Plants-rooted meatlike food still on uptick

More firms roll out options as competition gains steam

Food products that resemble meat and are marketed as "plant-based" continue to take up more retail space, landing this year on an increasing number of store shelves and restaurant menus.

This month alone, Starbucks, KFC and Denny's said they would test or debut new plant-based products -- generally made of soy and pea protein, spices and binders -- catering to customers who want to limit their meat consumption for dietary or environmental reasons.

The competition is heating up. Mission statements from suppliers Beyond Meat and Impossible Foods paint Tyson Foods and other traditional meat processors as the enemy.

"Some of the competitors in the alternative protein space have positioned their product to be 'either, or' and we don't think in those terms," said Noel White, Tyson Foods chief executive officer. "We need this in addition to the animal proteins that we produce, and it's simply to meet the growth in global demand that we are seeing."

Research shows that U.S. grocery sales of plant-based foods have grown more than 30% in the past two years to reach $4.5 billion, according to data released last summer by SPINS, a Chicago technology firm focused on retail. Things are expected to only get hotter, with Swiss bank UBS projecting the category to reach $85 billion by 2030.

"It's a segment that we believe we need to compete in," White said. "The demand for protein is expected to double in the next 30 years, and I don't think there's going to be sufficient growth in animal protein."

Tyson, which is responsible for 20% of the beef, pork and chicken produced in America, began selling alternative proteins last year. They include blended burgers (part meat, part plant) and nuggets that resemble chicken, but are made of ingredients such as pea protein, bamboo fiber and egg whites. Around the same time Perdue Farms debuted competing blended nuggets made of chicken, cauliflower and chickpeas. Even Nestle, the world's largest food company, formed a plant-based "Awesome Burger" to directly compete with Beyond Meat and Impossible Foods.

Burgers and nuggets aren't the only plant-based meat products in play. From a global standpoint, pork is the most consumed meat, and suppliers are testing substitute versions to capture some of that market. Demand has grown as a disease continues to deplete Asia's hog herds, slashing the global supply. Impossible Foods revealed its imitation pork last month at a conference in Las Vegas. At the conference, Chief Executive Pat Brown underscored the potential for a porkless pork product that could appeal to a third of the world's population that rejects pork for religious or cultural reasons.

"Can you imagine how popular it would be if you had a product that wasn't forbidden in that way?" Brown said. "Our mission is to completely replace animals in the global food system. We've been serious about that since day one, and of course you are not going to achieve that mission without taking on pork."

The porklike product is meant to be used in ground pork items, such as chorizo sausage and in pork dumplings. Impossible Foods did not say when it would hit store shelves, but restaurant partner Burger King began testing an imitation sausage product in the "Impossible Croissan'wich" at five cities this month.

Burger King, one of the early adopters of plant-based burgers, created the "Impossible Whopper" that was shipped to stores nationwide in August after a successful test in St. Louis. Only recently have sales of the product begun to lose steam. In-store sales have fallen to an average of 28 a day from 32, according to Carrols Restaurant Group Inc., the biggest Burger King franchisee in America. The fast-food chain added the "Impossible Whopper" to its "2-for-$6 mix or match" deal last month to encourage sales. Meanwhile, Tim Hortons pulled Beyond Meat's plant-based products from its coffee shops in Canada.

Despite slower sales, Jennifer Bartashus, a food retail and grocery analyst at Bloomberg Intelligence, is optimistic about the future of alternative proteins. She said Burger King's sales decline is natural as the hype fades after a new product is introduced.

"Impossible made a big splash and people went to try it," Bartashus said. "It's the same with other limited-time offers."

The decision to pull plant-based meats from Tim Hortons was also an exception. Bartashus said more than half of Beyond Meat's earnings come from grocery store sales, a positive trend for long-term growth.

"That's what you want to see," she said. "It means that people are adopting these items."

A recent Gallup poll shows that nearly a quarter of Americans are reducing their meat consumption. Most are eating smaller portions or eliminating meat from some meals. About 36% are turning to meat replacements such as plant-based burgers or sausages, data show.

Today's shopper is a consumer of both meat-based and plant-based foods, White said. Which is why Tyson is experimenting in the blended protein space. He said they plan to debut a new blended burger this year among other alternative protein products, but he did not go into specifics. Tyson also plans to produce alternative proteins for casual dining and fast-food restaurants, as well as custom manufacturing of pizza toppings and other ingredients.

Lab-grown meat, made from animal cells, is inching closer to commercialization. Producer Memphis Meats, supported by investments from Bill Gates, Tyson Foods and others, just finished a round of funding led by SoftBank Group that raised $161 million.

The lab-grown products are made from animal cells, differing from Beyond Meat and Impossible Foods, which develop their alternative proteins from plants.

The largest barriers have been cost and government regulation for cell-based meats. The first cultured hamburger from Mosa Meat cost more than $278,000 to produce. That was in 2013. Today, it costs less than $100.

A Silicon Valley company called Just recently took plant-based eggs to market, developed a cultured chicken nugget that costs about $50 to manufacture, the Guardian reported last month. It has the green light from a few high-end restaurants in Asia, but is awaiting approval from regulators who are unsure of what to do with such a product.

Bartashus said cell-based foods could be "bigger in the long-run compared to plant-based foods."

"People are still going to want meat," she said.

But cell-based meat won't be available for the next 1-2 years, Bartashus said.

An indicator that alternative proteins have staying power is how the U.S. government is handling it, she said. Federal regulators established oversight guidelines last year and so far 17 states, including Arkansas, have passed laws about the labeling of meat products in direct response to the evolving market.

White said that with Tyson's investment in Memphis Meats "we want to be fully aware of the progress that is being made in the space. It's still going to be a period of time before it is commercially available."

When they are available, Bartashus said populous countries such as China and Singapore will be the first to adopt cell-based meats. African Swine Fever has slashed supplies and driven up prices, creating a demand for protein in China. Singapore, a country that has invested heavily in cultured foods and relied on a lot of food imports, could change its food security status if the island can grow its own food in a lab.

"We believe there will be an openness there," she said.

SundayMonday Business on 02/16/2020

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