Carving up the alternative meat market

Original article by Barclays found here at investmentbank.barclays.com

Can the rise of the alternative meat industry help provide a solution to concerns over health and large-scale farming’s impacts on climate change, animal welfare and waste?

Consumers are increasingly aware of the consequences of animal meat production and consumption. Alternative meat has the potential to go mainstream by catering to everyone, not just vegetarians, as diets become more “flexitarian”.

What is ‘alternative meat’?

Whether called cultured, clean, fake, mock or meatless, the range of alternative meat products is steadily expanding.

Beefing up: the potential growth for meat alternatives

Due to rising demand and a growing population, global meat consumption is on the rise, especially in the US, which currently makes up about $270 billion of the $1.4 trillion global meat industry. We believe therefore that there is a bigger market opportunity for plant-based (and maybe even lab-grown) protein than was projected for electric vehicles ten years ago.

Appetite for meat alternatives: 3 reasons consumers could bite

What will it take for substitute meat to go mainstream?

To turn this niche into a mainstream category, a joint effort is required by food producers, retailers and restaurants to educate people about the benefits of alternative meat. So what can these players do to whet the appetite of meat eaters?

Appetite builders and suppressors: opportunities and risks for growth

Consumer opinion and regulatory decisions are likely to have a key impact on how the alternative meat market evolves.

What it means for alternative meats

Consumers’ changing eating habits provide an incentive to producers to use natural ingredients in their alternative meats. Given its chemical origins, the lab-grown meat of the future faces a challenge if it is to achieve mainstream status.

Healthy food, including alternative meats, is usually more expensive, so food producers need to provide consumers with affordable options.

Potentially unpalatable: how regulation could affect the alternative meat market

The debate about regulating the alternative meat industry is growing, especially on issues such as labelling. If plant-based alternatives were prohibited from being called “meat”, it could harm industry efforts to go mainstream.

The regulators

In the US, the Food and Drug Administration (FDA) and the Department of Agriculture (USDA) jointly regulate safety and labelling of meats, poultry and egg products, but there is a need for clear marketing rules for plant-based products. Recently, the FDA and the USDA decided to oversee the production of lab-based cell-cultured food products derived from livestock and poultry.

Inadequate labeling, opaque production processes and perceived lack of regulation may put off consumers. For example, studies show that consumer confidence in meat products is boosted by FDA oversight.

The future: taking the alternative out of alternative meat

Alternative meat producers have plenty to do to make their products mainstream. In our view, this should include research and development to improve nutrition and taste while keeping prices competitive, and a marketing campaign that emphasises the health, animal welfare and environmental benefits. If these issues are addressed, we believe these substitutes may capture a significant share of the market from traditional meat products.

Read the full report

Authorised clients of Barclays Investment Bank can log in to Barclays Live to read the Signature report I Can’t Believe It’s Not Meat by our Equity Research team.