When it comes to choosing traditional or alternative proteins, Wiley chief future officer Brett Wiskar makes the case for choosing a bit of both for a better future.
Whether it’s for cost or health, animal welfare or environment, the numbers are clear; Australians are reducing their meat consumption.
According to IBISWorld, since 2019, Australian beef consumption per capita is down 17.5 per cent and total meat consumption has slipped by 6.5 per cent while plant-based meat alternatives (PBMA) have soared.
Is the writing on the wall?
Not necessarily. While there is great debate around the cause of this decline, there is no singular smoking gun. In fact, it’s quite likely that the factors leading to the shift in domestic meat consumption have little to do with the factors that have seen the growth in plant-based meat alternatives. A little digging shows it’s clearly not an apples to apples comparison.
For example, the dominant protein of choice for the “Australian family” has undeniably shifted – but from lamb and beef to chicken (pork is also giving it a red-hot crack). From a global perspective, as wealth increases, so does the appetite and budget for meat consumption. Simply put, the demise of meat as a staple is notimminent.
In the $18 billion Australian red meat industry, there’s a lot at stake. But as we’ve learnt from the great Uber-taxi debacle, competition driven by changing consumer needs is inevitable. Those in industry who are progressively minded are embracing this opportunity.
Rather than adversaries vying for the same attention of consumers, there’s much these two industries can learn from each other.
Through decades of innovation the meat processing industry has learnt lessons that can provide great value to alternative proteins. When it comes to adopting value-add technology, cold chain management and automation, traditional processors are the experts.
On the other hand, alternative proteins have much to teach the meat industry about embracing consumer demand.
Technology has come leaps and bounds
In recent years, the meat sector has worked hard modernising and innovating to remain globally competitive.
The industry has learnt how to apply emerging innovations, use data to identify opportunities, and build business cases around new technology. The resultant landscape of the meat processor and their supply chain is one that lends itself to new proteins.
Let’s look at requirements. New plant-based proteins need to: be processed in high hygiene environments; have value added; be packaged, chilled or frozen; access the cold chain; understand retailer requirements; successfully navigate export markets; and be marketed to consumers. Sound familiar?
With all of that in mind, who better to bring scale and quality to market for these products than the existing meat players?
It makes business sense to invest in this new sector where processors leverage their existing operations and capitalise on the new market opportunities.
Value-adding adds to the bottom line
In the Australian economic landscape, the opportunity for growth in revenue lies firmly in value adding. The Australian Farmers Federation says agricultural and food output could top $100 billion annually.
Given the domestic Australian market couldn’t feasibly consume that volume, we have three choices: grow more and export it; increase baseline agricultural output by adding value; or a combination of both.
While the grow-and-export route is popular, there are challenges in efficiencies, competition and scaling. Value-adding, by comparison, requires less demand on growth and can service both domestic and export markets.
Selling beef to the world’s growing middle class exposes Australia to competition from suppliers like India and Brazil and all the challenges and market fluctuations that entails.
Selling unique, new, price competitive meat analogues is where Australia will find less competition in the next decade. Products which are value-added onshore and designed to target directly at the dietary and cultural requirements of a specific export market are gamechangers.
This is where plant-based proteins can land themselves squarely in the future of industry and the economy. For better or worse, plant proteins are a highly processed product. This means a relatively low-cost agricultural output is processed into a comparatively valuable ready to eat ‘meat’.
It’s exportable, it’s in demand and we’ve got a sizeable head start on other global producers.
Follow the consumer, follow the money
Thirty years ago, lean cuts of meat were considered cheap. These days, 500 grams of “heart smart” lean beef mince will set consumers back an extra 30 per cent at the check-out. If you can slice it, marinate it, and give it a fancy name, you can charge a 600 per cent mark up.
The shiny new alternative proteins are also a consumer hit. Retail sales of plant-based meat alternatives have grown year on year and there has been a five-fold increase in the number of PBMAs on Australian supermarket shelves since 2015.
There’s more than 250 products for consumers to choose from. While the lean beef label adds a third to the price, PBMA averages an increase of 43 per cent.
What this illustrates is that value is subjective, and it’s set by consumers. Those who understand this consumer-set value are leaps ahead of the rest.
The flow of capital into the cultured meat industry has also grown substantially in recent years, reaching roughly US$1 billion over the past 12months. Investments in 2020 surpassed $360 million, six times more than the year before.
Interestingly, often the influx of money comes from existing red meat giants such as Cargill, Tyson Foods, and JBS.
Wiley client v2food has gathered significant external investment from across the globe and is looking to scale and capitalise on global demand for alternate proteins: investment that is coming from the traditional meat sector.
There’s clearly plenty of economic opportunity in the PMBA space. The question is whether producers are willing to see it. When it comes to the next revenue stream, the wise choice is often to follow the money. In this case, the money is leading directly to alternative proteins.
Ultimately, alternative proteins and meat are stronger together.
If both parties campaigned for a well-balanced diet that included both products, it would result in better outcomes for everyone: consumers who want choice and industry, which wants to ensure steady and sustainable growth.
While some in the traditional meat sector are railing against the shift in status quo, the smart money shows the global consumer is changing. Those prepared to change with it, bringing their own strengths tothe new market reality will ultimately win out.
This article first appeared in the April 2022 edition of Food & Drink Business.