Investors are eyeing plant-based meat brands as Covid-19 spurs consumer interest in health and wellness, and casts a spotlight on food safety and the global food supply chain
Step into most mid- to high-end restaurants in Singapore and you would notice a section in the menu that offers plant-based meat dishes. Big brands such as Impossible Foods and Beyond Meat have worked their way into the Asian market, a move welcomed by consumers.
Despite these plant-based meats having a higher price point than regular meats, consumers are still inclined to order these “fake meat” dishes as they mimic the taste of meat well, albeit that of a lean cut than a fatty one.
Also, consumers can now find these plant-based meats in local supermarkets. This gives them the freedom to play around with recipes to whip up their own meals using these products.
According to market intelligence agency Mintel in its research titled “Asia Pacific: The Food and Drink Landscape” published in November 2020, Covid-19 has spurred consumer interest in health and wellness. The research shows that consumers are increasingly placing a focus on preventive health and mindful eating, indicating the potential for disruption in the F&B space.
“What’s more, the preference for natural, simple and flexible diets is leading consumers to seek more fruits, vegetables, and other plant-based ingredients within the products that they purchase. The rise in plant-based diets can be attributed to heightened concerns for animal welfare, the environmental impact of intensive animal farming and also health reasons,” says Mintel in the report.
Now, more than ever, these alternative meats are gaining popularity in the market. Covid-19 has also shed a spotlight on the importance of food safety. According to researchers, the virus originated in bats, and it was consumption of these exotic meats in China that caused the birth of this highly contagious virus.
But Covid-19 is not the only virus or disease that stemmed from contaminated meat. Others include E.coli, Salmonella, and H1N1.
In the Morgan Stanley’s research titled “The Future of Food: Complexities and Compromises”, the complex global agri-food system needs to transform in order to produce 50% more food, eliminate malnutrition for 2.5 billion people and cut about 13Gt of greenhouse gas emissions by 2050. And with alternative meat products producing up to 90% lower green-house gas emissions than traditional equivalents and using 99% less water, they could likely be a good replacement.
“We estimate that achieving approximately 16% growth per year would result in about 3% of the global meat market coming from these alternatives by 2030. We estimate that, together, plant-based meat and milk could be worth more than US$80 billion by 2030,” says Morgan Stanley.
Consumers’ growing acceptance of meat alternatives have inspired investors to go after these companies. Shares of Nasdaq-listed Beyond Meat soared in 2020, opening at US$75.41 on Jan 3 that year and closing at US$125 on Dec 31. As at Feb 23 this year, shares in Beyond Meat were trading at US$149.42 ($197.28). According to Bloomberg data, four analysts have a “buy” or equivalent call, with target prices ranging from US$132 to US$200. In contrast, 12 analysts have a “hold” rating and eight believes investors should “sell” the stock.
Even plant-based milks are gaining popularity. Vegan food and drink maker Oatly AB, which is backed by celebrity entrepreneurs Oprah Winfrey and Jay-Z, has confidentially filed for an IPO in the US. Oatly, whose biggest shareholder is Belgian family-owned investment firm Verlinvest, submitted its registration documents under rules allowing companies to keep their financial information secret until shortly before they begin marketing the deal.
According to Bloomberg, the company that turns fiber-rich oats into liquid food, is considering seeking a valuation of around US$10 billion in the listing. Last year, Oatly raised some US$200 million in funding from investors including Blackstone Group and Jay-Z, while boasting early backers from the likes of Verlinvest and China Resources Group. The funding round valued Oatly at roughly US$2 billion.
Local flavour
Away from Wall Street, alternative meats have become a familiar presence. From restaurant chains to hawker centres, chefs have been adding their own touch on creating dishes with alternative meats.
According to local restaurant chain Swensen’s, there has been consistently a high demand and interest for the Impossible dishes in their menu. A spokesperson from the restaurant chain said that this was because of “their affordability and accessibility at our restaurants”.
“Increasingly, we also observe customers opting for dishes with Impossible Meat because they enjoy its taste — the plant-based meat is now being considered as another option, alongside other meats like chicken or beef,” adds Swensen’s, which is owned and operated by locally listed F&B player ABR Holdings.
There is also OmniFoods, a food tech company launched by Green Monday, which has opened up a fully plant-based restaurant concept in VivoCity. The Green Common café aims to encourage diners to make more sustainable food choices.
Citing research from Barclays, AT Kearney and UBS, David Yeung, founder of OmniFoods and Green Monday, says that within the next five to 10 years, plant-based meat will make up at least 10% market share of the meat industry.
