ESG Investing | Plant-based meat market in China

Updated: Feb 18, 2020

Has the plant-based meat market reached China yet? Who are the major players in the Chinese artificial meat market? Read our article to find out!

(source from Omnipork)

1. The rise of plant-based meat

The craze of “artificial meat” in China began in 2019, following the rise of major players Impossible foods, Beyond meat and Memphis meats in the global market. The debut of Beyond Meat on the Nasdaq in May 2019 created a new record of the best first day performance over the last 11 years.

Not only gaining traction in the western market, Impossible foods and Beyond Meats have their eyes set on the world's largest meat market: China, 46% of meat consumption came from pork, 11% from beef, 33% from lamb and 15% from poultry, pulling in close to a quarter of total meat traded in the global market. According to Economic Co-operation and Development’s (OECD) estimate, the average Chinese citizen tucked into a whopping 49 kilos of meat last year.

Environmentally conscious entrepreneurs, make note of this figure; the livestock trade worldwide accounts for almost 18% of human-induced greenhouse gas emissions. If we see meat consumption in China convert to a more plant-based meat diet, this will indeed contribute to an improvement to global human-induced GHG emissions.

(Infographic of less meat, less heat)

2. How is the Chinese plant-based market different from the western market?

In November 2019, at the China International Import Expo, Impossible foods gave Chinese consumers the first taste of its plant-based meat. In addition to its signature meatless impossible hamburger, Impossible foods teamed up with famous Singaporean chef Jeremy Leung, to present two traditional Chinese dishes, the lion’s head meatball soup and siu mai, which soon sparked positive responses and commentary on Chinese social media.

source from our friend Mr. Meng

During an interview with local Shanghai news media, interviewees and medical experts however commented on the nutritious benefits of artificial meat, such as low cholesterol, low saturated fat, etc. This is very different from the ambitions of western plant-based meat companies, which are more focused on solving the ethical concerns regarding livestock and animal trade, and issues on climate change in the conventional meat industry.

(sourced from Beyond meat)

Secondly, fake meat isn’t a stranger to Chinese people. China has a long history of making ingeniously disguised vegetables, roots and soy beans as meat, due to religious reasons. The overall Buddhist population in China only count for 50 million people, less than 4% of total population. The acceptance of a vegetarian diet lags behind western countries or even neighbor countries like India. Chinese people tend only to eat fake meat during religious festivals or consider them as snacks and not a true substitute for meat products. Whilst western plant-based meat companies aim to provide fake meat as an alternative to real meat consumption, i.e. artificial meat in the form of hamburgers or sausages, it is predicted that artificial meat will only be served in 1 of 10 dishes on Chinese dinner tables.

(sourced from Omnipork)

Another challenge is to win the Chinese palate. Even if artificial meat no longer reminds us of the taste of cardboard, Chinese consumers believe that the taste of real meat is by far the superior option. The massive choices and competitive restaurant industries make it harder for plant-based meat companies to join the fray. Younger generation will possibly try it out but the challenge is to scale up. So why would Chinese consumers choose plant-based meat over real meat?

3. Who are the main players in the Chinese plant-based market?

Before anyone can determine what strategies to convince Chinese people to warm to plant-based meat, the market potential for artificial meat in China is too big to ignore. The African swine fever (ASF) epidemic devastated the country’s pork supply last year, with pork prices skyrocketing in 2019. Consumers are now searching for safer and cheaper alternatives to pork, mostly from western countries.

On top of the food safety concern, according to the Guardian, the Chinese dietary guidelines recommended that personal meat consumption be reduced with the aim of producing an overall reduction of 50 percent by 2030, a positive outlook for plant-based meat companies.

On 6 Jan 2020, Securities Times reported that China is drafting its first National Standards for artificial meat. Wang Shouwei, director of the China Meat Research Center, announced the news at an industry forum on the same day, calling artificial meat a “signature product” and a “food of the future” that would benefit from national regulation, both in terms of food safety and investment potential. Monday’s forum was hosted by the China Institute of Food Science and Technology, an affiliated institution of the Chinese Academy of Agricultural Sciences.

