Meatless encounters

The plant-based meat substitute market has grown by leaps and bounds amid the COVID-19 pandemic and is projected to keep expanding afterward, as consumers make a dietary shift toward a greater emphasis on food safety. Pamela Lin reports from Hong Kong.

The COVID-19 pandemic has spawned new phenomena in business and in social life, with the food sector joining the revolution.

Global public health and people's well-being have been seriously threatened by the COVID-19 pandemic, arousing an awareness of food safety and ecological consciousness as vegans see their ranks swell and plant-based meat substitutes come under the spotlight.

And, venture capitalists have been dancing to the tune of mindful foodies, seeing enormous potential even in the post-pandemic Asian market.

Although plant-based meat has long been served in vegan-friendly and non-vegan-focused diners as well as being offered on supermarket shelves, consumer demand has been fueled as people begin to reassess their dietary choices and take note of health and sustainability.

In a recent survey to gauge the extent of consumer recovery on the heels of COVID-19, United Kingdom-based data analytics and consulting company GlobalData found that up to 85 percent of Chinese consumers say they're either buying the same amount, more or significantly more plant-based meat alternatives and stockpiling them.

"Consumers seem to be reassessing their dependence on animal products and exploring other, more sustainable protein sources, such as soy, mushroom or rice," said Sumit Chopra, consumer research director at GlobalData.

The pandemic has prompted Chinese consumers to prioritize hygiene and wellness when choosing restaurants and food, noted Adam Xu, a partner at OC&C Strategy Consultants.

This new focus has boosted meat substitutes - plant-based, animal-fat-free food products made to have the taste, texture and look of real meat - amid the pandemic. Xu said plant based meat producers emphasizing the value proposition of wellness have succeeded in stirring up greater interest among consumers.

Nick Halla, senior vice-president for international at Impossible Foods, a California-based alternative meat producer, is on the same page, echoing such observations of consumers' growing awareness of food safety. He said COVID-19 has awakened more people to the fact that eating animals is nothing less than a public health disaster, with the revelation of accelerating biodiversity collapse, global warming and the climate crisis.

For Asian taste buds, plant-based meat substitutes aren't something new, as people in the region have been creating vegetarian recipes for years with tofu, soybeans and mushrooms.

With rising environmental and wellness consciousness, plus thriving food technologies, more Asian consumers have begun looking for innovative plant-based meat and are more willing to try new products in the market.

Traditional vegan meat mainly targets vegans and vegetarians, while plant-based products resembling real meat launched by food-tech companies like Beyond Meat, Impossible Foods, Green Monday and Zhenmeat are also targeting omnivores by encouraging them to diversify their diet.

New products, new market

Since the coronavirus hit, plant based meat producers have made headlines by continuing to launch new products and tap new markets. With a positive momentum and massive catalysts, players in the plant-based meat-substitutes business say they see ample opportunities, especially in China, where the level of meat consumption is high.

Impossible Foods, famous for its "Impossible Burger", allowed its key restaurant partners in Hong Kong to resell its plant-based meat to consumers in August. Recently, the company rolled out its "Impossible Sausage" in the special administrative region - its first market outside the United States.

Halla said Hong Kong has some of the world's most discerning foodies and trend-setting chefs.

"Our launch in the Hong Kong market has been great learning for us to understand more about what our product needs to do with the different cooking apparatuses, cooking styles and dishes. There's also a much greater variety of cuisines in Hong Kong that are much more Asian-focused," he told China Daily.

Still at an early stage in trying to develop the Chinese mainland market, Impossible Foods sees plenty of opportunities, according to founder and Chief Executive Officer Patrick O. Brown, who said in a webinar that the company intends to build an entire production ecosystem - from the whole agricultural supply chain to manufacturing - on the Chinese mainland.

US plant based meat producer Beyond Meat, the first plant based protein maker to go public in the US - said it will set up two production facilities in China's Zhejiang province after signing a pact with the Jiaxing Economic and Technological Development Zone.

The company expects trial production to start within months and full scale production early next year.

Hong Kong-based Green Monday sells its plant-based meat called Omnipork at more than 200 retail stores on the mainland. It has partnered with mainland fast-food chain Jixiang Wonton to add vegan Omnipork dumplings to its menu at around 350 locations in Shanghai.

Social entrepreneur David Yeung, who founded Green Monday Hong Kong and plant-based concept store Green Common, said retail sales tripled in June and July from pre-pandemic monthly sales.

In May, it unveiled vegan luncheon meat - about two years after its pioneered Omnipork entered the market.

"We've a deep understanding of localization because of the basic fact that we are Asian. When we innovate our products, we know clearly we want to cater to the Asian market," said Yeung, adding that food clearly has a cultural element.

