John Phipps: Is Fake Meat a Real Threat to Livestock Producers?
Customer Support 05/25/19
A timely question from Darrell Boone:
“There's been a lot in the ag media lately about fake meat. If it would turn out to be comparable in taste and nutrition to real meat, it would appear to me that it could likely be produced cheaper than on a farm, which could be a real game changer. Do livestock producers have reason to be concerned about this? And if so, what about corn and soybean growers and other related ag industries?”
There are several terms for such products used in addition to fake meat, but that’s short and easy to say, so I’m going to skip that nomenclature debate for a while. I have no idea fake meat is going to fare in the consumer market, but I have several indicators I’m watching.
First is the rollout by several burger chains of fake meat sandwiches, the largest of which may be the Impossible Whopper by Burger King. We should have sales data on those menu items within months.
Second, I’m watching the economics of both cultured and plant-based products. If they begin a sharp price drop similar to other new technologies, that could be a big boost to sales.
Third, fake meat could become a form of virtue signaling. In other words, if people eat it because they support animal rights or lower carbon emissions rather than because they think they tastes better. Monitor sales in Europe. They tend to lead food trends.
Fourth, the demographics of sales of fake meat matter. Children getting used to them early will shape demand curves of the future, for example. A good clue would be sales in the young-parent age group.
Finally, I’m looking for clues from China. They not only represent the largest and fastest growing market for protein, they are also world leaders in biotech. Their focus to date has been on cultured meat, but we really don’t know what products they are targeting. The current trade war could make switching to fake meat a way for their citizens to demonstrate patriotism and to avoid protein dependence on the US. Intense government encouragement could engage Chinese consumers similar like SPAM did in the US during WWII.
Fake meat doesn’t have to replace T-bones or pork chops. But my crude estimate is if such products get to 5% of total sales, they will emerge a formidable competition and a demand curve changer. I’ll talk more about this in the future.