GLOBAL October 2019
 
Future of Meat is its going to be more expensive
 
The global meat industry is currently facing a major challenge which comes from both internal and external factors.
The internal challenge is the unabating onslaught on meat supply by the ongoing African Swine Fever (ASF) and Bird Flu viruses which affect both pork and poultry supplies, 2 of the most highly-consumed meat products.
The larger threat is ASF which has destroyed more than half of China’s hog population. As a result, China is importing meat in huge quantities which will indirectly lead to higher prices of beef, pork and poultry globally.
Domestic pork prices in China have jumped and China's meat imports are growing in response, depleting global supplies and sending ripples across the global economy. Meanwhile, poultry shipments to China from Brazil have increased by 31% while retail prices for chicken parts have increased by more than 15% this year.
As a matter of comparison, buyers in Europe are now paying 5% more for their pork as manufacturers shipped meat in increasing quantities to China, while in Australia, lamb prices grew 14%. The same goes in countries like UK and New Zealand which are major exporters of meat to China – their domestic consumers have to pay more for their meat.
China is currently facing a historic pork deficit, and this is worsened by its existing trade war with the US, which curtailed US food exports to this country. Nevertheless, there is ‘light at the end of the tunnel’ for US meat exporters as China authorities could exempt US pork and several major agricultural products from tariffs. Major US meat exporters like Tyson Foods and Smithfield Foods are expected to benefit from higher prices of meat as growing imports from China reduce global meat supplies.
China is currently facing what we call a major ‘Pork Crisis’. This is because Chinese consumers are the world’s largest consumer of pork eating more than 55 billion kg of pork a year, which translates to an average 39kg per person. In the past, most of China’s pork demand has been satisfied domestically, however the existing ASF outbreak has decimated China’s pork production by up to 16.2 billion kg in 2019, nearly double the volume of pork marketed internationally in 2018. China pork prices have also risen by 50% and the Chinese government have tried rationing pork or encourage Chinese consumers to switch to other meat products.
China’s imports of pork, chicken, veal and sheep have increased by 70?tween May to July 2019, raising worldwide meat prices. Foreign meat exporters from Brazil, Europe and Latin America are racing to get Chinese certification for exports as China market offers a more lucrative market as it is willing to pay higher prices for imported meat, compared to their own domestic market as well as other countries’ markets.
According to latest Euromonitor report, demand for fresh meat outweighs those for processed meat by a factor of 8:1. The following Chart 1.0 showed the growing demand for meat globally from 2013 to 2018.
As meat is getting more expensive, it could open up a window of opportunity for meat alternatives, particularly plant-based meat products, which are equally expensive to fill up the gap in supply. This forms an external challenge for real meat coming from a new but growing Meat Alternative segment. In actual fact, this segment is not entirely new as vegan meat has been around for many years mainly to serve consumers who are vegetarians due to religious obligation. However this segment has been given a new life with the entry of new players with more sophisticated technology and able to produce ‘faux’ meat product that truly imitate the real meat in terms of color and taste.
One rising player is HK-based Green Monday, the producer of plant-based meat substitute ‘Omnipork’. Omnipork is a plant-based protein that looks and tastes like minced pork, and it was introduced in Hong Kong last year.
Green Monday is just one of growing number of companies like Beyond Meat and Impossible Foods that are tapping into a growing market for plant-based meat. According to Allied Market Research, the global meat substitute market is projected to reach US$7.5 billion by 2025, up from an estimated US$4.2 billion in 2017. Another research report published by Meticulous Research estimated the global plant-based protein market to grow at 8.1% annually to reach US$14.3 billion by 2025.
Plant-based meat products often promise lower calories but more dietary fibre as they contain pea and non-GMO soy and other grains and plant-based ingredients. However, they are not expected to replace the real meat anytime soon, as there is also a growing ‘negative’ narrative that plant-based meat, unlike fresh meat, contain too much processed ingredients like isolates of natural ingredients, rather than directly-used plants, meaning that only 60% of the protein in the plant can be extracted. Apart from losing some of the plant nutrients, most meat substitutes are not organic. Meticulous Research estimated that on the basis of ingredient type, soy protein segment is estimated to command the largest share of the overall plant-based protein market whereas pea protein is expected to witness the most rapid growth during the forecast period (2019-2025). Latest Euromonitor report on ‘Driving Forces Behind Plant-based Diets’ showed that meat substitutes sales are yet to catch up with the growth from meat sales. According to the report, “There seems to be lack of meat substitute suitable for developing and emerging markets, cheap enough to be affordable, yet interesting enough to be a status food item.” In most instances in these countries, Packaged Tofu seems to be the dominant and affordable meat alternative. (See Chart 2.0)
Nevertheless, as plant-based meat will become cheaper and its ingredients refined, we will see this industry playing a bigger role in satisfying global demand for meat, particularly in China.
 
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