Meat safe from plant trend: analyst

NIAGARA FALLS, Ont. — Increasing amounts of alternative protein sources are being sold in grocery stores amid great fanfare and intensive marketing.

That might have meat producers pondering their futures.

Plant-based competitors to meat, such as Beyond Meat and the Impossible Burger, are in the market for the long-term and most people are likely to try them along with their regular meat purchases, said the editor of Meatingplace, Lisa Keefe.

Tyson, Cargill, Maple Leaf, Nestle, JBS and Unilever have invested in the alternative market, so the sector likely has a future, said Keefe at the Canadian Meat Council annual meeting held earlier this year in Niagara Falls.

The California-based company, Beyond Meat, issued a public share offering on the Nasdaq exchange, offering US$25 shares and raised $240 million. That gave the company a market cap of $1.5 billion, said Keefe.

About $16 billion was invested in plant based foods between 2009-18 with most of the financing coming in the last two years.

Revenues for these companies are hard to track but they are not running roughshod over other food corporations just yet. Coca Cola Corp., for example, reported a net profit of $6 billion from revenues of $32 billion last year, she said.

For some meat producers, these products are in direct competition to their industry, but in reality beef and pork sales are in good shape, said market analyst Kevin Grier.

“Despite what you read and hear, the meat industry is strong,” Grier told the meat council, which represents packers and processors.

Beef and pork per capita consumption in Canada and the United States has declined steadily since 1983 but on the demand side, the industry has made a strong turnaround starting in about 2014, said Grier.

“The demand for red meat is pretty darned good in Canada and the United States,” he said.

“Red meat demand in Canada and the United States is very positive. The product that you are producing is a product that is in strong demand by consumers. That is a big change from a lot of years,” he said.

Annual growth rates at the manufacturing level from 2013-18 showed the red meat industry has outpaced general food processing.

At retail, meat makes up about 20 percent of total food store sales, behind only beverages and vegetables.

As well, strong international demand improves the outlook.

“Growth in red meat exports has been exemplary in the last five years,” Grier said.

Last year, Canada exported a record 398,580 tonnes of beef worth $2.75 billion and 1.3 billion kilograms of pork worth $3.9 billion.

The threats to the industry’s competitiveness are the high price of feed barley, lack of growth in livestock herds and a critical shortage of labour.

The Agriculture Horticulture Development Board in the United Kingdom tracks international costs of production for hogs. Canada is competitive in terms of hog production.

However, the beef sector shows problems.

A recent study for the Alberta Cattle Feeders Association compared Alberta to Kansas, Texas and Nebraska. In the last year, Alberta has fallen behind because of the high cost of feed grain and higher taxes, said Grier, who participated in the review.

On the pork processing side, revenue generated from muscle cuts is relatively close between the U.S. and Canada. Facility costs are higher in Canada but they are falling more in line with the U.S.

In beef, facility costs are higher in Canada and probably less revenue is garnered on beef muscles or inedible products.

As well, meat companies continue to struggle with a labour shortage. More production and more value-added products could be generated if there were enough workers.

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