also competing to develop cell-cultured meats.
“By the end of next year, we’ll have something out there on the marketplace,” Hampton Creek founder and chief executive Josh Tetrick recently told Chase Purdy of the online magazine Quartz.
“Top Trends in Prepared Foods 2017”
Meanwhile, addressing the sales end of the food industry, the London-based marketing research firm GlobalData spotlighted veggie food in a June 22, 2017 report entitled Top Trends in Prepared Foods 2017.
A subhead longer than some news reports about the findings detailed the GlobalData definition of terms: Exploring trends in meat, fish and seafood; pasta, noodles and rice; prepared meals; savory deli food; soup; and meat substitutes.
Advised GlobalData, “44% of consumers in Germany follow a low-meat diet, a significant increase from 2014 (26%).”
Sauerkraut outsells sausage?
Germany has historically been known for a diet heavy in meat, and as the home of hamburgers, frankfurters, wieners, and wursts.
Yet the London-based global marketing intelligence agency Mintel, formed in 1972, now with offices in five nations, reported in April 2016 that, “Vegetarian and vegan meals and meal centers [the central part of a meal] are booming in Germany, as the rise of flexitarianism — a plant-based diet with the occasional inclusion of meat — offers new opportunities for manufacturers to experiment with meat-free product concepts. The number of meals and meal centres with vegetarian labels increased more than seven-fold (633%) in Germany between 2011 and 2015,” Mintel noted, “while the number of vegan-labelled meals and meal centers has grown more than twenty-fold since 2011.
“Vegetarian claims,” Mintel said, appeared on “12% of all meal and meal center launches in Germany in 2015, up from only 2% in 2011. Similarly, vegan claims in this category have also increased sharply, from just 1% of all meal and meal center launches in 2011 to 9% in 2015.”
What people eat vs. what they say they eat
Affirmed GlobalData, “6% of U.S. consumers now claim to be vegan, up from just 1% in 2014.”
Though the percentage of consumers actually practicing either strict veganism or vegetarianism remains much lower than the percentage defining themselves as vegans or vegetarians, consumer self-definition is important to food marketers as the most important indicator of what claims will help to sell products––especially new products.
“Vegetables are the most frequently consumed food globally,” GlobalData continued, “with a quarter of global consumers eating them almost every day. Meat, fish, and poultry are also commonly consumed, with 62% of global consumers eating them at least once a week.
“The majority of global consumers eat pasta, rice, or noodles––staple parts of many cuisines––at least once a week,” GlobalData added.
“Six trends impacting innovation”
GlobalData examined what it termed “six key trends impacting innovation in prepared foods,” most of them helping to drive the growth of the non-meat food sector.
Most obvious is the trend that GlobalData identified as Go Meat-Free.
“Rising veganism and awareness of the impact of meat consumption,” GlobalData explained, “are driving demand for meat-free product substitutes.”
But five less self-evident trends also contribute, even though they do not actually imply eating less meat, or none, and even though GlobalData offered some examples of these trends that would appall most vegans and vegetarians.
“Premiumized Junk Food”
One trend of note is toward what GlobalData terms “Premiumized Junk Food.”
“High-quality ingredients,” observed GlobalData, “can raise the image of food categories that are traditionally seen as unhealthy.”
Simply put, identifying junk food items as vegan and organic, among other labeling schemes, helps to sell junk foods to consumers who would otherwise avoid them.
Softshell turtle extract & shark fin
Examples abound. But an appalling example of “Premiumized Junk Food” spotlighted by GlobalData was that of the “Rich” noodle line introduced in 2016 by Nissin Foods, of Japan, “featuring premium ingredients,” GlobalData emphasized, “such as Chinese softshell turtle extract and shark fin.”
“After a little bit of investigation,” reported the Japanese news television station Sora News 24 in March 2016, “we found that “the Luxurious Thickness Shark Fin Soup Flavor” doesn’t actually contain shark fin but ‘shark-fin-like processed foods’—news that those concerned for our finned friends’ welfare will no doubt be relieved to hear.
“That being said, faux-fin or not, it seems odd that Nissin should choose to slap the word フカヒレ (fukahire/shark fin) quite so prominently on the product’s packaging while campaigners the world over are trying to put an end to finning,” Sora News 24 said. “We’d argue that they’d probably benefit more by marketing the new snack as an alternative to actual shark fin soup.”
Unfortunately Sora News 24 did not manage to identify the actual source of the “Chinese softshell turtle extract.”
“Healthy Swaps, Fresh & Easy”
What GlobalData calls “Healthy Swaps” also tend to encourage consumption of vegan and vegetarian alternatives to animal protects and byproducts, but indirectly.
“Consumers are becoming savvier about food ingredients,” GlobalData believes, “so offering alternative prepared foods with enhanced health benefits will appeal.”
GlobalData also mentioned “Fresh and Easy” as a distinctive trend. “Time-scarce consumers seek convenience, but want to cook their food with fresh and natural ingredients,” GlobalData explained. “Meal kits offer both aspects to appeal to these consumers.”
Consumers practicing “Ethical Eating,” GlobalData continued, “connect ethical and sustainable lifestyles with wellbeing and wellness, creating demand for more ethical prepared foods.”
Unfortunately, GlobalData offered as an example of “Ethical Eating” packaged fish meals which purport to identify the fish used by point of origin and fishing method used––an advertising ploy fraught with opportunities for misrepresentation.
Finally, the eaters GlobalData called “Inspiration Borrowers” borrow “ideas from other food categories to inspire novel innovations,” which “creates opportunities to attract experimental consumers and capitalize on social media exposure.”
GlobalData took note of Memphis Meats, but Hampton Creek had not yet announced that it is developing cell-cultured meat products when the GlobalData report was issued.
