* Meat packers rebranding as protein companies
* 'Flexitarian' diners on the rise
* 'Vast opportunity for crazy profits' -investor
* Billionaire Bill Gates invests in plant protein companies
By Rod Nickel
WINNIPEG, Manitoba, Oct 13 Some major North
American meat producers are clearing room on their plates for
plant-based substitutes, hedging their bets as consumer tastes
shift and high-tech startups seek to create meat alternatives
that taste like the real thing.
The trend was highlighted on Monday when Tyson Foods Inc
, the biggest U.S. chicken processor, took a 5 percent
stake in Beyond Meat, a plant-based protein maker partly backed
by Bill Gates.
Other meat packers including Canada's Maple Leaf Foods Inc
and German sausage-maker Rügenwalder Mühle are also
stepping up production of "meats" made from peas, soy and other
crops, predicting stronger sales growth for the segment than its
"It's an incredibly hot area right now," said Adam Grogan,
Maple Leaf's senior vice-president of marketing and innovation.
"We view it as no different than chicken or pork. We view
ourselves as a protein company first."
Global sales of meat substitutes jumped to an estimated $4
billion this year, a 42 percent rise since 2010, according to
research firm Markets and Markets.
U.S. red meat consumption has declined steadily since the
1970s, U.S. government data shows, to 69.2 pounds per person in
2014, the lowest on record. Consumption may rebound in the
coming decade, however, as production expands and prices
decline, according to U.S. Department of Agriculture
Globally, meat and seafood consumption amounted to 463
million tonnes in 2014, dwarfing 10 million tonnes of
alternatives such as soy-based meat replacements, according to
Meat faces pressure from diners who may be concerned about
animal welfare and the environmental impact of raising animals,
or view vegetarian meals as healthier.
Two-thirds of Germans and 38 percent of Americans eat
meatless meals once a week or more - consumers known as
"flexitarians" - according to Innova Market Insights 2016
Another potential challenge for conventional meat packers
are startups like California's Impossible Foods, partly funded
by Gates and Google Ventures. Inside its Silicon Valley lab,
biochemists are on a quest to develop products that match the
texture, aroma, and flavor of real meat.
"We're not making a veggie burger. We're making meat," said
Celeste Holz-Schietinger, the company's principal scientist.
"We're just doing it through plants."
There is also potential for startups to collaborate with
Impossible Foods Chief Executive Pat Brown told reporters
last week that while large-scale output poses a challenge, its
options include outsourcing production.
Traditional packers like Maple Leaf are doing their own
research. The company, which raises and processes pigs as its
main business, says it dedicated several staff in the past year
to work on innovating plant-based protein products in its
kitchens, focusing on improving taste.
In Europe, sausage-maker Rügenwalder Mühle added
meat-substitute dishes in 2014 as German meat sales declined.
Those products, including soy-based schnitzel, now make up
20 percent of its gross annual sales of 205 million euros
($229.6 million), and it plans to double that percentage by
2020, said spokeswoman Silke Ponert.
Agribusiness company Cargill Inc does not
currently make plant-based meats, but recently began referring
to its meat business as its "protein group," to signal its
interest in a variety of protein options, said spokesman Mike
REAL MEAT ENDURES
To be sure, the meat business still makes good money. Tyson
notched record adjusted profit in 2015.
"Given consumers' recognition of the value of protein of all
types, it appears that (some packers) are responding to a
business opportunity - not a threat," said Chief Executive Barry
Carpenter of North American Meat Institute.
But the pace of growth in meat substitutes has caught the
attention of industry and investors.
"We are going to see the meat industry recognize that it
needs to diversify," said Bruce Friedrich, managing trustee of
New Crop Capital, a venture capital fund that backs companies
whose products replace foods derived from animals.
"This is a vast opportunity for forward-thinking companies
to make crazy profits."
Investors managing $1.25 trillion in assets launched a
campaign in September to encourage 16 food companies to change
how they source protein.
Meat substitutes are not a risk-free investment, however.
Consumer tastes could eventually turn against them, said Camilla
Stice, analyst at Lux Research, noting that some meat
alternatives are made from genetically modified crops opposed by
U.S. retail beef and pork prices have declined in the past
year due to supplies rebounding after drought and a deadly pig
virus, but prices are still relatively strong, said Canada-based
industry analyst Kevin Grier.
"I don't see these (meat substitutes) as something new and
exciting," he said. "If I want a hamburger, I'll have a
hamburger, not a pretend hamburger."
($1 = 0.8928 euro)
(Additional reporting by Alexandria Sage and Peter Henderson in
Redwood City, California, and Lisa Baertlein in Los Angeles;
Editing by Jeffrey Hodgson and Matthew Lewis)