A three-year shareholder engagement with 25 giant food retailers and
manufacturers has found that some leaders are beginning to capitalize on the
rising demand for alternative proteins, while others are falling behind the
curve of a booming growth industry.
The alternative protein sector, which includes plant-based substitutes for
traditional, animal‐based foods — such as Beyond
Meat
or
Impossible
burgers, and plant-based milks — is expected to capture roughly 10 percent of the
meat market within 15 years and is now valued at $19.5 billion, according to
research quoted in today’s Appetite for Disruption
report by the FAIRR investor network. The report
provides a briefing on long-term sustainability risks associated with livestock
supply chains, which account for 14.5 percent of global greenhouse gases.
According to the Food and Agricultural Organisation, the sector is the
largest user of freshwater resources, and grazing and feed production account
for 80 percent of all agricultural land. The sector is also highly exposed to
physical risks from climate change.
For the first time since its launch in 2016, FAIRR’s
collaborative engagement found 5 of 25 firms
— Unilever, Tesco,
Nestlé, Marks & Spencer and
Conagra — have developed proactive strategies to build a sustainable protein
portfolio; including recognizing that a high dependence on animal-based
ingredients is a material risk to business, undertaking risk assessments on
their protein supply chains and expanding their range of plant-based products
over the previous year.
Over 87 percent of retailers have ramped up their own-brand plant-based
products, which means more supermarket products will come from low-carbon
protein sources such as plant-based foods, rather than meat and dairy. A 2018
FAIRR
report
found Nestlé and Tesco best positioned to benefit from a transition to
alternative plant-based proteins; Tesco is one of four retailers trailing
alternative protein products, and Nestlé has said that it expects its
plant-based
sales
to reach $1 billion in ten years.
the exciting potential of cultivated, fermented and plant-based protein innovation
Join us as Aleph Farms, the Better Meat Co, the Good Food Institute and Plantible Foods discuss the latest advancements in cultivated, plant-based, and fermentation-derived proteins — and how incorporating alternative proteins can help brands significantly reduce environmental impacts, while conserving natural resources — Tuesday, Oct. 15 at SB'24 San Diego.
In 2016, FAIRR’s shareholder engagement was supported by 36 investors managing
$1.25 trillion in assets; the clear business case for protein
diversification
has now attracted 74 investors with combined assets of $5.3 trillion including
Schroders (UK), NN Investment Partners (NL) and Boston Common
Asset Management (US).
“From the factory floor to the supermarket shelf, the mounting environmental and
social pressures to move away from a reliance on animal-derived proteins is
reshaping the food
industry,”
said Jeremy Coller, founder of FAIRR and Chief Investment Officer at
Coller Capital. “The growth of alternative proteins offers a promising
opportunity for food companies to meet the lucrative demand for protein with
fewer impacts on land, water and biodiversity.
“For too long, big food has been playing catch up to consumers and startups on
alternative proteins, when they should be leading this transformation,” Coller
added. “This report shows that some food multinationals are seizing the moment
by setting clear strategic goals to increase their alternative protein exposure,
supported by relevant metrics that are tracked and reported. That’s a good
start, but as alternative proteins go mainstream, investors want more food
retailers and manufacturers to capitalize on the opportunity including improving
branding, merchandizing and tracking of alternative protein products to expand
their appeal across a broad swathe of consumers.”
The 25 food-based multinationals were evaluated on areas such as business
strategy, forward-looking analysis, R&D investment levels and consumer
engagement to understand how companies are capitalizing on the rising demand for
alternative proteins to transform their protein portfolios in line with the
Paris Agreement.
Report findings include:
-
5 of 25 firms (Unilever, Tesco, Nestle, M&S, Conagra) achieved the top
‘proactive’ ranking; 16 were active, and 4 (Amazon,
Hershey, Costco,
Saputo) given the bottom, ‘reactive’ ranking. These categories indicate a
company’s readiness to undertake a protein transformation.
-
23 of 25 companies have expanded (or announced plans to expand) their
alternative protein product portfolios in the last 12 months.
-
64 percent of the companies included terms like “plant-based” and
“vegan” in their annual reporting and/or quarterly earnings calls in
2018/2019.
-
Seven of 25 (28 percent) companies (including Unilever and Tesco) were
awarded higher scores based on official Scope 3 climate
targets
that explicitly referenced their efforts to reduce their supply chain
emissions from agriculture (either by eliminating mass of emissions,
absolute emissions or through science-based
targets).
-
4 companies (M&S, Conagra Brands, General Mills and Groupe
Casino) have undertaken some type of risk assessment specifically on their
protein supply chains. Including climate risks.
-
Some companies, including M&S and Carrefour, have set some type of
target to increase their exposure to alternative protein products.
Carrefour's target is to double the number of products in its vegetarian
range in 2019.
-
Four of 16 retailers are trialing alternative protein products adjacent
to more traditional animal proteins (e.g. on the meat aisle). (Sainsbury's,
Tesco, Kroger and Woolworth Group).
-
However, zero companies have formal, publicly reported metrics in place
to track and report on their protein exposure (e.g. percentage split between
animal and plant-based sources)
“There is a clear shift underway among consumers who are increasingly aware of,
and concerned by, the climate impacts of the food they eat and how
sustainability it is produced,” said Elly Irving, Head of Engagement at
Schroders. “Companies that don’t adapt risk falling behind and missing the
growing market opportunity that is emerging. FAIRR’s research has been valuable
in helping us to identify leaders and laggards. We will continue to engage with
companies across the food industry to push them to ensure their practices are
sustainable.”
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Sustainable Brands Staff
Published Jul 24, 2019 2pm EDT / 11am PDT / 7pm BST / 8pm CEST