Big Ag wants a cut of booming fake-meat market

Grain traders and seed-makers are following the lead of Beyond Meat and others that have cashed in on plant-based meat substitutes. (Reuters)
Updated 09 September 2019

Big Ag wants a cut of booming fake-meat market

  • Demand for meat alternatives has soared as consumers add plant-based protein to their diets for health reasons
  • Fake meat makers largely rely on soy, wheat, and peas

WINNIPEG, Manitoba/CHICAGO: Bunge Ltd, one the world’s biggest grain traders, recently disclosed the 1.6% stake it had purchased in the fast-growing fake-meat startup Beyond Meat.
The play looked smart after the stock surged more than 250% since the faux burger and sausage maker’s initial public offering in May. Indeed, Beyond Meat’s market capitalization of $9.9 billion is now larger than Bunge’s , a 201-year-old firm with 31,000 employees.
No wonder many top agricultural firms want to grab their cut of the booming market for plant-based fake meat. Bunge’s investment is just one example of how grain traders and seed companies are trying to capitalize on a market that now accounts for 5% of US meat purchases — a share expected to triple over a decade, according to investment management firm Bernstein. That growth would mirror the fast ramp-up of milk substitutes made from crops such as almonds.
“I definitely think this is going to continue to drive demand,” said Vince Macciocchi, president of the nutrition group at Archer Daniels Midland, one of Bunge’s chief rivals.
ADM and privately-held grain trader Cargill are selling processed peas and soy proteins to consumer food companies and restaurants that use them to make vegetable burgers, sausages, fish substitutes and other faux-meat products. They are also getting into the business through acquisitions and corporate partnerships or by leveraging their labs and research capabilities to help make new plant-based products for clients including food and beverage makers.
Seed company Corteva — which spun off in June after a merger of Dow Chemical and Dupont — is studying potential vegetable seed offerings.
Grain traders and seed-makers are following the lead of Beyond Meat and another startup, Impossible Foods, along with traditional meat producers such as Tyson Foods and Maple Leaf Foods that have cashed in on plant-based meat substitutes. Demand for meat alternatives has soared as consumers add plant-based protein to their diets for health reasons and out of concern for animal welfare and environmental damage from livestock farming.
Tofu, made from soybean milk, is the best known meat alternative and has been around for decades. But in recent years, other crops such as black beans, peas, lentils, canola, beets and sunflower have become popular in products made to taste like or replace meat.
The big agricultural firms are in part playing defense. Grain traders supply the world’s livestock farms with animal feed — a business that would suffer if fake meat sales rise at the expense of real meat. Seed companies such as Bayer AG sell to farmers who grow the corn and soybeans that are now sold mostly to feed livestock.
ADM this year created a new position — director of “flexitarian” solutions — to focus on developing products for food companies who are targeting the market for a mostly plant-based diet, Macciocchi said. The company is also considering repurposing an animal-feed plant in Rotterdam to produce human-grade soy products, he said. ADM has expanded its plant-protein team of scientists and marketers in the past three years even as it aims to cut its overall workforce.
“We’ve dedicated a significant amount of our team — the technical side of our team, as well as the commercial side of our team — to plant-based proteins,” Macciocchi said.
Cargill in August announced an additional $75 million investment in North American pea-protein producer Puris — which supplies Beyond Meat. That triples its original $25 million investment in January 2018.
Cargill’s customers have been clamoring for pea or soy protein products, including alternative meats, said Laurie Koenig, who leads a Cargill unit developing such items.
“We’ve never seen this kind of pull before from the market,” Koenig said.
Like ADM and Cargill, Bunge is now looking to supply ingredients to startups and large companies involved in the imitation-meat trend, Bunge CEO Greg Heckman said in an interview.
“There’s just so many ways that it is touching our business,” he said.
Seed developer Corteva has discussed expanding into research or small acquisitions in vegetable seeds in part to take advantage of increasing demand for plant-based proteins, Chief Executive Jim Collins told Reuters. Corteva’s ability to research breeding and genetics of corn and soybean crops could be applied to vegetables, he said.
“The whole vegetable-seed industry is interesting to me,” Collins said.
Rival Bayer also could enter the market as a provider of plant-based meat alternatives, an executive said in August, without providing details. The company, which sells seeds and farm chemicals, said it also offers products for plant-based protein sources such as soybeans, tree nuts and peas.
Toronto-based pork processor Maple Leaf two years ago bought US-based Lightlife Foods, a plant-based burger-maker, to expand its reach into a market with boundless potential, chief executive Michael McCain said. While the trend is starting in North America and Europe, it will expand worldwide within a decade, McCain said.
Marfrig Global Foods SA is making a plant-based burger for the Brazil market — made from soy supplied by ADM, and sold at Burger King starting in November.
ADM is building a pea protein plant in North Dakota, while France’s Roquette and Verdient Foods, backed by Hollywood director James Cameron, are building plants in Manitoba and Saskatchewan respectively.
Fake meat makers largely rely on soy, wheat, and peas, according to the Good Food Institute, which promotes the alternatives. But a wide variety of other crops play a role, presenting an opportunity for companies that maintain relationships with farmers.
In a Winnipeg, Manitoba laboratory that doubles as a kitchen, a Burcon NutraScience food scientist grills black bean burger patties that are held together with canola protein, rather than the usual eggs — making such burgers appealing to vegans. The company makes protein ingredients from canola, pea and soy, and business is brisk.
“The plant-protein industry is as hot as it’s ever been,” said Burcon vice president Martin Schweizer.


