From CB Insights:
Will a meatless food
industry featuring lab-grown meat, seafood substitutes, and insect
protein be the future of food? Food giants from Tyson to Cargill
are working to navigate a future where protein isn't dominated by
traditional animal sources.
At the moment, meat is still king.
By some estimates, 30% of the calories consumed globally by humans
come from meat products, including beef, chicken, and pork. The global
meat market is worth $1.8T, according to CB Insights’ Industry Analyst Consensus.
Americans consumed a near-record 220 pounds of red meat and poultry
per capita in 2018 — in 1960, that figure was just 167 pounds, according
to the USDA.
Also in 2018, USDA figures showed domestic production of meat hit a
record high of more than 100B pounds. That translates to a staggering
number of animals grown for food: around 30M beef cows in the US and
20M+ pigs in Iowa alone.
To meet this skyrocketing demand, the meat industry has evolved into a
complex global business that involves farms and feed lots, as well as
meat middle-men, like processing and storage centers, transportation and
logistics, slaughterhouses, and more.
Together, the 6 largest meat companies represent $60B in market
capitalization — as of the beginning of the year — with the largest,
Hormel, boasting a $23B valuation.
The industry has seen massive consolidation, as companies like Hormel
and Brazil-based JBS have grown bigger and bigger through the
acquisition of new meat brands and products.
Since 2014, Hormel has spent around $3B on acquisitions, including
Applegate, Fontanini Italian Meats and Sausages, Ceratti, and Columbus
Manufacturing.
One of the biggest deals in this space was pork producer WH Group’s
2013 acquisition of US-based Smithfield Foods, which owns brands such as
Armour and Farmland. At the time of the deal, Smithfield was valued at
$7.1B.
Despite high-profile deals in the sector, the industrial meat
industry faces a rising tide of challenges related to business, ethical,
and environmental concerns.
Meanwhile, startups using technology to engineer meat in labs or
manufacture it from plant-based products are rising in popularity. In
2019, one of the world’s biggest alternative protein brands, Beyond
Meat, the manufacturer of the plant-based Beyond Burger, went public at a
valuation of almost $1.5B.
Shortly after, Burger King released the Impossible Whopper — a
meatless variant of its most well-known product. The Impossible Whopper
replaces beef with plant-based meat manufactured by Impossible Foods, a
Redwood City-based company that has raised more than $700M in disclosed
equity funding. The company was given a valuation of $2B at its last
funding round.
In addition to offering new products, these alternative protein
startups have the potential to upend the meat production process.
Going forward, the meat value chain could be simplified dramatically,
as “clean meat” labs could take the place of farms, feed lots, and
slaughterhouses.
Especially
vulnerable to these changes are food companies like Tyson, Pilgrim’s,
and Sanderson Farms, which rely on animal meat products for 80% or more
of their revenue, as seen below.
Using CB Insights data, we dug into some of the major trends in the
growing meatless industry, from startups to watch to key investors to
future trends & challenges.
Table of contents
Startups innovating across the meatless ecosystem
Startups are disrupting the meat production value chain through the
development of high-tech protein products, threatening established
players like Tyson.
Meat substitute startups are not only competing with prepared and
frozen meats, but are also creating alternative snacks (such as Beyond the Shoreline‘s kelp jerky).
While the environmental benefits of lab-grown meat are potentially
dramatic, meatless products are still significantly more expensive on a
per-pound basis than animal alternatives.....
.....
MUCH MORE
