Food giants capturing opportunities from meat-free products to drive sustainability efforts

The market is expected to capture 10% of the global meat market and reach $100bn in value within 15 years. Image: Impossible Foods

The ‘Appetite for Disruption’ report by the FAIRR investor network outlines how major companies are now turning to plant-based or alternative proteins in order to meet consumer demands, promote healthy diets and embrace a low-carbon future.

The report, which ranked 25 major retailers and manufacturers, found that 87% of retailers had ramped up their own-brand plant-based products over the last 12 months. The report gave Unilever, Tesco, Nestle, M&S and Conagra the highest “proactive” ranking, noting that the firms had developed a strategy to build a sustainable protein portfolio that recognises that animal-based ingredients are becoming a “material risk”.

The report adds that the alternative protein market, currently valued at $19.5bn, can increase long-term supply chain security, with livestock emissions currently accounting for 14.5% of global emissions. The Food and Agricultural Organisation (FAO) estimates that the livestock sector is the largest user of freshwater resources and accounts for 80% of all agricultural land.

FAIRR’s founder Jeremy Coller, and chief investment officer and Coller Capital, said: “From the factory floor to the supermarket shelf, the mounting environmental and social pressures to move away from a reliance on animal-derived proteins is reshaping the food industry. The growth of alternative proteins, from meatless meats to fishless fillets, offers a promising opportunity for food companies to meet the lucrative demand for protein with fewer impacts on land, water and biodiversity.

“For too long big food has been playing catch up to consumers and start-ups on alternative proteins, when they should be leading this transformation. This report shows that some food multinationals are seizing the moment by setting clear strategic goals to increase their alternative protein exposure, supported by relevant metrics that are tracked and reported.”

Meating expectations

The alternative protein sector caused waves as Impossible Burger and Beyond Meat products begin to be included by major brands such as Burger King.

The report noted that 64% of companies were now including terms like “plant-based” and “vegan” in their annual reporting and quarterly earnings calls. However, only Marks & Spencer, Conagra Brands, General Mills and Groupe Casino had undertaken some type of risk assessment on their protein supply chains to account for climate risks.

More broadly, zero companies have formal, publicly reported metrics in place to track and report on their protein exposure.

The report outlines that more consumer-facing products will come from low-carbon sources rather than meat and dairy. Nestlé, for example, has said that it expects its plant-based sales to reach $1bn in 10 years.

Large consumer goods firms are also prioritising vegan products and recyclable packaging over low-carbon innovation, research by CDP has concluded. CDP found that five of the seven food and drinks firms which originally offered meat or dairy products, including Nestle and PepsiCo, are now “actively innovating” to launch more vegan alternatives as consumer demands shift.

The market is expected to capture 10% of the global meat market and reach $100bn in value within 15 years.

In 2016, FAIRR’s shareholder engagement was supported by 36 investors managing $1.25trn of assets. But following a trend of high-profile market entries and demand from consumers, the case for protein diversification has now attracted 74 investors with combined assets of $5.3trn. These investors are now calling on firms to make protein diversification a material issue.

Matt Mace