Appetite for Disruption

Sweet Ice Cream Photography/Unsplash

Sweet Ice Cream Photography/Unsplash

Is that plant-based burger craze just a fad or the future of food and a way to help save the planet?  

A new report by major investors says that the market potential for alternative proteins is huge, the benefits to the planet substantial and those companies that don’t adapt run the risk of being left behind by the tsunami of change hitting the food sector. 

Major investors with trillions of dollars at stake are now joining consumers to rattle the cage of the $1.3 trillion global food industry, considered vulnerable to changing consumer attitudes, concerns about animal welfare and the climate and environmental impacts of the current food system. 

“The fourth agricultural revolution is underway” says Jeremy Coller, founder of the large institutional investor coalition FAIRR (Farm Animal Investment Risk and Return). FAIRR investors who manage $5.3 trillion in assets have been pressuring 25 of the largest global food retailers and manufacturers to address these risks and make sure they manage the revolution impacting their businesses. 

“The protein sector is under increasing scrutiny due to the impact of its scale on people and the planet,” the FAIRR report said. “A staggering 70 billion animals are slaughtered for food each year.”  This means approximately 130,000 animals are killed every minute. 

The growth potential of alternative protein “challenges the long-held belief that the only way for the sector to grow is through the expansion of the intensive animal production system that prioritizes cost efficiency over ethical, health and environmental concerns,” the FAIRR report said. 

Three major factors are driving the disruption of the current food industry: consumers’ growing appetite for alternative protein, new technology that produces tasty, climate friendly foods, and growing concerns about the environmental, climate and health impacts of the industrialized animal agriculture system. “21st century technology has the ability to create protein substitutes that replicate the taste, texture and flavour of meat, fish and dairy without actually using the animal,” FAIRR says. 

And the alternative protein sector is taking off as a result. Currently valued at $19.5 billion, small by comparison to the overall food industry, the sector is growing rapidly and is predicted to be $100-140 billion in 10-15 years. An A.T. Kearney study, featured in our August newsletter, predicts that plant-based or cultured meat will have a 60% market share of the meat sector by 2040. 

Source: FAIRR

Source: FAIRR

The above charts show that European consumers are ahead of those in the US.  For example, while the US is a much bigger market than the UK, market share for alternative proteins in the US is 4% vs 12% in the UK. 

The FAIRR report is a report card and tracking mechanism that shows how companies are adapting to the market for alternative proteins. The report names both leaders and laggards, and shows the industry is behind the curve. Most companies don’t have comprehensive strategies to deal with the radical changes. 

FAIRR has been pressuring food retailers and producers to make significant changes to their global supply chains: 

1.       In animal agriculture operations, reduce emissions by investing in feed additives to reduce methane, improving manure management systems and reducing reliance on fertilizers for growing feed;

2.       Eliminate deforestation caused by feed production and cattle grazing from their global supply chains through independent certification and auditing systems;

3.       Tackle water scarcity problems, pollution and antibiotic overuse; and

4.       Improve animal welfare practices (demanded by consumers and investors) including responsible antibiotic use, slower growing breeds, no confinement and no routine mutilation of animals. 

The FAIRR report also stated that investors do not support efforts by the animal agriculture lobby to use court challenges regarding “confusing labelling” and other regulatory roadblocks to try to slow the growth of plant-based and cell-based new foods.  

The food revolution is being led by consumers but the loud voice of major investors, who speak with the authority of the trillions of dollars they manage, will exert a major influence on the food industry to change its ways and deliver more sustainable, planet friendly food to our dinner plates.

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