ALTERNATIVE PROTEINS: HYPE OR HOPE? - SHOULD ANIMAL AGRICULTURE BE WORRIED? CHRISTINE MCCRACKEN, EXECUTIVE DIRECTOR RABOBANK FOOD & AGRI RESEARCH ...
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Alternative Proteins: Hype or Hope?
Should Animal Agriculture Be
Worried?
Christine McCracken, Executive Director
Rabobank Food & Agri Research
April,2018
Alternative Proteins: Hype or Hope?
What Are “Alternative” Proteins
The Rise of Alternative Proteins
Meat Industry Response
2
Alternative Proteins: Not A New Idea
“We shall escape the absurdity of growing a
whole chicken in order to eat the breast or wing,
by growing these parts separately under a
suitable medium.” (Churchill, 1931)
3
Alternative Proteins Are Gaining Share
Albeit from a small base
The market in the US and Canada is The growth of alternative proteins is minor
still small, but is growing fast compared to animal protein growth
Source: Rabobank 2017
4
Not All Alternatives Are Created Equal
Plant-Based Emerging “Clean” Meat
Content varies but can be Similar to meat and
Protein Level 7% to 20%
over 20% poultry: c. 20%
Stage of
Developed Emerging Testing
Development
Market
Mainstream Emerging Future
Penetration
Cost of Low Medium High
Production
Innovation /
Technology Low Medium High
Sources: Agribusiness Intelligence, Business Insider, Foodnavigator, Huffington Post, RaboResearch
5
Burgers Have Come A Long Way
6
Meat Substitutes Go Mainstream
Industry Is Focused on Replicating Eating Experience
Soy/Pea Protein
Taste & Texture
Going head to head
to attract a more
mainstream audience
Wheat
Quality of products
Has low-quality early
Entrants permanently
damaged consumer perception?
Mycoprotein Competition
Competition for shelf space
heating up, brand
development and R&D
challenging for small scale operators
7
Plant-Based Proteins Nearing $1B
Strategies
Online grocers like Amazon add Future?
plant-based food and drink SKUs at
a feverish pace
Big Food companies seek
acquisitions to cope with
Consumer change
Millennials: high
disposable income +
Market Size
experiment with food +
US meat focused on sustainability
substitutes nearly
$1.0 B and growing
6% annually US Market Today
Plant-based food
market reached $3.1bn
in 2017
Plant-based US market
Plant- grew c. 8.1% in 2017
Alternative proteins offer
based 17% of US consumers
burger claim to eat mainly
reputational capital in this
sensitive environmental plant-based
period 60% of consumers are
reducing meat
consumption
Sources: Agribusiness Intelligence, Health Focus International, company releases, RaboResearch
6
“Flexitarians” Are Meat’s Swing Voter
The rise of flexitarians: vegan/vegetarian share sees little change
2017 Market Segmentation (in millions)
31
30
24
17
8
4
Vegan Vegetarian Flexitarian
North America Europe
9
Meat Substitutes Go Mainstream
“Health and food are merging
in a completely new way.”
“The biggest commercial
opportunity in the next 5
years lies with making
healthy foods affordable.”
“…people want to feel better
and are looking to food to
find answers.”
-Rabobank “Talking Points”, 2018
10Crickets: Not Just for Pets
Edible insect market $1.5bn by 2021
2+ billion people already consume insects (Asia/Africa)
Insect consumption 12.8% for males and 6.3% for females
Flexitarians are 4.5 more likely to consume insects
EU currently evaluating the use insect-based protein
Sources: Arcluster, European Commission, FAO, company announcements, Journal of Food Quality and Preference, RaboResearch
9Emerging: Promising Feed Ingredients
Insect based proteins
Very quick lifecycle,
1 sustainable, hypoallergenic,
high protein, limited land use
Larvae Protein-rich meal,
14-day feeding potentially used in
Black soldier fly
cycle aquatic feeds
Algal proteins and oils Bacterial proteins
Sustainable, cost
efficient, reliable, Sustainable, scalable,
good for consumer reliable, non-GMO, high
and animal health protein, low lipid
Source: Calysta, Rabobank, 2018
12Lab Grown/Cellular Proteins
• Lab-grown meat is made of actual animal tissue rather than a protein substitute
• Myosatellite cells are extracted from the animal and manipulated to reproduce tissue
• Technology still progressing, to date hamburgers can be produced for $11.36
• There is a lack of regulation and agencies unclear on how to review.