Leading global firms ranging from Unilever to Tesco and IKEA are among the mainstream conglomerates that indicate strong upward momentum for plant-based products. “For the benefit of humanity and well-being of the planet, we need to change the way we eat, and that change is already under way,” Yeung tells The Edge Singapore in an interview.
The way Yeung sees it, this is not just a fad that will go away. “You only need to look at the millennials and the Gen Zs to realise that not only will plant-based eating not taper off — it is bound to skyrocket. Our next generation of consumers are deeply concerned about climate change and global sustainability. Millennials, in particular, are driving these evolving consumer habits; they are most likely to consider the food source, animal welfare issues, and environmental impacts while making their purchasing decisions,” he says.
“As we become increasingly aware of the downsides of traditional meat and the benefits of meat-free alternatives, the plant-based food category can only grow,” he adds.
Investing in sustainability
Currently, environmental, social, and corporate governance (ESG) factors are key points investors look at in their decision-making process.
“The overwhelming interest from investors globally reflects an increasing awareness of plant-based diets as the solution to the pressing global issues, and a growing demand to tap into the market potential brought by the confluence of global consumer trends towards sustainability and conscious consumption,” explains Yeung.
Even Singapore’s sovereign fund, Temasek Holdings, has put bets on the alternative meat industry. In 2017, Temasek led a US$75 million investment round in Impossible Foods. This was Temasek’s first investment in Impossible Foods.
Subsequently, it continued to invest in Impossible Foods’ later funding series, with the latest Series F round in March 2020 securing some US$500 million, led by Temasek and Horizons Ventures, which is backed by Hong Kong’s Li Ka-Shing. As at March 2020, Impossible Foods had raised some US$1.3 billion since its founding in 2011.
Impossible Foods now is on a journey towards growth. When it landed in Singapore in early 2019, it was carried only in some restaurants. Since October 2020, its products can be found in supermarkets and online grocers.
Meanwhile, Temasek also has its hands in an Australian plant-based meat company V2food. In the start-up’s latest Series B funding that closed in October 2020, it raised A$77 million ($80.6 million), led by Temasek and Goldman Sachs.
The latest funding round will help V2food cater to the demand for alternative meat products that V2food’s CEO Nick Hazell expects to swell as population growth, and global wealth, accelerate. “This demand [for meat] will need to be met by alternatives,” says Hazell. “We need to double the meat industry globally by 2050. And we’re already against the planetary boundaries in terms of the meat we can physically produce.”
The company has already a rather significant presence in Australia, as its products are being sold in Woolworth Group’s stores, the country’s largest grocery retailer.
Appetite for more
Thanks to the likes of Impossible Foods and Beyond Meat, entrepreneurs in Singapore are now more confident to push their work in the alternative meat space, while international brands are looking at Singapore as a base to expand their footprint into Asia.
The Edge Singapore spoke to local alternative seafood meat start-up Growthwell, that is also backed by Temsaek, as well as investors including DSG Consumer Partners, Insignia Ventures, Genesis Alternative Ventures, Brandify, and Koh Boon Hwee, who sits on the board of Temasek.
“Consumers nowadays are not just looking to find a meat alternative. They are looking out for more nutritious and healthy products. And that’s why we have decided to transform the family business from a vegetarian manufacturer to a food technology, plant nutrition company,” says Justin Chou, executive director of Growthwell.
“The Covid-19 pandemic has revealed the vulnerabilities of our food supply chains,” says Chou, who believes that the company’s decision to build a manufacturing facility in Singapore is a timely solution that can help tackle the food security issue.
There are also new entrants such as food tech start-up Next Gen, which launched in Singapore in October 2020 with seed funding of over US$2 million. The start-up that creates alternative chicken meat was founded by Timo Recker, previously the founder and CEO of German plant-based meat company LikeMeat; and Andre Menezes, previously the General Manager of Country Foods Singapore, where he was involved in making Impossible Foods a household name in Singapore.
And it is not just alternative meats that are popular in the market. US-based company Eat Just has expanded its footprints in Singapore through a partnership with a consortium led by Proterra Investment Partners Asia.
Eat Just is widely known for its product Just Egg, which uses protein from mung beans to create an egg alternative. The brand has garnered a large interest in the US, having already sold the plant-based equivalent of more than 50 million chicken eggs and owning 99% of the plant-based egg category.
The consortium will invest up to US$100 million and Eat Just will invest up to US$20 million to build and operate their first-in-Asia and largest plant protein production facility in Singapore.
For a product often dubbed “fake meat”, the market potential is real.
