microscope science

Alternative proteins unlikely to have significant market impact in short term

Commercial viability, consumer acceptance, technological and regulatory hurdles among obstacles.

Protein products derived from plant sources, insects and cultured meats will be among the top food trends to watch in the coming years. However, the effect of these efforts on livestock and poultry demand is not expected to be significant in the foreseeable future, CoBank’s Knowledge Exchange Division suggests in a new report.

Cultured meat developers are in a race to match price and quality to traditional meat offerings, but products currently in development are prohibitively expensive and years away from widespread commercial viability. According to the report, the production cost for one lab-grown burger patty today has decreased dramatically from a $325,000 estimate in 2013. Memphis Meats, a food technology company headquartered in San Francisco, Cal., is reporting a cost of $2,400/lb. in 2017, compared to $18,000/lb. last year. Mosa Meats told CoBank that it expects the price of a single hamburger patty to be around $10 when production reaches scale using current technology.

With further expected improvements in the production process, CoBank said prices could fall far enough to compete with traditional beef.

“The future success of alternative meat lies squarely with rising global demand for protein rather than a battle for the existing market share of animal protein food products,” CoBank economist Trevor Amen said. “The road to commercial viability and consumer acceptance of cultured meat is long, and this type of product is unlikely to have a marked effect on traditional animal protein demand through at least the next decade.”

The alternative protein category is certain to grow in the coming years, allowing pathways for more diversified protein products; however, the alternative protein market will be overshadowed by the current retail market size of $49 billion in sales for the entire meat and poultry category, the report said.

Commercial viability and consumer acceptance

Rising global incomes will continue to drive consumers to a higher-protein diet. Global gross domestic product is projected to grow by $38 trillion from 2016 to 2030, generating a 46% increase in meat and poultry consumption. As such, technology companies and alternative protein providers are exploring new protein products to try to capitalize on the growing demand.

In fact, CoBank reported that large protein companies like Cargill Inc. and Tyson Foods have recently invested in alternative protein start-ups. Additionally, the arena has caught the attention of billionaire tech entrepreneurs like Bill Gates and Richard Branson as well.

“The timeline for commercial viability of cultured meat products remains the greatest unknown,” Amen said. “The consensus projection points to an initial market introduction in the next three to five years, most likely in restaurants and specialty stores and offered at a premium price to traditional meat offerings.”

Adoption of alternative proteins in supermarket is projected to take an additional two to three years beyond that as the technology becomes more affordable and acceptable to consumers.

As for consumer acceptance, CoBank noted that a recent consumer study indicated that two-thirds of respondents said they would be willing to try lab-grown cultured meat, with only one-fifth indicating they would not try it. In addition, one-third of those surveyed said they would be willing to consume the product regularly.

Despite a willingness to try meatless meat, CoBank said a number of potential barriers to engagement were identified. The product's taste/appeal was the number-one response (79%), followed by ethical concerns (24%) and price (20%).

Consumers also indicated a reluctance to pay more for lab-grown cultured meat compared to traditional livestock and poultry products.

Technological and regulatory hurdles

Overall, CoBank said the timing and degree of market penetration for meat alternatives will largely depend on advancements in technology that reduce price and improve quality attributes.

“In addition to start-up companies, we’re seeing agribusiness leaders investing in research and development projects surrounding meat alternatives,” Amen said. “Similar projects are also underway in China, Israel, Japan and France.”

Newly created cultured meat products will also need a regulatory framework before entering the market. In fact, CoBank pointed out that both the Food & Drug Administration and the U.S. Department of Agriculture are closely monitoring developments in the cultured meat industry.

CoBank said it is unlikely that the agencies will rule on terminology that can be used to describe and market cultured meat until the technology is more fully developed.

TAGS: Business
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