Key players using self-reproducing animal cells
Key biotechnology players developing marine animal
food
Sources: The Economist, Press releases, RaboResearch, USDA
10“Clean” Meat: AKA “Schmeat”
14What is Driving the Shift to Alternatives
Push drivers Pull drivers
Health Investors
Convenience
concerns
Food Safety Curiosity
Growth of
alternative
proteins Nutrition/
Population/
income growth Protein Diet
Animal
Sustainability Technology
welfare
Source: Rabobank, 2018
15Sustainability Tops Consumer Concerns
CANADA
Source: IATP, GRAIN, Heinrich Boell Foundation, 2017, Rabobank 2018
16Animal Welfare Lends Support
Source: Compassion in World Farming, 2017
17Global Growth Accelerates Alternatives
Population and Income growth drive massive need for additional protein
Growing Global Demand for Protein (2000-2030)
Country category Milk Beef Pork Poultry
High income 31% 15% 22% 65%
Upper Middle Income 50% 47% 68% 115%
Lower Middle Income 124% 114% 61% 200%
Low Income 136% 124% 167% 300%
All markets are expected to increase demand for animal proteins, especially emerging markets
Sources: Consumentenbond, Kepler Cheuvreux, RaboResearch
18Food Recalls Reinforce Lab Strengths
Recalls of Meat Products
160
140
120
100
80
60
40
20
0
2014 2015 2016 2017
Beef Mixed Pork Poultry Other
19Millennials Health Focused; Going Meatless
Are we winning the race, but losing the war?
Millennials Baby
boomers
41% 55%
30% 44%
30% 37%
25% 29%
12% 29%
24% 11%
Source: NAMI; Rabobank, 2017
20Big Money Chasing Alternative Investment
21Big Names Investing in Alternatives
Established
Players
Other
Notable
Companies
Early Stage
22Tyson Foods is the best known of
many investors in alternative proteins
Source: CNBC, 2017
23Convenience & Curiosity Driving Usage
Environmental impact is the number one reason
millennials chose alternative proteins, while health
is most important for older people
Dietary needs/disease or health management
Cost/less expensive
Easier to prepare
Own/family member preference
Nutrition/health
Adding variety/just something different
0% 10% 20% 30% 40% 50% 60%
24“Dude, where’s my consumer?”
Willing to
Experience- Values driven
spend more
driven Health-
conscious Experimental
Online
Consumer preferences 180+ million
are changing quickly, millennials in the US
and the meat industry and Europe
needs to keep up!
Q: Who is driving Q: When will they eat? Q: Where will they buy
consumption trends? their food?
A: Any time!
A: Millennials! A: Everywhere!
Source: Rabobank, 2018Personalised Nutrition On Trend
23
25%
g protein
protein
23% protein 11% protein
10% protein
Source: Walmart, Habit, 2017
26Technology Comes of Age
“Today this is
grown in a petri
dish; but soon it
will be grown in
your local
bioreactor”
27Industry is Facing Multiple Challenges
Consumer
Acceptance
Cost Retail &
Competitiveness Foodservice
Financing Regulatory
? Challenges
?
• Source: RaboResearch Food & Agribusiness
11If You Make It…Will They Try It?
Product Quality Still Key
Impossible Burger, List of Ingredients
• Water
• Textured Wheat Protein
• Coconut Oil
• Potato Protein
• Natural Flavors
2% or less of:
Leghemoglobin (soy)
Yeast Extract
Salt
Soy Protein Isolate
Konjac Gum
Xanthan Gum
Vitamin C
Thiamin (Vitamin B1)
Zinc
Niacin
Vitamin B6
Riboflavin (Vitamin B2)
Vitamin B12
Contains: Soy, Wheat
29Can Cellular Be Cost Competitive?
The cost of a lab-grown burger has
dropped exponentially in 4 years!
Cost of lab-grown meat, ($/lb)
Cost down
325,000.00 30,000x
11.36
2013 2017
Source: Company reports
30What is “Meat”?
31Will Export Markets Move Faster?
Asia’s Food Trade Balance Deteriorating Key Ag Products Contributing to
(deficit has more than doubled) China Trade Deficit
USD billions
40
Dairy
20
0
Meat
-20
-40 Grains
-60
Oilseeds
-80
Japan Korea Indonesia India
0 10 20 30 40
Food Trade Balance 2000 Food Trade Balance 2015 2000 2015
Sources: China Statistics Yearbook, FAO, Rabobank 2017
32What’s Next?
Follow or lead the trend to alternative
proteins, and learn
Re-position meat in the consumer market
Take the lead on health and sustainability
33Stay on Top of the Trends
• Try to understand the drivers of the shift to alternative proteins.
Sustainability/Environmental, Food Safety, Health
• Follow the technology and understand its players.
• Prepare a response
Conference
2018
34Get (back) on-trend with consumers
Source: Carnivore Club; Eataly, 2017
35Hybrid product opportunities exist –
it’s easy to follow the trends
Source: ABP, 2017
36Don’t Become Obsolete
37Christine McCracken
Animal Protein Analyst – Executive Director
christine.mccracken@rabobank.com
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subject to change. This document is based on public information. The information and opinions contained in this document have been compiled or derived from
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report has been published in line with Rabobank’s long-term commitment to international food and agribusiness. It is one of a series of publications undertaken by 38
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