Blame game as wheels come off India’s auto sector

Updated 16 September 2019

Blame game as wheels come off India’s auto sector

NEW DELHI: When India’s Finance Minister Nirmala Sitharaman claimed that a preference by millennials for ride-hailing apps was contributing to a painful slump in car sales, it sparked an online backlash from furious youngsters.

They started a campaign using ironic hashtags such as #BoycottMillennials and #SayItLikeNirmalaTai last week to push back against older generations blaming them for today’s problems in society.

While data shows firms such as Uber and Ola are popular with younger consumers more comfortable with shared mobility and digital trends, analysts say the auto industry’s problems run deeper than that — and it is facing more serious bumps in the road.

With a population of 1.3 billion people, India is the world’s fourth-largest car market and one where owning a vehicle is as much a status symbol as a means of transport.

But the country’s once-booming auto sector — seen as an important barometer of overall economic health — is in the slow lane, with sales slumping for the 10th-straight month in August.

“The minimum (priced) car that you can get nowadays starts from six to seven lakhs ($8,500 — $9,800),” university student Somya Saluja told AFP.

“So it’s much easier to pool-in rather than to buy a new car.”

Even India’s richest banker, Uday Kotak, recently said that his son was more comfortable using ride-sharing apps than owning a car.

Uber and Ola reportedly facilitate some 3.65 million daily rides.

Still, Avanteum Advisers managing partner VG Ramakrishnan told AFP the key reason for the drop in car purchases was economic.

“I think the slowdown is primarily because consumer confidence is low and income growth has really been impacted in the last couple of years,” he told AFP.

India’s economic growth slowed for the fifth-straight quarter in April-June to reach its weakest pace in five years.

Banks are also more reluctant to lend owing to a liquidity crunch caused by the near-collapse a year ago of IL&FS, one of India’s biggest shadow banks — finance houses responsible for significant consumer lending.

There are also extra production costs caused by new rules requiring cars to be compliant with emissions and safety standards, while a 28 percent goods and services tax (GST) introduced in 2017 has dampened demand, analysts said.

“Cars are increasingly becoming unaffordable now because of so many taxes,” Karvy Stock Broking auto analyst Mahesh Bendre told AFP.

“To put things in perspective, if you buy a car in India, at least 40-45 percent of costs go to the government in terms of taxes and registration charges and so on.”

A year ago, India displaced Germany to become the world’s fourth biggest car market, having clocked up annual sales growth above seven percent for several years.

But the promising growth ride is screeching to a halt, with passenger car sales tumbling this year, including a 41 percent drop last month — the worst since records began more than 20 years ago.

Aside from passenger cars, sales of commercial vehicles, motorcycles and scooters have also been hammered.

With the industry — a major employer in India — contributing more than seven percent to total GDP and almost half of manufacturing GDP, the potential fallout from an extended slowdown is sending shockwaves through the economy.

Manufacturers are reducing production and cutting jobs, which is also affecting related industries such as auto component manufacturing and at dealerships, totaling about seven percent of India’s total workforce, Bendre said.