Big Meat will channel VW-Tesla in alt-protein war
LONDON, Dec 20 (Reuters Breakingviews) - Elon Musk successfully forced Volkswagen (VOWG_p.DE) to embrace the electric vehicle big time. In 2022, Brazil’s $15 billion meat giant JBS (JBSS3.SA) and $31 billion U.S. rival Tyson Foods (TSN.N) could end up trailing Tesla’s (TSLA.O) alternative protein equivalents, Beyond Meat and Impossible Foods. Yet just as VW aims to overtake Tesla’s production by 2025, there’s a way for incumbents to win.
Making meat the old-fashioned way emits over 40% of annual global methane production and wastes too much land, water and time. To make the food system more sustainable, technologies that imitate meat are flourishing. The $4 billion Beyond Meat and Impossible Foods, which may seek a public listing in 2022 read more , have both launched plant-based burgers at major restaurant chains such as McDonald’s (MCD.N).
Doing nothing is unwise. Big traditional producers face more costs: carbon taxes could cost beef companies up to 55% of current average EBITDA by 2050, according to research group FAIRR. And more governments are subsidising the alternative protein sector, which Credit Suisse estimates could reach $555 billion of sales by 2050 and account for 25% of the global meat market, up from 5% in 2030. Meanwhile, apart from plant-based meat, there are funding gaps in technologies that create slaughter-free meat grown from animal cells. This so-called “lab-grown” cultivated meat could reach $25 billion of sales by 2030, according to McKinsey.
As yet, traditional players are only getting involved in a piecemeal fashion. JBS has recently bought a Spanish cultivated meat startup, while $3 billion Asia-based Thai Union (TU.BK) has backed insect-protein firms. But no one has yet committed to serious topline targets. Aside from Toronto-listed $3 billion player Maple Leaf (MFI.TO), 51 traditional meat and fish producers have yet to disclose their alternative protein sales, according to FAIRR. Chinese meat producers like $40 billion Muyuan Foods (002714.SZ) have zero exposure.
That may change in 2022. Valid targets include hot startups in cultivated meat, fermentation or even insect protein. Temasek-backed Eat Just was last valued at $1.2 billion and has regulatory approval to sell cultivated chicken in Singapore. DSM-owned Meatable and Leonardo DiCaprio-endorsed Mosa Meat and Aleph Farms could be in the mix. Meanwhile, upstarts with considerable scale like UK-based Meatless Farm, which supplies pea-protein to Pret A Manger and over 20 countries, are good alternatives. So is France’s Ynsect, which sells buffalo mealworm protein that’s mixed in faux meat. Big Meat, in other words, has multiple ways to beef up.
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(This is a Breakingviews prediction for 2022. To see more of our predictions, click here.)
CONTEXT NEWS
- Brazilian meat company JBS on Nov. 18 said it agreed to buy Spain’s BioTech Foods in a $100 million deal that includes a $41 million investment in a new Spanish cell-cultivated protein plant.
- New data published by the FAIRR Initiative on Dec. 1 showed 86% of the world’s biggest meat and dairy suppliers are still failing to set meaningful reductions targets for emissions.
- While the listed animal protein companies have accelerated investments to build internal capabilities in the plant-based space in the last few years, disclosed investments to dabble in other alternative meat technology like fermentation and cultured meat remain at less than $115 million.
- Annual sales of edible bugs are estimated to grow to $8 billion by 2023, up from under $1 billion in 2019, according to Barclays.
- Locusts were added to the European Union’s list of approved food on Nov. 12. It was the second time Brussels had said an insect was safe for humans to eat after the dried yellow mealworm larvae of beetle tenebrio molitor was authorised in June.
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