Glacier FarmMedia – The future for plant-based protein is bright despite recent setbacks, according to a new Ernst & Young study.
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Demand for the product is expected to be strong in the wake of a global pandemic that led to an economic slowdown in 2022.
Ernst & Young is forecasting US$139.4 billion in global plant-based meat sales by 2035, up from $16.5 billion in 2021, which is a 16.5 per cent compound annual growth rate.
Why it matters: Soybeans, along with peas, are projected to make up half of the plant-based ‘meat’ markets, and one-third of the alternative dairy market in future.
That forecast is at odds with a recent report by CoBank, which used data provided by Circana. According to that report, plant-based meat sales in the United States amounted to 19.8 million kilograms for the 52 weeks ending July 2. That is down 21 per cent from the previous year.
Bill Greuel, chief executive officer of Protein Industries Canada, the group that paid for the Ernst & Young study, called the recent downturn a “short-term blip”, adding the long-term outlook for the category remains positive. He’s not sure if Ernst & Young’s ambitious targets will prove accurate, but he believes the long-term trend is for continued growth.
Greuel thinks consumers will be pleased with the next wave of alternative meat products. The first wave was all about replicating ground beef. The next wave will mimic whole muscle cuts, such as salmon steaks.
Growth is also anticipated in the other two main categories. Plant-based dairy sales are expected to expand to $51.3 billion in 2035 from $14.4 billion in 2021, representing a 9.5 per cent annual growth rate.
The plant-based baking fortification category is forecast to have global sales of $15.3 billion, up from $8.7 billion in 2021, a 4.1 per cent annual rate of growth, according to the Ernst & Young study.
Those are all the most bullish scenarios. Under the base case, the 2035 outlook falls to $88.3 billion for plant-based meat, $40.2 billion for dairy and $9.9 billion for baking.
Soybeans and peas are expected to account for more than half of the plant-based meat market, and soy will make up more than 30 per cent of the dairy market.
Peas and other pulses are expected to gain ground on soy in the plant-based meat category.
Ernst & Young is forecasting 15.85 million tonnes of pea use in that category by 2035.
To put that in perspective, Canada produced an estimated 2.19 million tonnes of peas this year and it is the world’s second biggest producer of the crop behind Russia.
Ernst & Young is forecasting rapid growth for plant-based protein in emerging markets like the Asia-Pacific region, fueled by population growth, rising incomes and lactose intolerance.
Lingering concerns surrounding environmental sustainability and animal cruelty are also top of mind for many consumers and should keep sales strong, according to the study.
But there are also roadblocks. Plant-based products need to attain parity in price, taste, texture and nutrition with the conventional products they compete against.
Recent inflation has led to higher price sensitivity, hindering the adoption of plant-based products. Some 64 per cent of consumers who reduced their consumption of plant-based proteins cited price as a reason.
Price premiums range from 67 per cent for plant-based meat to 87 per cent for plant-based milk products.
Another 58 per cent of consumers reduced consumption due to taste and texture issues, such as the meltability of cheese and the texture of seafood. Greuel said food ingredient companies are funding research and development projects to tackle those problems.
Canada is a leading producer of protein-rich crops and has established pulse fractionation infrastructure, a major strength. Greuel estimates that Canada has about 500,000 tonnes of pulse fractionation processing capacity.
Streamlined government regulation and increased access to capital will be needed to meet growth targets.
Labelling and food safety regulations are “hindering the deployment and growth” of novel products, according to Ernst & Young.
Greuel said the U.S. Inflation Reduction Act is another major challenge because it provides a huge competitive advantage to U.S. ingredient manufacturers.
“We need to really think about how competitive our jurisdictions are in this country relative to the incentives put in in the U.S.,” he said.
– This article was originally published at The Western Producer.