The end of meat as we know it?

As we move into the roaring twenties, the focus on corporate and consumer sustainability is experiencing a sharp crescendo. Press, influencers, and campaigners have led the drive to climate change prevention and a now-evergreen awareness partly driven by Attenborough’s ‘War on Plastics’, Gore’s ‘An Inconvenient Truth’, and notably recently Extinction Rebellion. Many industries are looking inwardly to see how their impact on the planet can be lessened, with industries such as apparel switching to sustainable materials, finance looking at impact investing, or logistics businesses looking at limiting wastage.

The impact of the food industry on the planet has long been in question. The consumer now, more than ever, wants to know the provenance of what they physically consume. Meat has been sharply brought into focus in the UK, with almost 200k head of cattle infected with BSE from 1995-2015 with a nationwide scandal in 2013 thrown in for good measure following the revelation of manufacturers replacing beef with horse. Local, or in some cases hyper-local, sourcing is becoming prevalent in the US and UK, and most supermarkets now have sourcing principles in place centred on full transparency and traceability.

“Meatless” or “plant-based” seems to be an in-vogue and flexible iteration of veganism or vegetarianism, describing an aversion to animal-based products. True’s portfolio company, Soulfresh, calls this the “Tarian Generation” – a certain wokeness leading to changes in the everyday lifestyles for those with a keen focus on health and sustainability.  And there are companies like Allplants that are making it that much easier to get good plant-based meals direct to your door – have a listen to our podcast with Jonathan Petrides, the CEO & Co-founder.

The sustainable impact of lab-grown meats versus animal meat is estimated by CB Insights and roughly corroborated by a study admittedly commissioned by Beyond Meat (sceptics beware) to, per pound of meat: use less than 20% of water, emit 78% less greenhouse gases, and use 1% of the land. According to Fast Company, the switch from beef to plant-based meats in burgers would be the sustainability equivalent of 12 million cars off the road for a full year.

Beyond Beyond.

In meats, it is thought that the cultivation of livestock contributes about 15% of greenhouse gas emissions according to the UN’s Food & Agriculture Organisation, making it one of the ‘worst’ damagers to the environment. Further, with over 10% of the USA’s c. 3bn pounds of beef and 35% of 9bn pounds of pork produce being exported to other nations, the environmental impact of the transportation of meat is vast. This has led to a proliferation of businesses attempting to ‘solve’ the problem of how to recreate the taste, texture, and experience of meat in a way that is more agreeable to the planet. Enter the world of meatless meats.

Veggie-friendly solutions are nothing new: Quorn in the UK launched in 1985 and Lightlife in the US recently celebrated its 40-year anniversary. However, potentially driven by Beyond Meat’s successful public listing in 2019, there is a keener curiosity by consumers to try products such as soybean-based “beef” burgers, pulled jackfruit “pork”, mung bean “eggs”, to go alongside the almond and oat milk that long-ago displaced dairy.

Estimates for the future of the industry are easily into the billions of dollars. With every proponent, though, remains a detractor – whilst some have questioned the health benefits of highly-processed plant-based meats, another source of ire is cattle ranchers: $6.5m has been spent lobbying the US government to keep encouraging the ongoing consumption of genuine meat. Some want meat alternatives renamed given they do not originate from live animals as well as soy- or almond-based “milks” also to be re-labelled.

There are, however, established incumbent businesses such as Soulfresh (through the Eaty meat analogue and Wildly Good veggie brands), Tyson, Hormel, Conagra, and Nestlé who are investing in, and quickly taking to market, concepts that are taking advantage of the shift to plant-based meat alternatives – although for businesses like Tyson, who have over four-fifths of their revenue from animal meat, the meat-to-meatless transformation has tangible ramifications for some of these businesses.

#staywoke.

Charity group Veganuary had over 400k participants in January 2020: a 43% uptick on Jan 2019, which was 50% up on 2018. Reasons for participating include the health benefits of veganism (46% gave as a reason), the environment (12%), and animals (34%).

Traditionally, the majority of those participating are under 35 and female, but with world-famous and outspoken vegans such as Lewis Hamilton (owner of Neat Burger in London: the ‘first plant-based sustainable burger chain of its kind’), Joaquin Phoenix, Paul McCartney, and Arnold Schwarzenegger, more people than ever are willing to try a changing lifestyle. According to research by Hartman Group, all age groups now – either occasionally or always – make food and beverage selections with sustainability, social issues, or labour practices in mind for the majority of purchasing decisions. Whereas previously choice was limited, attempting a ‘plant-based lifestyle’ or being vegan in 2020 is much easier than at any time prior given the optionality both in and out of home. Accordingly, innovation through start-ups in food is getting more interesting and diverse: could crickets provide a high-protein and more sustainable alternative to jerkies or scratchings as the pub snack of choice?

The Future & Impact.

A survey last year by analysts at BAML suggested that two-thirds of consumers would consider or had already bought a plant-based protein option – but worryingly for long-standing incumbent players in the grocery aisles, 80% of those who have tried it intend to repeat-purchase.

Whilst the consumer proposition is evident, the historical impediment (like a lot of early-stage innovation) is the cost of implementation. The cost of one pound of lab-grown meat is estimated to be around $12 versus around $1 for animal-based meat – and that $12 has come way down versus only a few years ago.

The next iteration and logical step is vertical farming – localised production, cutting down transport costs, and lower resource intensity all adhere to the broader trends around sustainability and are aiming not to compromise on nutritional value too. Companies like Infarm, Plenty, BrightFarms, and AeroFarms have raised cumulatively hundreds of millions of dollars seeking a solution – leveraging tech and data – to provide infrastructural solutions to the global question of how best to feed a global population forecast to reach 10bn by 2050.

At True, we remain excited about how we are able to leverage our Live Network to exploit the ever-changing consumer behaviour around food and beverage consumption.  Our recent investment in Soulfresh’s global portfolio of healthy, better-for-you brands led by Lo Bros kombucha and Nutty Bruce plant-based milks and snacks aligns us to the seemingly ever-rising demand for fun and new solutions sought by those with a lifestyle of health and sustainability.

Posted by:
Richard Brick, Private Equity Principal & F&B Sector Specialist, True.

05 March 2020