Pressure on sales of plant-based meat in the US – the largest single market for the category – has sparked industry participants and observers to chew over what could lie ahead for meat alternatives in other countries, not least in the UK, Europe’s largest market.
At present, there is optimism about the category’s prospects in the UK, with plant-based meat no longer seen as a fad, although barriers still need to be broken down.
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By GlobalDataTop of the list is taste in convincing meat lovers to try animal-free alternatives, even if it is only once or twice a week.
Price is still an issue, although the gap with conventional meat products is slowly closing, especially as retailers expand their own-label ranges, and as more major food companies appear on the scene, creating manufacturing scale to bring costs down.
Animal welfare is no longer seen as the key driver, although those concerns still play a part, with health and the environment becoming the top considerations when it comes to choosing a meat-free alternative to animal-reared proteins.
According to an estimate from London-based GlobalData, the meat-substitutes category in the UK was valued at US$713m last year in retail and is expected to reach $1.01bn by 2026. GlobalData estimates sales in Germany, the second-largest market in Europe, hit $397m in 2021, with $862m forecast over the same time frame.
“Booming category”
Heather Mills, the owner of UK plant-based business VBites and a long-time vegan advocate, says the market is enjoying a boom.
Nick Cooney, the founder of investment fund Lever VC, which has invested in UK firm Plant Meat, the company behind the brand This, as well as plant-based firms wider afield, agrees.
“If we look at the last year or two in the UK, and what the dollar figures have done, it certainly would land in the booming category in terms of percentage growth in annual sales, the number of offerings, both from existing retail, the major retailers’ own ranges, as well as new brands on-shelf,” Cooney tells Just Food.
“In terms of looking mid to longer term, there’ll be years where it jumps more and years where it flattens or jumps less. I think that the longer-term trajectory when you put that straight line through those moving dots, it is pretty clearly going to be a significant upward trajectory.”
Mills adds: “This is a movement. It’s not a trend anymore. It was a trend for a while but it is a complete movement and next generation.”
Figures from GlobalData show the UK meat-substitutes market grew at a compound annual growth rate of 5.4% in the five years to 2018 to reach $592.3m but growth eased to 4.9% by 2020. By last year, it had quickened to 7.3% and is expected to maintain that momentum to 2026 based on a five-year CAGR.
Representative of the growth rates the industry is seeing, Andy Shovel, the co-founder of This, says his business has grown to GBP20m (US$27.2m) in annualised revenues in two-and-half years. He estimates the UK meat-free market at retail as a whole has expanded around 17%, which, he says, “puts it right at the top of consumer goods in terms of growth rates”.
More innovation needed
Flexitarians are playing a part in driving the growth. Based on research from Kantar, vegans only represent a “single” percentage of the UK population, consumer insights director Tesni Steele-Jones says. “It’s been that way for the last few years and it’s always kind of jumped 1% or 2% a year – it’s a much smaller percentage than what a lot of people make it out to be”.
Shovel says the number of vegans and vegetarians has become “fairly irrelevant” in terms of the people now giving meat-free products a go.
“How many vegans and vegetarians is of little consequence when you think of the millions of people within that bracket who are up for trying this stuff,” he explains. “I really don't think that this is any sort of bubble burst. We’re now on a one-way ticket.
“I don’t think we’re suddenly going to turn around in ten years and find that everybody’s eating way more bacon and way more beef, so we’re beyond that point of ambiguity.”
However, there needs to be more choice beyond plant-based burgers, sausage and mince, where many producers are playing, Steele-Jones suggests, pointing to the need for variety in meat-free beef and pork steaks and chicken breasts.
“In order for the meat-free market to continue with some of the growth rates that they have seen, there’s going to need to be some sort of innovation to tap into different markets that potentially haven't been developed as much in meat-free,” she says.
“There are some small companies that are starting to play in that space and that's probably where there's more growth potential. The retailers are also playing in their spaces with their own-label ranges as well.”
The quality question
Nevertheless, both Mills and Shovel level some heavy criticism at the quality of some of the products on the market, particularly around taste and texture, with some of that directed at private-label retail.
As Steele-Jones implies, “if someone’s trying something and they don’t like it, then it’s going to be much harder to get them to go back and try it again even in like two or three years”.
Mills goes a step further. “There’s masses of demand but the UK market is saturated. The worry is there’s so many rubbish products coming out and then that does not convert the carnivore. They try one vegan product and go ‘oh, I'm not doing this again’ but, if they try the right one, then they do become flexitarians.”
She adds: “The ones making the terrible ones are the really big corporate companies. I think they will just start to improve their products and learn more about it. I think they’ll buy more start-ups who have been doing it for years and understand the innovation. It’ll be a lot more cost-effective.
“They’re going to have to perfect it because it’s going to be a huge percentage of their sales over the next ten to 20 years. If they don’t, then they don’t have a business because meat and dairy is going to be miniscule in 15-20 years.”
