Meat industry facing the grinder if it doesn’t adapt to substitutes

In a recent report, global advisory OC&C Strategy Consultants has examined the current state of the meat substitute segment, and expects major coming disruption to the protein industry.

Beyond what might seem like the current hype, a new report from global strategy and management firm OC&C Strategy Consultants has warned organisations operating in the protein industry that the rush of recent activity around meat substitutes cannot be ignored, with the researchers going so far as to state that in their opinion the trend-line represents “both the biggest threat and the biggest opportunity” that the industry has seen in years.

Already by 2018 and on the back of strong double digit growth, the market for plant-based alternatives stood at more than $3.5 billion in the US and UK alone, with more and more people around the world opting for substitutes due to environmental, health, animal welfare and budgetary concerns. According to one survey, more than a third of respondents were actively cutting down on meat, with nearly 40 percent of those having adopted a vegetarian or vegan diet.

This widespread shift in consumer behaviour points to far more than a passing fad, despite a possible appearance to the contrary. “The rapid rise of meat substitutes has all the hallmarks of a classic market bubble – lots of new entrants trying to cash in on the gold rush, a wide range of competing (often as yet unproven) technologies vying for recognition and investment – and huge hype, perhaps only matched by the heady valuations being realised,” the report states.  

But, the firm adds, beneath the fanfare there are fundamental shifts in consumer behaviour that are driving this rapid market growth, and it’s being supported by leading retail and foodservice operators which have been broadening their offer. As such, OC&C is forecasting that between one tenth to a fifth of current protein production will be displaced by substitutes, and points to comparable segments such as dairy-free milk which have even exceeded such an impact.  

But the firm expects the rise of substitutes to have a much more profound impact on the protein industry than just volume loss, as well as play out differently across categories due to varying consumer motivations and so then vastly different requirements and preferences. Given these specific drivers and attitudes, OC&C’s analysts project materially different growth in meat substitutes across meal occasions, meal types, product categories and proteins.

“Each ‘battleground’ will display its own recipe for success,” the firm concludes. “The emergence and commercialisation of new protein sources and technologies is progressing at a dizzying rate, with a concurrent improvement in their economics. Those businesses that have a clear view on the likely implications on carcass economics and capacity decisions will be a step ahead to mitigate the impact and take advantage of the commercial opportunities.”