Players in the plant protein industry made headlines in recent weeks that will be closely watched to see if the sector can live up to the excitement or hype heaped upon it.
There is still a good argument that plant protein products have a bright future, but to maximize growth, promoters might have to put “meat on the bones” when they pitch their foods as healthier and a low-carbon partial solution to climate change.
Here are a few of the developments:
— Roquette officially opened its $600 million pea protein plant in Portage la Prairie, Man., expected to process 125,000 tonnes of peas a year for a market it thinks has few limits on growth.
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More Than Protein Ingredients Ltd. broke ground on a $100 million pea processing plant at Bowden, Alta.
— Beyond Meat, the California-based plant protein meat maker that was a market darling when it launched on the NASDAQ stock exchange in 2019, has recently seen its share price perform below exceptions, particularly after lowering its revenue guidance for the third quarter.
— But the same company saw shares bump up last week as McDonalds began testing in the United States its McPlant burger, made with Beyond Meat’s beef substitute. Previously McDonalds tested it internationally. If the golden arches rolls the product out permanently across the U.S. it will be a boon for Beyond Meat and the plant protein sector generally.
— Maple Leaf Foods last week said it is re-assessing its plant protein business after seeing a marked slowdown in its performance “which may suggest systemic change in the extremely high growth rates expected by the industry.” The review will determine whether to affirm its investment or adjust its strategy.
It is not surprising that a new industry, rapidly growing but barely out of diapers, might have a few teething problems.
And I doubt that the sector is close to collapse as some critics and social media warriors would like us to believe.
Growing pains are not surprising, considering that through most of the launch period of these plant protein products we’ve been living in a pandemic that upended consumer buying patterns and supply chains.
Plant protein products, like all food groups, had to adjust as COVID initially closed dining out options, putting the food focus on grocery stores and then adjust again as restaurants reopened but struggled because of labour shortages.
Beyond Meat pointed to COVID issues when in October it had to revise its revenue guidance for the third quarter down to about US$106 million from an earlier forecast of between $120 million and $140 million.
Another factor that could play into revenue adjustments at any single company is the fact that the sector is quickly filling up with competitors.
Beyond Meat and Impossible Foods were the two early industry disrupters created at roughly the same time and nurtured financially in the venture capital environment of California’s tech-heavy economy.
But established meat companies quickly decided they too had to get involved or risk losing market share.
Canada’s Maple Leaf Foods in 2017 bought two companies and combined them in a new plant-based subsidiary called GreenLeaf Foods. In the latest quarter Maple Leaf’s meat protein group sales rose 13.4 percent to C$1.15 billion while its plant protein group saw sales fall 6.6 percent to $48 million, although the decline was revised to 1.2 percent to account for foreign exchange fluctuations.
The disappointing quarterly results prompted the company’s review of its plant protein strategy that I mentioned earlier.
Tyson Foods, America’s biggest meat company, initially invested in Beyond Meat, but then launched its own brand called Raised and Rooted.
Other huge, long established global food companies also entered the segment, including Nestle, Cargill in a joint venture with Puris Foods, JBS, Smithfield Foods and Unilever.
In June, Cargill chief executive officer David MacLennan, speaking at the U.S. National Grain and Feed Association convention, forecast that in three to four years, plant-based products could make up as much as 10 percent of the meat market.
He has also projected that demand for protein will grow by 70 percent by 2050 meaning lots of growth opportunities for traditional meat, the newer alternatives as well as the wide world of dairy substitutes.
But now that the initial hype is dying down, some are demanding more data and transparency to confirm health and environmental claims.
A recent New York Times story quoted environmental advocates that track the sustainability of companies complaining about lack of disclosure regarding the carbon footprint of alternative meat producers.
The Times quoted Ricardo San Martin, research director for the alternative meats program at the University of California as saying “Everybody has a supply chain, and there is a carbon footprint behind that chain.”
