COVID-19 Impact on Alternative Protein Industry: Meticulous Research® Viewpoint

London, June 01, 2020 (GLOBE NEWSWIRE) -- The on-going COVID-19 pandemic is re-shaping everything from the global economies to product categories, pricing, and stock availability to consumer behavior. The crisis has caused people to re-evaluate their diets as the pandemic has underlined the link between food and health. The pandemic has also placed the spotlight on meat supply and food security globally, a driver behind meat reduction trends. The spotlight on meat supply has been evident in both developed and emerging markets amidst disruptions to supply chains and panic buying and stockpiling, following announcements of lockdowns and social distancing measures.

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Impact of COVID-19 (Coronavirus) on the Alternative Protein Industry

The meat supply in the U.S. is expected to be hit hard by the COVID-19 outbreak, as major meat plants have been taken offline as factory workers have tested positive for the virus. It is estimated that meat plants responsible for 10% of all beef production in the U.S. and 25% of all pork production have closed as of April 2020, with this having the potential to disrupt meat supply chains and lead to shortages. This potential shortage of meat supply is already leading to augmented consumer demand for plant-based meat alternatives in the U.S., with meat substitute sales reported to have jumped 200% in the country in the week ending 18th April, compared with the same week last year. Thus, the global crisis, in other words, is turning into a big opportunity for the plant-based protein sector.

COVID-19 is providing an unexpected boost to the alternative protein industry, globally. Medical studies show that coronavirus disease has an overwhelming impact on people with underlying health conditions like diabetes, hypertension, and heart disease. An alternative protein-based diet can help reduce the effects of the virus on at-risk people as there is the presence of an abundance of macronutrients, micronutrients, and antioxidants. From a manufacturing and distributing point of view, this industry has faced unprecedented demand from manufacturers as well as consumers, particularly for some products, such as meat analog and plant-based milk.

COVID-19's association with animal sources will result in a large population shifting from animal-based proteins to alternative proteins due to various health and environmental concerns. Moreover, alternative proteins are generated with less dependence on labor, making it less prone to staffing scarcity as opposed to red meat, which is relatively labor-intensive, encouraging the production of alternative proteins.

The pandemic has also led to some best practice models for the alternative protein industry. Earlier, this industry was too restrictive, however, during the outbreak, regulations are eased temporarily. The government of some countries announced a relaxation in regulatory requirements placed on alternative proteins, mainly for plant-based protein products and insect proteins. For instance, the FDA has relaxed its guidelines for selling plant-based meat products. Earlier, due to labeling concerns, the FDA did not allow direct-to-consumer sales of Impossible’s raw plant-based meat burgers. Moreover, insects are also very well positively placed to be a solution for any food shortages. Edible insects are incredibly sustainable and use a fraction of the feed, water, and resources than traditional livestock and other alternative protein source use, which is likely to ease the pressure on the global food supply chain.

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Strategies to Capitalize on the Growth Opportunities

As the link between animal meat consumption and deadly human viruses has become more widely understood, consumers across the globe are shifting towards “meat-free” protein diet. To cater to the sudden growth in the demand, many companies in the space of alternative protein have already started changing their strategies. Companies like Beyond Meat Inc., Impossible Foods Inc., and Tofukry Co. are ramping up their production, discounting their plant-based alternative products to appeal to more consumers, expanding into more stores, and partnering with the stakeholders. Along with this, to further capitalize on the opportunities in the alternative protein sector over the coming years, expansions, new product launches, diversifications, and acquisitions strategies are being implemented by leading manufacturers, such as Cargill, PepsiCo, Smithfield, and Tyson, among others.

Some instances include:

  • Beyond Meat plans to expand its manufacturing capabilities to Asia in 2020, despite potential headwinds associated with the novel coronavirus outbreak that has disturbed global commerce.
  • In May 2020, JUST Inc, a company that applies cutting-edge science and technology to create healthier, more sustainable food products, partnered with Michael Foods, a subsidiary of Post Holdings and one of the largest processors of value-added eggs in the world, to bring the top-selling, plant-based JUST Egg to millions of more consumers in the U.S.
  • In April 2020, Impossible Foods announced to expand into 777 more grocery stores throughout the U.S., as Americans are doing more cooking at home amid the pandemic.
  • In March 2020, the Plant-Based Foods Association (PBFA), the trade association representing 180 plant-based food companies, partnered with Dot Foods, the North American food company, to increase the access to plant-based foods in North America.
  • In May 2020, the Spanish meat analogue brand, Heura, expanded its distribution in supermarkets despite lockdowns. Heura has expanded its retail distribution by 13.7% in Spain during the lockdown with more supermarkets.

