The Financial Times explores investment opportunities in meat alternatives. Private investor David Stevenson says, even though I love a nice steak, I think change is coming fast to the food sector, with the growth of meat alternatives and huge advances in so-called “agtech”.
Something is bubbling away in kitchens around the world. Eat Just, a US cellular meats pioneer, has just received regulatory permission to sell its cultured chicken substitutes in Singapore. New York-based LiveKindly has snapped up Iceland’s meat alternative brand, No Meat, while Beyond Meat, a listed plant alternatives company, has formed a joint venture with PepsiCo. Its shares are up 61 per cent over the past year.
Impossible Foods — Beyond Meat’s main rival — recently announced a 15 per cent price cut in the US market for food service distributors, which suggests that the point at which meat alternatives become cheaper than “conventional” meat is not too far away. Meanwhile, rumours abound of new IPOs, with fish alternatives producer BlueNalu topping most lists.
Why my enthusiasm? Without wanting to sound overly dramatic, we need deep structural change in the food sector — and I say that as a life-long carnivore.
I could throw any number of faintly scary stats at you. A steak requires two years of cattle raising and meat contributes up to 8bn tonnes of CO2 a year, roughly equivalent to the annual emissions of 1.6bn cars.
Seedstock, an urban farming consultancy, observes that “over the next 40 years, the world population is expected to swell to 9bn people… In that time global food production will need to increase by 70 per cent.” All of these matter, but to me, the sheer undesirability of factory farming and industrial fishing are the icing on the cake.
How can investors play this mega trend over the next decade or so? First, work out where you are on the divide between those who think plant-based alternatives are the answer or whether we should wait for cellular, lab-grown alternatives.
My guess is we will have to wait at least another four to five years before we reach the griddle point for cultured meat. By contrast, the plant-based meat industry is already worth more than $900m and experienced an 18 per cent increase in sales last year. According to market research by the Plant-Based Foods Association, 79 per cent of millennials already consume plant-based meats.
This has led to an investment scramble. Food tech investments totalled $4.8bn during the first half of 2020, which compared with $7bn in all of 2019, Rabobank says. According to Mr Mellon, just $400m of that has gone into cultured meat.
My hot tip would be to watch out for hybrid products that combine plant and some cultured products, especially those that add cultivated oils and fats to plant-based products to produce the right taste sensation. Worth also keeping an eye on are air-based protein products, using engineering pioneered by US space agency Nasa to convert elements of the air we breathe into food.