Profitability of plant-based meat

The plant-based protein market is expanding as the demand for plant-based products grows from new consumers, who are more aware and concerned about their health and environmental issues. In addition, the increase in the level of intolerance to certain vegetable proteins also contributes to the opening of new growth areas in the plant-based market.

Currently, milk substitutes are the most demanded category of plant-based products worldwide, with a projected growth of 11,4% from 2019-2024, for a market share worth 30B billion euro (Plant Protein Market, Mordor Intelligence, 2019). These products have been on the market for a long time and have become mainstream among people, such that there is now also a wide differentiation between protein sources, from soy, to almond, coconut, oat, and many others. The inclusion of these products in the diet of consumers is dictated by various needs, such as replacing animal milk with vegetable milk due to allergies and intolerances.

After milk alternatives, the most popular category of plant-based products for consumers is meat substitutes, with a projected growth of 15% between 2019 and 2024, for a market share of approximately 21B billion euro (Plant Protein Market, Mordor Intelligence, 2019). However, for producers entering the meat substitutes market can be both a great opportunity and a great risk for the multiple challenges they will be facing, both from an economic and social point of view. Let’s try to understand what are the real opportunities to seize and what are the obstacles to overcome in this sector.

Strenghts and opportunities

As we mentioned, the meat substitute sector is currently growing, and therefore can offer great market opportunities for producers.

There are many different matrices where to start for creating alternatives to meat, and to experiment on for offering an innovative proposal compared to competitors. The most widely used vegetable protein is still soy, but the trend in recent years is evolving towards non-allergenic vegetable proteins, to reach a wider target. As such, producers can take advantage of this moment to innovate in this area, creating their own competitive advantage. In addition to this, developing a sustainable product that meets consumer demand for plant-based and sustainable products can be another reason and opportunity to enter this market.

Moreover, meat substitutes are products addressed to a target tendentially different from the one of vegetable milk. Usually consumers choose to drink vegetable milk for different reasons, sometimes not related to vegan or vegetarian diets, but as valid alternatives for those who have intolerances or allergies to dairy products. On the other hand, consumers who require alternatives to meat can range from vegetarians and vegans, who completely or partially exclude animal proteins from their diet, to semi-vegetarians or flexitarians, who want to incorporate more plant-based proteins or reduce the consumption of animal proteins in their diet. This implies that the consumer base that this industry is targeting tends to be large and diverse.

Weaknesses and threats

Because this sector represents such a large market opportunity, it also sees a lot of competition from large, established global corporations. These companies generally have key competitive advantages, such as local and global manufacturing and distribution capabilities, an established network of connections, and cost-effective marketing opportunities to support their products and brands.

Besides, just for the production of this kind of product, producers must be able to bear the production costs, trying to reduce their own costs in order to increase the possibility of purchase by possible distributors and finally consumers.

Finally, we need to consider the issue of spreading these products among consumers. For this reason, the trend is to be able to create a meat substitute that fully resembles animal meat, developing better factors such as taste and texture, while maintaining an adequate price. In fact, where the share of vegetarians/vegans remains stable (consumers who, by definition, do not look for products similar to meat), the real market is represented by flexitarians, i.e. all other consumers ready to combine the consumption of these products with traditional products. Not to forget the choice due to health and environmental reasons.

However, this same process of innovation presents a critical issue for manufacturers: given that most producers of plant-based protein products are now aiming for the same goal – to better emulate the taste and texture of meat – it is a fair assumption that differentiation between products will decrease as more and more products achieve the goal of resembling meat in appearance, taste and texture.

For this reason, innovation in the field of plant-based proteins will be pushed further and further, in order to explore the opportunities of plant-based. For those who want to be an active part of this innovation process, Protilla Finder can be a valuable aid, an excellent tool to better understand the ideal protein for the desired application.