Green Monday is in the process of setting up a production site in Guangdong province, within the Guangdong-Hong Kong-Macao Greater Bay Area, in response to growing consumer demand.

According to the entrepreneur, there're lots of products in the company's pipeline that would fulfill the Asian and global markets.

Responding to the increasing number of makers of plant-based meat substitutes tapping into the mainland market, Yeung said he won't see them as competitors as they're all trying to create a habit for people to go for plant-based meat as they need variety in food.

On the mainland, food-tech companies are also racking their brains trying to have an edge over foreign plant based meat producers.

Zhenmeat, a homegrown mainland food tech startup, is focusing on Chinese cuisine by launching vegan pork tenderloin and crayfish products to cater to local appetites.

The vegan pork tenderloin is designed for Chinese Sichuan hotpot as a substitute for surou (crispy meat), a hotpot dish of spiced and deep fried strips of pork.

In addition, the startup is experimenting with 3D-printed bones to insert into its plant-based meat products to make them seem more like real meat.

Investment in mainland firms

Venture capitalists are betting big on the Chinese mainland's plant based meat business - an early market growing at a fast pace - against the backdrop of the world health crisis and African swine fever that threatens domestic pork production.

The Chinese mainland already has the world's largest market for plant-based meat that has been growing at a 14 percent compound annual growth rate in recent years, according to Lever VC, an alternative protein venture capital fund.

Deemed as "essential businesses", food companies never have to pause operations or stop developing new products, even during the pandemic, said Nick Cooney, managing partner at Lever VC, who has more than a decade of experience investing in the alternative meat market.

Lever VC completed the first funding round of its Lever VC Fund in August, which is used to invest in early stage plant-based and cell-cultivated meat and dairy companies. The fund says it currently has $23 million in capital commitments with substantial support from Asian family offices.

"On the plant-based side, we look for companies that are in the No 1 or 2 slots in terms of having the best tasting and the best quality products in the category and geographic region they target," said Cooney.

Since COVID-19 struck, he noted there has been an increase in the number of startups in the field of alternative meat which is likely due, in part, to COVID-19, or also reflects the general momentum.

"For some companies we've invested in since the pandemic broke (out), COVID-19 has allowed us to negotiate lower valuations, which is really great for us," Cooney told China Daily.

On the Chinese mainland, he said a number of plant based meat startups have formed in the past 18 months, and he expects more to emerge in the years ahead.

Plant-based meat has been favored by investors for years with its value proposition of wellness and sustainability. The investors behind Impossible Foods include Hong Kong tycoon Li Ka-shing and US philanthropist and Microsoft founder Bill Gates.

Followed by a round of funding that raised about $500 million in March, Impossible Foods secured another round of funding of $200 million in August, taking the food tech startup's total funds raised to $1.5 billion since its founding in 2011.

Shenzhen-based Starfield, founded last year, closed its latest funding round in March, attracting investments from Dao Foods and New Corp Capital, an early backer of Beyond Meat.

As plant-based meat substitutes flock to China's supermarkets, online e-commerce platforms and restaurants, Xu, consumer and retail analyst at OC&C, remains apprehensive.

He pointed out that Chinese consumers started caring about cost efficacy more than ever as the pandemic shock hit the economy.

He said the initial prices for plant-based meat set by meat substitute producers when they tapped into the Chinese mainland market were comparatively high.

On the mainland, plant-based pork substitutes cost a lot more than real fresh pork. About 100 grams of vegan pork is priced at 25 yuan ($3.67), while the same portion of real pork is sold for just 8 yuan on online e-commerce platforms.
The higher prices will definitely affect consumers' acceptance of vegan meat, Xu warned.

On the other hand, in terms of eating habits, he said Chinese people usually have meat as pieces with bones, while most plant-based meat substitutes are in the shape of ground meat and meatballs.

With current food technologies, it doesn't seem that plant-based meat alternatives could become the mainstream fare for Chinese people in the short term, said Xu.

At the end of the day, it comes down to the taste of plant-based meat substitutes, which is the dominant factor for Chinese consumers, he said.

He suggests that producers reduce prices of plant-based meat substitutes in the long run if they want to drive scale.

Chopra at GlobalData noted that brands that are transparent with ingredients and value taste and quality can win over mass consumers. He also suggests that plant based meat producers use alternative packaging, such as biodegradable or edible packaging that would leave behind less waste, to gain popularity.

GlobalData sees China's meat substitute market hitting $474.4 million by 2024 - from last year's $283.5 million - at a compound annual growth rate of 10.8 percent.

With clearer labeling and deeper technological innovation, industry players will be able to get a leg up in the contest, said Chopra, as the meat substitute business is still in its infancy.

Contact the writer at
pamelalin@chinadailyhk.com