Growing demand is spurring big restaurant chains and food companies to explore vegetarian options. No longer at the food fringes, plant-based meats are selling well in supermarkets and emerging as a hot commodity for fast-food chains, industrial food companies and Wall Street investors.

JPMorgan Chase has estimated the market for plant-based meat could easily top $100bn in 15 years.

Barclays says the “alternative meat” market could account for about 10% of all global meat sales, or up to $140bn in 10 years.

Among big restaurant chains, Burger King has been testing a vegetarian version of its flagship “Whopper” since April, while McDonald’s has unveiled a meatless burger in Germany. Kentucky Fried Chicken is studying nonmeat options for its menu.

Alternatives to meat are not new, but start-ups and other growing players in the business have taken advantage of newer technologies to simulate the taste and texture of authentic meat more comprehensively. At the same time, more consumers are opting for plant-based products out of concern for the environment, animal welfare or for health reasons.

The best-known new ventures, Impossible Food and Beyond Meat, have had difficulty at times to meet surging demand for their products, even as Wall Street has bet on their potential.

On its first day on Wall Street as a publicly traded company, Beyond Meat surged 163%, finishing the session at $65.75. Since then, shares have more than doubled, ending Friday’s session at $139.13, up a stunning 39.4% after the company said it expects sales growth of 140%.

Impossible Burger, which is already sold in more than 7,000 restaurants in the US and Asia, recently raised $300m in a financing round that valued the company at $2bn.

Food giants

Among large food companies, Swiss giant Nestlé in April launched its “Incredible Burger” in Europe based on soya, wheat and extracts of beetroot and other plants. Nestlé plans to offer a pea-based “Sweet Earth” veggie burger in the US in 2019.

Anglo-Dutch company Unilever in 2018 bought the Vegetarian Butcher, which has said it aims to become the “largest butcher in the world” with plant-based meat.

US company Kellogg has been present in alternative meat since the 1970s through MorningStar Farms. While the brand has not enjoyed the same outsized gains of late as the newer players, it remains the biggest producer in the US.

Others active in the burgeoning business include Brazilian company JBS, which is launching a vegetarian burger in its home market, and Tyson Foods, a one-time investor in Beyond Meat that plans its own plant-based product.

Sales of alternative meat jumped 23% in 2018 in the US, according to the Food Institute. Yet that accounts for just 1% of the total market for meat, much lower than the 13% of milk represented by nondairy sources such as soya, almond and coconut.

In spite of the strong potential, analysts caution against losing sight of some uncertainties facing the industry.

“There are risk factors to consider, such as alternative meat products being less healthy than claimed as a result of additives to appeal to customer taste,” said Barclays.

Barclays also pointed to “potential regulatory restrictions” as far as marketing. For example, farm groups have lobbied Washington to restrict the term meat to animal-based products. Also, there is always a risk that emerging stars in the business could be roiled by a recall, said JPMorgan.

The effect of mistakes could be amplified by the growing presence of bigger and more diversified companies that are racing into the market. The conventional companies also have sophisticated supply chains and ready access to capital.

AFP