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Some Meatpackers Investing In Plant-Based Substitutes | KRVN Radio

Some Meatpackers Investing In Plant-Based Substitutes

We are going to see the meat industry recognize that it needs to diversify.

- Bruce Friedrich, managing trustee of New Crop Capital

Some major North American meat producers are clearing room on their plates for plant-based substitutes, hedging their bets as consumer tastes shift and high-tech startups seek to create meat alternatives that taste like the real thing.

The trend was highlighted on Monday when Tyson Foods Inc , the biggest U.S. chicken processor, took a 5 percent stake in Beyond Meat, a plant-based protein maker partly backed by Bill Gates.

Other meat packers including Canada’s Maple Leaf Foods Inc and German sausage-maker Rügenwalder Mühle are also stepping up production of “meats” made from peas, soy and other crops, predicting stronger sales growth for the segment than its traditional products.

“It’s an incredibly hot area right now,” said Adam Grogan, Maple Leaf’s senior vice-president of marketing and innovation. “We view it as no different than chicken or pork. We view ourselves as a protein company first.”

Global sales of meat substitutes jumped to an estimated $4 billion this year, a 42 percent rise since 2010, according to research firm Markets and Markets.

U.S. red meat consumption has declined steadily since the 1970s, U.S. government data shows, to 69.2 pounds per person in 2014, the lowest on record. Consumption may rebound in the coming decade, however, as production expands and prices decline, according to U.S. Department of Agriculture projections.

Globally, meat and seafood consumption amounted to 463 million tonnes in 2014, dwarfing 10 million tonnes of alternatives such as soy-based meat replacements, according to Lux Research.

Meat faces pressure from diners who may be concerned about animal welfare and the environmental impact of raising animals, or view vegetarian meals as healthier.


To be sure, the meat business still makes good money. Tyson notched record adjusted profit in 2015.

“Given consumers’ recognition of the value of protein of all types, it appears that (some packers) are responding to a business opportunity – not a threat,” said Chief Executive Barry Carpenter of North American Meat Institute.

But the pace of growth in meat substitutes has caught the attention of industry and investors.

“We are going to see the meat industry recognize that it needs to diversify,” said Bruce Friedrich, managing trustee of New Crop Capital, a venture capital fund that backs companies whose products replace foods derived from animals.

“This is a vast opportunity for forward-thinking companies to make crazy profits.”

Investors managing $1.25 trillion in assets launched a campaign in September to encourage 16 food companies to change how they source protein.

Meat substitutes are not a risk-free investment, however. Consumer tastes could eventually turn against them, said Camilla Stice, analyst at Lux Research, noting that some meat alternatives are made from genetically modified crops opposed by some environmentalists.

U.S. retail beef and pork prices have declined in the past year due to supplies rebounding after drought and a deadly pig virus, but prices are still relatively strong, said Canada-based industry analyst Kevin Grier.

“I don’t see these (meat substitutes) as something new and exciting,” he said. “If I want a hamburger, I’ll have a hamburger, not a pretend hamburger.”

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