Plant-based protein food surging in China with enticing potential returns

Renee Pan

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Due to the coronavirus outbreak and concern over the environmental impacts of meat among Chinese consumers, plant-based proteins are surging in popularity across the country, with local businesses and venture capitalists alike looking to capitalize on the trend.

Growing market for plant-based meat in China

Although China remains the world’s biggest consumer of meat, demand for plant-based proteins is on the increase. Currently, as the world’s most populous nation, China consumes around $170 billion worth of meat annually, according to consultancy Euromonitor. This means that the country is responsible for around one-third of the world’s meat consumption.

However, the ongoing coronavirus crisis has helped to emphasize concerns over the links between meat-based products and viral diseases. As a direct result, Chinese citizens have begun to pay special attention to their diet and their health. This means that plant-based protein is firmly back on the menu, with many citizens turning to meatless products such as Omnipork.

This move towards a healthier, greener, meat-free diet in China is also part of a wider trend that has been unfolding over the past decade. Last year, Euromonitor predicted that China’s free-from-meat market had grown by 33.5% since 2014. By 2023, it’s estimated that the free-from-meat market will be worth $12 billion, up from just under $10 billion in 2018.

Source: Good Food Institute

But, despite its growth from an RMB3.59 billion market in 2014 to an RMB6.12 billion market in 2018, China’s plant-based protein market is still comparatively small compared to the meat supply chain. However, because vegetarian alternatives to meat, dairy and seafood are continuing to gain traction across Asia, the market’s growth appears likely to accelerate in the coming years. This will likely be helped further when high-quality products reach supermarkets and restaurants.

Overall, the picture looks incredibly positive for the meat-free market. It has grown rapidly since 2014 and coronavirus-related scares make it appear likely that this growth will continue going forward.

Chinese players more active in recent months

Looking specifically at the role Chinese suppliers have played in this growth, it’s clear to see that start-ups, traditional food businesses and investors have all looked to penetrate the market throughout the first half of 2020.

For example, in April, Chinese food tech firm Starfield announced that it had partnered with six major restaurant chains to offer plant-based dishes across the country, with options including a plant-based black-pepper meatball pizza at Papa John’s and Starfield burgers at Brut Eatery.

As well as in-store options, Chinese citizens have also benefited from an increasing number of plant-based takeaway products. Online food group Deliveroo revealed that first-quarter growth in orders of vegan food in Hong Kong matched a doubling in orders of other food compared with a year earlier. As a response to the growing demand, Deliveroo has increased its number of partner restaurants that offer vegan options from 80 to 266. These figures are backed by China Daily, which recently reported that more than 300 restaurants in Beijing alone now offer vegetarian meat.

With such sustained growth in the market and players becoming even more active in recent months, China is in a strong position to become a leader in the move towards a sustainable food system.

Leading US players attracted by China market starting to act

The expansion of the meat-free market in China in recent months has attracted the attention of leading US players such as Impossible Foods and Beyond Meat, who are both aiming to penetrate the Chinese market in the coming months and years.

Last November, Impossible Foods debuted its replacement beef product to 40,000 consumers at a trade show in Shanghai. Following the successful trial, Impossible Foods is currently working through the regulatory process to enter mainland China. If successful, its strategy for China could be similar to the one it has undertaken in Singapore where the company’s famous ‘bleeding’ plant-based product has already been rolled out across nearly 200 locations, including coffee chain Starbucks, fast-food chain MOS Burger and bakery shop BreadTalk.

In China specifically, a partnership between Starbucks and Beyond Meat debuted back in April of this year and marked Beyond Meat’s first entry into the Chinese market. As part of the partnership, Starbucks created three dishes made with Beyond’s beef alternative and two made with a pork alternative from Hong Kong-based Omnipork. In addition, the coffee chain announced that it would offer Oatly’s oat milk as a non-dairy substitute for Chinese consumers as part of the coffee chain’s sustainability push.

Similarly, after successful trials in the US, KFC is now launching a series of products in selected Hong Kong locations under the name the New Era Plant-Based Series. This June, it launched Beyond Meat products across mainland China after trailing plant-based chicken nuggets in selected stores. During the trial, supplies sold out within an hour.

What’s coming up in China’s plant based market

With entrepreneurs, local companies and multinational organisations all investing in plant-based meat and dairy products in China, the future for the industry looks incredibly bright. Its growth also appears set to accelerate rapidly throughout 2020 and into next year.

To capitalize on this momentum in the market, leading global alternative protein venture capital fund Lever VC & Brinc has launched an RMB200 million fund and accelerator dedicated to helping Chinese plant-based and cell-cultivated meat and dairy companies. The fund will be supported by Shanghai-based Lever Foods and will back entrepreneurs and early stage ventures. This is a significant move for the Chinese market because the venture capital fund was an early investor in Beyond Meat, Impossible Foods and Memphis Meats.

The rapidly growing size of the meat-free protein industry in China makes the prospect of investing in China incredibly enticing because the potential returns are so high; particularly in such a meat-loving country. This is a view bolstered by the fact that the CEO of Impossible Foods, Pat Brown, described the meat-free market in China as a ‘perfect opportunity’ for the company. With more than 50 million vegetarians and counting, China’s growing number of meat-free consumers present a tempting opportunity for investors looking to capitalize on a growing trend.

Renee Pan

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