According to Caixin global, Pat Brown, CEO of Impossible Foods said talks have already begun with Chinese regulators and potential business partners to localize production in a bid to tap into local appetites. One of the biggest obstacles is regulation, given that Impossible Foods’ products contain genetically modified products, a concern China is reluctant to accept within its borders. Nevertheless, recently approved GMO corn is a gradual shift in the right direction.

(source by ChinaESG)

Impossible Foods definitely smells an opportunity in China’s pork market. They are planning to launch Impossible Pork in China. Mr. Brown mentioned to New York Times “Every time someone in China eats a piece of meat, a little puff of smoke goes up in the Amazon. It is an absolutely essential and extremely important market for us.”

Artificial meat giant Beyond Meat has also expressed its plans to enter the Chinese market in Q1 2020. In line with its global market strategy, they are focused on launching the online and offline stores in China and currently working on obtaining a license for imported food. CEO of Beyond Meat Seth Goldman told Reuters, they will also roll out soy bean based patties and serve as buns or dumplings. A Chinese listed company Double Tower food (002481.SH) claimed in June last year that they are the local supplier of plant-based protein to Beyond meat.

Familiarity with local tastes and culinary traditions is giving domestic companies a leg up in the race. Hong Kong based plant-based meat brand Omnipork is part of a green initiative organization called Green Monday group. Their market campaign emphasized on the health and food safety benefits which are exactly what Chinese consumers are looking for.

(Sourced by Omnipork)

According to data from Tmall, a B2C online store under the Alibaba group, Black Friday sales showed that Omnipork sold 4000 plant-based pork products within 2 days and 1500 meat-free chicken products. The major consumers are millennials born in the 1980s and 1990s. But digging further into the data, a 300g Omnipork product costs 28RMB (approx. $4) on Tmall. As the food is considered an imported product, it’s stored in a tax protection zone at Ningbo. Moreso, the product needs to be transported via cold-chain, the delivery fee costs 20RMB (approx. $3). A 75% increase in the product price and a one week delivery time lessens the appeal for potential customers.

(source from Tmall)

A Beijing based artificial meat Startup Zhen meat, where Zhen means “precious” and a homonym to “real”, put a vegan spin on mooncakes in Sep 2019. (yes, there’re savory mooncake!). A pack of 6 Zhen meat mooncakes costs 88 RMB. As a test of the market, the product was only available during the moon festival time and the overall sales consisted over 500 products. The marketing campaign used a slogan “eating meat without gaining weight” was also designed for the local market. According to New York Times, with the exception of mooncake, Zhen meat is researching 3D printing technology to produce imitations of meat that replicate the texture of bones and texture of meat to achieve likeness.

(source from Zhenmeat)

Shenzhen based startup Starfield, claiming they are the only mainland company with its own R&D team to produce artificial meat, appeared as another player in the market since September 2019 and collaborated with 23burger, Baia and other Shenzhen local brands within one month. In Nov 2019, they teamed up with Nayuki tea, a Chinese tea café chain and tested the market by releasing 3 artificial meat products, which incude 2 Starfield artificial meat burgers and 1 Mexican roll. According to the report from China funds, 100 burgers were sold within an hour.

Homegrown ham producer Jinzi (002515,SHE), another Shenzhen listed company, said on 14 October 2019, it's collaborating with an affiliate of U.S. biotech company DuPont on fake beef. Although the company has nothing to do with artificial meat months ago, but with the investment frenzy in this sector, its stock price went up 47% from 5.11 RMB to 7.52 RMB within one week but soon reverted to normal price levels.

#plantbasedmeat #artificialmeat #beyondmeat #impossiblefoods #china #zhenmeat

We believe the artificial meat market will continue to grow but it’s not an easy call to make as to whether artificial meat market has officially reached China. Stay tuned...!


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