Meat Substitutes Are on the Rise, but What Does This Mean for the Meat Market?
Every day, more and more people are abandoning meat as part of their diet in favour of plant-based meat substitutes. The movement towards meat substitutes has been spearheaded to the mainstream by Millennials and Generation Zers as a statement against animal cruelty, an acknowledgement of newfound evidence linking meat products to certain cancers, and the harmful impact the production of meat (particularly beef) has on the environment. While the movement grows in popularity by the day, the business world carefully observes how the meat market is projected to develop.
Markets and Markets projects the meat substitutes market to grow from US$4.6 billion in 2018 to $6.4 billion by 2023. With billions of potential revenue still up in the air for the next few years, companies are flocking to fill in the gap in the meat substitutes market.
Startups specialising in the production of plant-based substitutes have seized the market opportunity presented to them. Beyond Meat, a publicly-traded meat substitute producer based in the United States, currently has a market capitalisation of over US$6 billion. The company became one of the most successful companies that went public in 2019. Although its valuation has decreased since a massive peak in the summer, Beyond Meat is poised to be a leader in the growing market. Its success demonstrates the massive potential in the meat substitutes market.
After Beyond Meat’s prosperous year, other producers of meat substitutes have been under pressure to separate themselves from the pack in the meat substitutes market. Impossible Foods is a popular producer of meat substitutes that is not (yet) public. One of their notable moves was their partnership with Burger King, who rolled out the Impossible Whopper near the end of 2019. Considering how well-marketed the Impossible Whopper was leading up to its release, the massive success of Beyond Meat since its initial public offering (IPO) may have compelled Impossible Foods to make a move that would increase their own publicity.
However, it is not just newcomers who are seizing opportunity in the market for meat substitutes. Massive meat producers have begun to produce their own plant-based meat substitutes. Such a strategy is a recognition that plant-based substitutes are no longer a niche component of the meat market. If the world’s established meat producers want to continue their dominance in the market, creating plant-based substitutes appears to be a must.
As the market for meat substitutes grows, the competition between startups and established companies will generally lead to one side triumphing over the other. In an age where globalisation is more of the standard than the exception, the large meat companies are advantaged by having the means to creating a globalised network for producing and distributing their products. However, public perception heavily favours the startups over the established companies. The growing awareness around the treatment of animals by meat companies has accelerated the growth of the plant-based diet movement. Ethically conscious consumers will resist buying plant-based products from the very companies that compelled them to abandon their meat-eating ways in the first place. Also, unlike the large meat companies, Beyond Meat and Impossible Foods are dedicated to sustainability and have embraced environmentalism as a core value. While the startups have broadcasted a clear mission as a part of their penetration into the market for meat substitutes, the large meat companies are simply reacting to demand without any substantive value at the core of their change in strategy. As the value-oriented Millennial and Generation Z consumers incorporate a larger and larger portion of the global consumer base, the dedicated actions of Beyond Meat and Impossible Foods should prove to outlast the reactionary actions of the large meat companies.
Considering that the plant-based startups seem poised for massive growth, the plant-based movement is officially here to stay. The value-driven approach of the startups will propel them into dominance of the meat substitutes market. Rumours of Impossible Foods going public after the success of Beyond Meat shows that investors are willing to engage in the meat substitutes market and also trust the startups to dominate the market in the future over the established meat producers. The sudden growth of both Beyond Meat and Impossible Foods also indicates just how much social movements can dictate the actions of businesses. Both companies’ focus on the environmental benefits of eating plant-based has resonated with younger consumers and has developed an appreciation of both companies’ efforts. By the day, consumers care more and more about what a company stands for rather than just what it sells, and the rise of plant-based producers and their disruption of the meat market is a practical example of just that.