Consumer demand for plant-based alternatives to meat and dairy is rising rapidly – but so should scrutiny over companies’ claims on health and sustainability, writes Dean Best.
We all know about the growing interest among consumers in plant-based products, particularly those foods positioned as alternatives to meat and dairy, for health and environmental concerns.
And a conference last week in London underlined the growing interest in the market among conventional food manufacturers – and among investors.
Last Wednesday, global investment bank – and major food-industry M&A advisory firm – Houlihan Lokey held its third annual event focusing on the European consumer, food and retail sectors.
just-food was in attendance, as were representatives from some major players in global packaged food and private equity. Houlihan Lokey divided the conference into thematic sessions and it was standing-room only in the mid-morning session dubbed ‘Plant Power’, at which executives from Sweden-based vegan supplier Food For Progress, Dutch vegetable-products group Hak and three UK firms – The Meatless Farm, foodservice wholesaler Vegetarian Express and dairy-alternatives business Plenish – presented to an assembled audience of manufacturers and investors their companies, the growth they had seen so far and their outlooks for the sector.
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As you’d expect, each spoke about the rising demand for plant-based products, driven by the growing attention consumers are paying to the links between what they eat and their diet, as well as the impact on the environment. They certainly would’ve left the attendees with plenty of food for thought as they broke for lunch – as would have the keynote speech after the lunch break.
Quorn Foods boss Kevin Brennan took to the stage to take the audience through the development and growth of the UK-based manufacturer, the rise of the meat-free market – and his perspectives on how that part of the industry could develop.
And he had words of warning for the companies doing business in the market and for investors wanting a piece of the action. Brennan, who has been at the helm at Quorn for more than a decade, said companies and investors need to consider just how healthy and environmentally-sustainable the products they were developing or backing really are.
There were signs at the Houlihan Lokey event some in the investment community are already beginning to ask such questions. In the Q&A section after the ‘Plant Power’ session, one attendee raised some of the environmental questions around the sourcing of commodities for plant protein.
“Many of the crops that are supplying the protein today – and, presumably, we need them to supply the protein in the future – are very bad for the environment. Think of the deforestation from soya, think about the water consumption from almonds,” the attendee said. “I’m not trying to defend meat. I’m trying to ask where do we think this supply of plant protein will come from without creating a different set of environmental problems? Where are the solutions if we want to increase the supply?”
Rightly, the attendees on the panel sought to make comparisons between the impact of using certain commodities for livestock and dairy and the impact of their use for alternative proteins.
“California almonds need 1,000 litres of water for one litre of [almond] milk. Dairy needs 4,000,” Kara Rosen, the founder of Plenish replied. “It may not be perfect and, yes, it’s a huge, huge global issue that we can’t solve with one answer but you have to make these little changes to start somewhere.”
Another presenter, Anna-Kajsa Lidell, the co-founder of Food For Progress, said the company believed “the world needs a large-scale transformation into something that we call ‘food that fits within one planet’. She added: “Of course, this is extremely challenging [but] we’d feed the cattle with more soya than we’d actually eat ourselves if we do that transition.”
The rising interest among a growing number of consumers about the links between their diet and their health – particularly with regard to meat – has been a driver in the increasing demand for plant-based products, especially from those who aren’t vegetarian or vegan. There is all sorts of data out there pointing to the fact a growing number of people are what the marketeers tend to call ‘flexitarian’ – that is they, for example, forego meat more often, even if they don’t cut it from their diets entirely. Low-meat consumers, including flexitarians, now represent 22% of the global population according to the GlobalData 2018 Q4 global consumer survey.
Health is cited as a reason why these flexitarian consumers – and, for many a food company in this space, it is these consumers that they see as their market – choose a plant-based alternative to meat or dairy.
However, health is another area where the plant-based movement should not receive a free pass. The plant-based sector has, in many ways, benefited as the meat industry has been hit hard by scientific studies, such as the 2015 World Health Organization report that linked the eating of processed meats to bowel cancer. (As an aside, a new study out this week from Dalhousie and McMaster universities in Canada suggested there is only “low-certainty evidence of a very small reduction of cancer and other adverse health consequences of reducing red meat consumption”).
However, while reducing meat consumption and turning instead to plant-based protein is broadly seen as beneficial to human health, that is not to say every plant-based alternative can be considered “healthy”.
There is growing attention being placed on, for example, the amount of salt in products sold as alternatives to meat, or the level of sugar in plant-based dairy products.
Moreover, there is a growing scrutiny of the complete ingredient lists of products like plant-based milks and some plant-based companies are already trying to set themselves apart.
Plenish’s oat milk contains what the company calls “three natural ingredients of oats, water and sea salt”. At the Houlihan Lokey conference, Plenish founder Rosen, pointed to the longer ingredient lists of some of the other products available, which she colourfully described as the “the scary underbelly of the dairy alts market”, saying the company would not be “putting any of the phosphates, gums, oils” in its products.
Could, therefore, some of the products on the market be at risk of falling behind the curve as investor and consumer knowledge and expectations mature?
There is a “win-win” in, incrementally, moving more of our food consumption away from dairy and meat, in terms of the impact both those food groups have on health and on the environment.
That is not, necessarily, to say that all dairy products are unhealthy or that all meat production is bad for the environment.
Morten Toft Bech, the Danish entrepreneur who founded The Meatless Farm, told the Houlihan Lokey conference the environmental impact of the meat industry was rising up the consumer agenda but he insisted he was not against all meat consumption. “Generally from our experience, [consumers choosing plant-based options] comes from an animal welfare point of view or the point of view of their own health. But now we really are starting to see the environment being a very important factor,” he said.
“I’m frankly not against sustainably-grown meat. I think there’s definitely a role for that in the market. But, obviously, we need to reduce what is mass agriculture and the slaughter of animals and the rate at which we are doing it.”
But change is needed. What is also needed, however, is increased scrutiny by both consumers and investors of plant-based products movement grows into a lucrative industry.