Skyrocketing Sales for Alternative Protein Products during COVID-19

COVID-19 is providing a surprising increase in sales for alternative protein-based products. Beyond Meat and Impossible Foods, makers of plant-based meat alternatives, have seen surges in sales due to a shortage of beef and pork during the coronavirus pandemic. Beyond Meat reported its first quarter (Q1 2020) net revenues increased 141 percent from the previous year to more than $97 million, compared to more than $40 million in the first quarter in 2019. According to the Good Food Institute, Plant Based Foods Association, IRI, and Nielsen data, in April 2020, in the U.S., retail sales of fresh plant-based meats grew by 279.8% in the week ending March 14, beating a 206.4% jump the week before. Also, sales of oat milk grew 476.7% in the week ending March 14, while dairy milk sales grew 32.4%. Additionally, retail sales of meat grew 77% in the week of March 15.

Some instances include:

  • In May 2020, Green Monday (China), a plant-based product start-up, claimed that its online sales have more than doubled in the last two months, citing the impact of COVID-19. Among the most popular purchases was a pork substitute called Omnipork, used in dumplings, noodles, and rice.
  • In May 2020, Califia Farms, U.S., witnessed a 50% increase in grocery sales as compared to 2019. An upsurge in sales was mainly attributed to increased sales of oat milk and nutritional plant-based butter.
  • In May 2020, Beyond Meat, a plant-based meat producer, witnessed a 141% increase in its revenue over the previous year.
  • In May 2020, Tofurky, which sells 35 different plant-based alternative meat products, reported that their sales have increased by 40% in the last twelve weeks, with the sale of its plant-based ham growing 631% compared to the same period last year.

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Geographies with High Revenue Potential

With meat-processing workers falling victim to COVID-19, shuttering plants, and slowing supply, Americans are starting to see poorly stocked aisles where once beef and pork were plentiful. The North America region is the largest revenue generator in the overall alternative protein industry and is witnessing favorable outcomes of COVID-19, especially in the U.S. The coronavirus pandemic has resulted in a sudden increase in the demand for plant-based substitutes in the U.S. and has led to many slaughterhouses closing shops. Also, retail chains in the U.S. have prolonged shelf and storage space for alternative protein-based products to cater to the growing demand. In May 2020, this pandemic-driven panic buying lead sales of some plant-based coronavirus quarantine foods rising even higher in recent weeks in North America. Plant-based meat companies—including Beyond Meat and Impossible Foods are filling the protein void by lowering prices and expanding retail distribution. Reports suggest that plant-based meat and milk sales have skyrocketed and have outpaced conventional meat and milk sales as Americans continue to stock up on food supplies amid COVID-19 shutdowns. The grocery store sales of products like Beyond Meat and Tofurky were up 264% during a nine-week period ending on 2nd May, according to Nielsen.

Q1 and Q2 2020 Investment in the Alternative Protein Industry is Higher than in 2019

Before the outbreak, plant-based food makers were attracting investment from venture capital firms and major established meat supply companies as this time is ripe to jump into plant-based product investing. Investments in alternative-protein manufacturing companies have risen in recent years, as numerous start-ups sell plant-based protein and experiment with insects and lab-grown fish. Companies, including Nestle, Cargill, and Tyson Foods have all been developing plant-based meat brands alongside their more traditional meat products. And even after the pandemic hit, some plant-based meat manufacturing companies announced new investments. The coronavirus pandemic has exposed the vulnerability of industrial meat, from increasing numbers of outbreaks in meat-processing plants and empty supplies of beef and pork in supermarkets to the public health dangers of industrial meat farming. Consumers, now more concerned about food safety than ever before, are now increasingly in favor of plant-based proteins.

According to the Good Food Institute (GFI), 2019 was a record-breaking year for plant-based meat, egg, and dairy companies in the U.S., who received more than $747 million in investments. Global cultivated meat companies raised more than $77 million in capital in 2019, for a total of $824 million in alternative proteins. However, investment in U.S. plant-based meat, egg, and dairy companies in just the first quarter of 2020 was a staggering $741 million - even as COVID-19 has disrupted global markets - almost as much as for the entirety of 2019. In the first quarter of 2020, cultivated meat companies raised $189 million, more than the amount invested in the cultivated meat industry’s prior history, making investments in alternative protein up to $930 million.

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Amidst this crisis, Meticulous Research® is continuously assessing the impact of COVID-19 pandemic on various sub-markets and enables global organizations to strategize for the post-COVID-19 world and sustain their growth. Let us know if you would like to assess the impact of COVID-19 on any industry here-

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