A recent fizzle in the hype surrounding plant protein consumption will give way to a more sustainable growth trajectory that could see the segment account for 30 per cent or 40 per cent of the global protein market, according to a top Nestle SA executive.
Like the initial boom in craft beer, many investors piled into the faux meat market based on overly optimistic expectations of consumer uptake, Chief Technology Officer Stefan Palzer said in an interview Monday.
“When craft beer came on the market, everybody wanted to have it,” Palzer said. “Then there was a dip in demand and then it slowly grew back over many years to a significant business. I think that's what we will also observe here.”
Plant protein makers that benefitted from a greater emphasis on health in the early stages of the pandemic have struggled as inflation pushes consumers to less expensive options, including the animal meat they hoped to replace. Once an investor darling, Beyond Meat Inc. has lost more than 80 per cent of its value in the past year as discounting products in the U.S. and abroad hurts profitability. And some fast-food chains have pulled back from faux meat offerings after lackluster demand.
While the market may have been disappointed by plant protein sales of late, Nestle is still seeing “quite good” performance in the segment, said Palzer, who leads Nestle's research and development. He's preparing for steady consumption growth in the years ahead by building the plant protein portion of his global R&D team to 10 per cent, or 300 people.
The Vevey, Switzerland-based firm will continue to develop meat replacements, but also has turned to products that use both animal and non-animal proteins -- such as an ambient mix that can be added to eggs to boost volume and affordability, or including plant ingredients in dairy protein drinks.
“We believe in the potential,” he said. “But the potential is beyond the pure alternative ingredient. It's to use plant proteins to innovate in many parts of our portfolio.”
Peers including Hormel Foods Corp. already have been experimenting with meat-vegetable blends to appeal to the so-called flexitarian crowd that's looking to cut back on animal proteins. Drive-in restaurant chain Sonic Corp. sold a mushroom-beef blended burger in the past that it touted as a healthier option.
While food science and technology remains a centralized pursuit for Nestle, innovation is decentralized, Palzer said. He spoke from Santiago, Chile, where the company held a ribbon-cutting event for a new center to develop foods for the requirements of consumers in the region.
He also sees plenty of plant protein potential in Latin America where meat consumption remains high. Motivations for turning to animal substitutes vary region by region. For example, in the U.K. and Germany, animal welfare is a big driver while in Latin America it's more health and then sustainability, he said.
In the U.S., McDonald's Corp.'s faux meat burger made by Beyond Meat hasn't gone any further than just a limited test. Meanwhile, the chain has expanded the plant-protein burger across all of the UK and Ireland. Palzer said it's inevitable that plant-based goes mainstream.
“There's no way around that because we cannot continue with the same amount of meat and fish and chicken like we consume today,” he said. “So plant-based has to go mainstream simply cause there's not enough animal protein.”
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