A new report by the FAIRR investor network shows that plant-based meat and dairy alternatives are becoming increasingly affordable and are on track to reach price parity with products derived from animals.
- The FAIRR investor network estimates that plant-based products could reach parity in taste, texture and cost between 2023 and 2031.
- Investment in the industry continues to grow, leading to the scale up of new technologies.
- More innovation is needed to increase the appeal of alternative proteins to meat and dairy eaters, which in turn will drive behavioural change.
The road to parity is being partly driven by inflation
A new report by FAIRR, an investor network focusing on ESG issues in protein supply chains, estimates that plant-based products could reach parity in taste, texture and cost between 2023 and 2031. The alternative protein market size is forecast to represent 10%-45% by 2035 and 25%-50% by 2050 of the total protein market.
Rising inflation is also driving price parity. In the UK, for example, FAIRR found that the cost of Oatly (NASDAQ:OTLY) oat milk has fallen from almost 2.5 times higher than dairy milk in 2019, to 12% higher per litre in 2022. The average price per unit of plant-based meats has increased by 3% this year, compared to a 6% increase for conventional meat.
There is also an increased focus by retailers to provide more affordable plant-based meat and dairy alternatives to meet consumer demand, as well as meeting their own climate goals.
Investment in the space continues to grow
FAIRR said that alternative protein companies raised $1.7 billion in the first half of 2022, up 2% from the year before, while there are “concerted efforts” to increase accessibility and affordability of these products. The premium price point are one hurdle to wider adoption of meat and dairy alternatives, according to research UBS.
Some large consumer corporations are addressing this issue. For example, Mondelez has launched plant-based Philadelphia cheese products at the same price range as the dairy versions, Walmart (NYSE:WMT) has incorporated plant-based products into its affordable ‘Great Value’ brand and Tesco’s (LON:TSCO) vegan ‘Plant Chef’ range is 11.6% cheaper per kilo than comparable own-brand meat products.
Jeremy Coller, chair and founder of FAIRR, said: “From precision fermentation to plant-based meatballs, innovation in alternatives to meat is disrupting the commodities market and bringing new, more sustainable choices to consumers.”
He added: “Combined with inflation that is driving the price of traditional meat and dairy up at a quicker rate than alternatives, we are starting to see a world where plant-based meat and dairy is just as affordable as conventional animal-based products.”
Driving behavioural change
According to FAIRR’s report, animal agriculture is responsible for over 60% of the agriculture, forestry and land use sector’s global greenhouse gas (GHG) emissions and contributes to around 15% of all GHG emissions worldwide.
Various studies have pointed out that widespread dietary change is needed to drive down the environmental consequences of the feedstock industry. This is because even the impact of the lowest-impact animal products is typically greater than those of vegetable substitutes. Reducing meat consumption is a key step to cut the carbon footprint of individuals.
More so than the price point, the taste of alternative proteins is the main reason why they are still relatively unpopular among meat eaters. UBS analysts expect prices to get increasingly lower as the taste and texture of these products improves, as strong market demand will drive innovation. As pointed out by FAIRR, the sector presents a compelling investment opportunity as it combines “environmental stewardship with financial return”.