Have meat substitutes missed the boat?

In the third part of the FoodNavigator focus on meat substitutes, we take a look at the market for meat and meat replacements and the reasons behind the declining growth rates for both categories.

“Growth rates for meat are declining, but this is actually appearing to be the case for meat substitutes too. Perhaps surprisingly, in markets such as Spain, Italy and the UK, there is not much difference in growth at all despite the perception that people are switching from one to the other. The figures for the substitutes are more worrying still when you factor in the much lower base rates, which usually exaggerate any growth,”​ says Datamonitor analyst Mark Whalley.

Current market data for meat and meat analogues can be found at the bottom of this article.

Meat consumption declines​

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Analysts point to four key drivers for a general decline in meat consumption in Europe and North America. These are: health, ethics, price and ethnocentrism.

Health:​ Whether justified or not, many consumers perceive meat to be unhealthy, particularly red meat which has been linked to cardiovascular disease. “Several diets encourage the consumption of less meat, or even complete abstention. As a society that is growing increasingly obese, more and more consumers are looking to these kinds of diets as a means of managing their weight,” ​says Datamonitor.

Ethics​: ​The analyst also points out that eating meat has increasingly become a moral issue, with people turning away from meat as they do not agree with the killing of animals.

Price: ​With meat getting more expensive, some consumers are looking for alternatives, whether these are meat analogues or something completely different. However, Whalley points out that prices are also going up for meat substitutes. “Actually as a percentage of total cost some of the substitutes are increasing in price faster,”​ he says, which partly explains why meat analogues have not taken off.

Ethnocentrism​: ​“Consumers have grown more concerned with the possible dangers of consuming meat, especially that imported from elsewhere,” ​says Whalley. Historical food crises such as the BSE/beef and swine flu cases have made some consumers reticent to eat meat due to fears over safety. Consumers are also proving to be somewhat less inclined to consume products imported from a long way away, as evidence by the rise of the localism trend.

Meat analogues: Missed opportunity?​

However, market analysts indicate that meat substitutes are generally not shaping up to consumer needs and expectations, prompting them to suggest aggressive changes if the market is to be salvaged.

According to a survey conducted by Mintel, over half of consumers are disappointed with the variety of meat-free products, with a strong perception of poor taste of these products.

Meat substitute manufacturers need to focus on more exotic and ethnic flavours, as well as more premium products to increase appeal to many consumers, particularly women, says Mintel.

Datamonitor suggests that it may already be too late for meat substitutes.

“This could be a big missed opportunity for meat analogues. The growth rate of meat consumption is slowing yet these alternatives are not necessarily thriving. They still to an extent suffer from a widespread consumer perception that there is a significant compromise on taste – an issue still facing manufacturers of soy products, gluten-free products and similar,”​ says Whalley.

He also points out that consumer surveys highlight “a widespread dissatisfaction among consumers regarding the choice and quality of products available. It seems that rather than switching from meat to substitutes, some meat reducers/abstainers are actually just cutting the whole concept out altogether.”​

Meat market data​

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The European market for meat is currently valued at US$228bn, which marks a 2.5 per cent compound annual growth rate (CAGR) since 2004, according to Datamonitor. Moving forward, the analyst forecasts a continued decline in growth rates, with CAGR set at 2.2 per cent between 2009 and 2014, when it expects a market value of $254bn.

A similar movement is seen in the North American market, which was valued at $45bn last year – a 2.8 percent CAGR since 2004. By 2014, the market is expected to reach $51bn, with CAGR dipping to 2.3 per cent.

When looking at volumes, there were 2.1bn kg of meat sold in Europe in 2009, and 2.4bn kg forecast to be sold in 2014. This marks a 1.3 per cent and 1.2 per cent CAGR from 2004-1009 and 2009-2014 respectively.

In North America, 4.9bn kg of meat were sold in 2009 and 5.2bn kg are forecast to be sold in 2014. CAGR comes in at 1.3 per cent from 2004-2009 and 1.7 per cent from 2009-2014.

Meat substitutes data​

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A similar decline in growth rates is seen in the market for meat substitutes, both in terms of value and volumes.

In Europe, the meat substitute market was valued at $2bn in 2009, which represented a 3.4 per cent CAGR between 2004-2009. By 2014 the market is forecast to reach $2.4bn, with CAGR dipping to 3.3 per cent.

In terms of volume, 226m kg of meat substitutes were sold in Europe last year, a 2.3 per cent CAGR since 2004. By 2014, volumes are forecast to reach 249m kg, with CAGR falling to just under 2 per cent.

The North American market for meat substitutes held a value of $326m in 2009, with a 3.1 per cent CAGR since 2004. Forecasts for 2014 place value sales at $368m, with CAGR dipping to 2.5 per cent.

Volume sales of meat substitutes in North America were 53m kg in 2009, with 2.6 per cent CAGR since 2004. By 2014, Datamonitor predicts volumes to increase to 57m kg, but CAGR will decrease to 1.7 per cent.