Shovel is uncompromising in his attitude to the inferior products on the market, an aspect he calls “incredibly damaging”.
“I’m very angry at some brands in our category for repelling willing meat-eaters because there's a lot of very sub-standard stuff out there,” he contends. “My biggest concern is a lot of brands are just coming in and sometimes own-brand as well. They’re coming into the sector with absolute crap.
“Whether it’s from an ingredients perspective, or more often it’s product quality, taste and texture ... they’re just trying to cash in quickly without deploying proper expertise and thought to the product development.”
Price issue fades
Lever VC’s Cooney says price is not so much of a barrier as it once was, with some meat-free products comparable to their meat cousins, and he sees alternatives becoming more competitive. “Much bigger” margins will perhaps encourage manufacturers and retailers alike, he adds.
“I do think price will continue to come down. As the industry grows, those things will compress, so the company will put in a slightly smaller margin [and] that will automatically lower the retail margin,” he says. “I don't think it’s a barrier from meat alternatives going from maybe 1% of the market to 5% of the market, or something like that.”
Shovel says price is an unfair observation, one he calls a “slightly rigged debate” because traditional animal-protein consumers “forget all of the unbelievably significant shortcomings of meat production, especially on the cheaper end of the mass market and all of the drugs that are used”, as well as chemicals.
He argues: “When you buy a pack of mince, the producer only has to say beef, they don’t have to say penicillin or whatever its trace is, whereas anything that goes into our products at trace level we have to declare. For some reason, we just put beef as though beef is just beef, but it's actually made up of lots of different acids and colloids and all sorts of stuff.
“As soon as the scale goes up to similar levels to meat, not only will it match meat, it will actually be below it because when you look at the steps involved with producing a meat product and the complexity and the resource usage, the steps producing plant-based is much simpler, the supply chain is much simpler.”
Kantar’s Steele-Jones says some consumers may be put off from eating plant-based meat more regularly when they believe the vegetable content will provide fibre and protein but not necessarily the equivalent nutrients in vitamins and minerals.
There have been questions raised about the health and nutrition credentials of some plant-based meat alternatives in markets worldwide. Steele-Jones says there is among some consumers an “attitude towards some of the actual meat replicas, that [they] are full of additives and they’re overly processed and lots of soy is used, which on mass might not be good for some people”.
Tiba Tempeh, a UK business set up in 2019, is seeking to resolve that problem by marketing products, as the name suggests, using tempeh, a fermented ingredient originating in Asia that is high in protein and good for gut health.
Tempeh provides 25 grams of protein, making it similar to meat and superior to tofu. It also contains potassium, magnesium, iron and vitamin B6.
Co-founder Alexandra Longton, while insisting she is no expert in predicting the UK meat-free market, believes it will “continue to grow”, although Tiba Tempeh is not out to replicate meat as such.
“We probably sped up really quickly, went off to a really fast start and now we’re having to think about what’s actually working in a fixture so we can make it work better,” she says.
Role of ESG
Cooney at Lever VC, which has also invested in Tiba Tempeh, says there’s combined growth potential from direct plant-based meat replicas, other meat alternatives and also on the “tech side” with cell-cultured meats and fermented products.
He explains cultured and fermented meats, which he calls hybrid products, could “resolve the taste challenge”.
“When you’ve got a significantly better product, you can have a lot more people interested in eating it. So I think in the next five to seven years, that’s largely the story – some of these cultivated and fermented ingredients helping accelerate the growth of the plant-based/hybrid space,” he says.
Environmental concerns are playing a part in spurring consumer appetite for meat alternatives and corporates are also joining the game, in part because ESG becomes of greater significance, particularly among investors and younger consumers.
“With many companies being rewarded for implementing movements to improve sustainability or ESG issues, an increased amount of meat substitutes are being produced by big players in the market,” Elise Robson, an analyst at Just Food’s parent company GlobalData, says.
“Additionally, a heightened number of consumers now may opt for meat substitutes to aid a healthier lifestyle. This may be due to Covid-19 health concerns, therefore driving many individuals to making dietary changes, which is something in their control in these uncertain times.”
Shovel says demand represents more of a “paradigm shift”. He adds: “For me, there’s a really clear distinction between the onset of a fad and the onset of a societal change. When you take coconut water, something that spiked and then went down again to a stable level, there were no substantial reasons or reasons of substance why you would start consuming loads of coconut water.
“Whereas when you look at meat-free, livestock is the third-biggest contributor to greenhouse gases and water use. That’s an incredibly substantial reason to take on more plant-based alternatives. I see it more as a sort of paradigm shift that’s here to stay rather than just a fad that’s going to calm and spike and then settle down again.”
GlobalData classifies meat substitutes as: soy-based products; grain-based lines; those made from a single-cell protein such as fungi or algae; and ‘vegetable- or plant-based proteins’ such as those made from legumes.
