Though Rabobank’s head of agri commodity markets Stefan Vogel said alternative proteins would amount to less than 1% of the market in North America and the European Union by 2022 Sherrard warned the animal protein sector could not afford to sit back and ignore the challenge.
It should learn from alternative protein makers about innovation, positioning, marketing and consumer engagement.
Sherrard estimated the European market for alternative proteins as a centre-of-plate item could have compound annual growth of 8% in the next five years, growing from 130,000 tonnes to between 200,000 and 250,000 tonnes.
In the United States and Canada growth could be slower over the same period at about 6%, reaching just over 200,000 tonnes from about 165,000 now.
The alternative protein market including use as food or ingredients in Europe could reach 390,000 tonnes by 2022, snatching a third of total European protein growth in that period because of flat growth in animal protein.
Sherrard expected growth in animal protein would shield some of the market loss in the United States and Canada with the alternative protein market expected to reach 290,000 tonnes in five years.
The projected market share for alternative proteins in the US and Canada was expected to make up just 2% of total protein demand growth over the next five years, largely due to the strong growth prospects for traditional protein products.”
Animal protein markets still dwarfed those for alternative protein and would continue to do so for at least the next five years but it was the rate of growth rather than the total market that was significant.
The EU was where new proteins could steal a material share of the growth in animal protein consumption in the next five years.
Sherrard described last year’s 5% investment by giant US meat processor Tyson Foods in alternative protein maker Beyond Meat as a tipping point in the progress of alternative proteins from niche to mainstream, shifting what had been the domain of vegetarians to mainstream.
“The unexpected message from Tyson Foods was that plant-based proteins will play a growing role in meeting consumers’ protein needs and personal preferences or, as Tyson put it at the time, ‘the investment for us is not about an either/or choice, it’s about the and’.”
Tyson was responding to the rise in a new consumer group, flexitarians, people who were consciously reducing their meat consumption.
Sherrard said there were three main types of alternative protein: meat substitutes designed to mimic traditional meat products, emerging products insects and algae that were yet to win consumer trust and regulatory approval and laboratory-grown meat products designed to look like conventional meat products.
Consumer drivers for the interest were consistent across most markets but in Europe and the US the report identified them as health concerns from eating meat, investor interest, general curiosity with a new product, animal welfare, ethical questions, concerns about the sustainability of animal production, the convenience of preparing the new products and tailoring proteins to meet personal nutrition.
Of those reasons seen as negative towards animal protein, the most frequently cited reason for turning to alternative sources was health concerns.
Next were concerns about animal welfare and ethical considerations followed by questions about the sustainability such as greenhouse gases emissions, land clearance for growing crops for animal feed and water quality issues.
Alternative protein makers still had to satisfy consumer expectations, overcome concerns about the role of technology and processed food and satisfy consumer interests in natural food ingredients at a competitive price.
Sherrard said consumers were fickle and might buy a product only once out of curiosity so creating structural demand was another challenge for alternative protein manufacturers but so far they had succeeded in marketing to and engaging with consumers.
“Most animal protein companies could learn valuable lessons from the approaches being taken to market alternative protein products,” he said.
The report recommends animal protein companies invest in product innovation to improve the health benefits from consumption of animal protein, adopt voluntary approaches to managing animal welfare that exceeded regulatory standards and took steps to improve the sustainability of their business operations and supply chains.
“They also need to engage more directly and effectively with consumers, improving the transparency of their supply chains.”
Sherrard said animal protein suppliers could not ignore the challenge or consumer concerns.
“The market is asking questions of the whole animal protein supply chain and some consumers are voting with their wallets in favour of alternative proteins.”