“With meat consumption being continually blamed for negative effects on the environment,” GlobalData said, “lab-grown meat may make its way into the mass market to combat these concerns. It also represents a cruelty-free option. A group of social-savvy tech teams are promising cruelty-free cultured ‘chicken’ will be available by 2022. The technology will even allow consumers globally to try meat based on rare wild animals, such as panda.”
Founded in 2000, GlobalData later absorbed several other major marketing research companies, including Verdict, founded in 1984, and Conlumino, founded in 2011.
Listed clients include Coca Cola Spain, Nestle Philippines, Heineken International, and Jose Cuervo.
Prepared meals sector in decline
The GlobalData optimism about the vegan/vegetarian niche in the prepared food sector stands in contrast to the GlobalData finding, reported in February 2017, that “The global prepared meals market,” while worth $80.4 billion U.S., “registered a negative growth rate during 2010-2015.”
But GlobalData predicted then that “rising urbanization levels, changing eating patterns and increasing feeling of time scarcity will boost the demand for convenient and ready to eat Prepared Meals during 2015-2020, especially in western Europe and the Asia/Pacific region.”
The February 2017 GlobalData report echoed a finding from Mintel that “Total retail sales of prepared meals and side dishes…declined 4% from 2008-13 as consumers prefer products with natural ingredients, and better-for-you claims,” and are expected “to decline another 5% from 2013-18,” unless manufacturers become better able “to meet consumer preferences for more natural and nutritional products.”
But Amy’s Kitchen sales soar
The prepared meals and side dishes category “continues to be led by brands from Nestlé and ConAgra,” Mintel found, followed by H.J. Heinz, but all three “experienced year-over-year sales declines,” according to Mintel, due to “poor-performing diet brands Lean Cuisine, Healthy Choice,” and “Weight Watchers Smart Ones,” all of which center on meat products.
Conversely, Amy’s Kitchen, not a vegetarian brand but offering a wide array of veggie products, “increased its sales nearly 13% from 2013 to reach sales of $181.9 million,” GlobalData said.
Yet another market research company, Technavio, in November 2016 predicted that “The global packaged vegan foods market will witness impressive growth,” noting that “An increasing number of people around the world are turning vegan, either permanently or temporarily, because of their compassion toward animals and the environment, or for improving their personal health and well-being.”
Asian vegan/veggie demand
While consumption trends in the U.S. tend to set the pace for the world, western Europe and the Asia/Pacific region account for much of the rising demand for vegan and vegetarian prepared meals.
Veganism and vegetarianism in western Europe, as in the U.S., tends to be associated with concern for animals and for personal health. Traditionally vegans and vegetarians in the Asia/Pacific region are religiously observant Buddhists, Jains, and Hindus, but GlobalData noted a rising trend toward veganism among young Indonesians, whose motives appear to parallel those of young vegans in Europe and the U.S.
“The food tastes better than meat”
Worldwide, GlobalData found, “A third of vegan of vegetarian consumers choose the lifestyle because they think the food tastes better than meat,” about the same percentage as believe eating animals to be cruel or abstain from meat for “religious or cultural reasons.”
Assessed GlobalData, “The global packaged vegan foods market is highly dynamic, as it is subject to rapidly changing consumer demand and preferences. Manufacturers in the global packaged vegan foods market may benefit from the rise in the number of health-conscious consumers who prefer non-dairy beverages, due to the nutrition profile and also due to lactose intolerance.
Four sectors of “packaged vegan foods market”
“Vegan food manufacturers compete on the basis of price, quality, product differentiation, distribution, and promotion,” GlobalData said. “Continuous innovation is imperative to operate and grow in the global packaged vegan foods market. To survive and succeed in this competitive environment, it becomes imperative for manufacturers to distinguish their product offerings through a clear and unique value proposition.”
GlobalData identified four major sectors within “the packaged vegan foods market.” In order of market share, these sectors are “vegan dairy alternatives, packaged vegan meals and meat alternatives, vegan bakery and confectionary products,” and then the catch-all category of “other packaged vegan foods.”
Sweetened vs. unsweetened
Observed GlobalData, “Vegan dairy alternatives are readily available in supermarkets and specialty health food stores in a wide assortment of blending profile and brands,” yet “While purchasing the regular vegan dairy alternatives, consumers [tend to] prefer the unsweetened variants over the sweetened dairy alternative products.”
However, GlobalData added, “Demand for flavored vegan dairy alternatives is rising,” especially “among the millennials worldwide.”
How many millennials identify themselves as vegan?
360% rise in Britain
“The number of vegans in Britain has risen by more than 360% over the past decade,” reported Sue Quinn of the Daily Telegraph in May 2016, “according to a new survey that shows record numbers of people are avoiding food derived from animals.
“The poll of almost 10,000 people, carried out by Ipsos MORI for the Vegan Society and Vegan Life magazine, is the largest ever aimed at quantifying the number of vegans in Britain. Some 542,000 people aged 15 or over – more than one per cent of the population – have adopted a plant-based diet,” Quinn continued, “up from 150,000 in 2006. Close to half of all vegans are aged 15–34 (42%), according to the poll, compared to 14% aged over 65.”
This is the sort of success that the late Linda McCartney (1941-1998) envisioned when, as wife of Beatles rock combo cofounder Paul McCartney, she in 1991 founded Linda McCartney Foods, one of the first major commercial distributors of vegan and vegetarian prepared meals. The company is now part of the Hain Celestial Group, best known for producing the Celestial Seasonings and Arrowhead Mills brands.
Beginning in Britain, Linda McCartney reasoned, the Beatles’ music swept the world and became an enduring phenomenon. Veganism could do likewise.
Now some of the leading food industry research groups agree, and some of the leading food industry investors are putting green money where vegan and vegetarian mouths are.