Big Ag wants a cut of booming fake-meat market
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[September 09, 2019] By
Rod Nickel and Tom Polansek
WINNIPEG, Manitoba/CHICAGO (Reuters) -
Bunge Ltd, one the world's biggest grain traders, recently disclosed the
1.6% stake it had purchased in the fast-growing fake-meat startup Beyond
Meat.
The play looked smart after the stock surged more than 250% since the
faux burger and sausage maker's initial public offering in May. Indeed,
Beyond Meat's <BYND.O> market capitalization of $9.9 billion is now
larger than Bunge's <BG.N>, a 201-year-old firm with 31,000 employees.
No wonder many top agricultural firms want to grab their cut of the
booming market for plant-based fake meat. Bunge's investment is just one
example of how grain traders and seed companies are trying to capitalize
on a market that now accounts for 5% of U.S. meat purchases - a share
expected to triple over a decade, according to investment management
firm Bernstein. That growth would mirror the fast ramp-up of milk
substitutes made from crops such as almonds.
"I definitely think this is going to continue to drive demand," said
Vince Macciocchi, president of the nutrition group at Archer Daniels
Midland <ADM.N>, one of Bunge's chief rivals.
ADM and privately-held grain trader Cargill are selling processed peas
and soy proteins to consumer food companies and restaurants that use
them to make vegetable burgers, sausages, fish substitutes and other
faux-meat products. They are also getting into the business through
acquisitions and corporate partnerships or by leveraging their labs and
research capabilities to help make new plant-based products for clients
including food and beverage makers.
Seed company Corteva <CTVA.N> - which spun off in June after a merger of
Dow Chemical and Dupont <DD.N> - is studying potential vegetable seed
offerings.
Grain traders and seed-makers are following the lead of Beyond Meat and
another startup, Impossible Foods, along with traditional meat producers
such as Tyson Foods <TSN.N> and Maple Leaf Foods <MFI.TO> that have
cashed in on plant-based meat substitutes. Demand for meat alternatives
has soared as consumers add plant-based protein to their diets for
health reasons and out of concern for animal welfare and environmental
damage from livestock farming.
Tofu, made from soybean milk, is the best known meat alternative and has
been around for decades. But in recent years, other crops such as black
beans, peas, lentils, canola, beets and sunflower have become popular in
products made to taste like or replace meat.
The big agricultural firms are in part playing defense. Grain traders
supply the world's livestock farms with animal feed - a business that
would suffer if fake meat sales rise at the expense of real meat. Seed
companies such as Bayer AG <BAYGn.DE> sell to farmers who grow the corn
and soybeans that are now sold mostly to feed livestock.
SURGING DEMAND
ADM this year created a new position - director of "flexitarian"
solutions - to focus on developing products for food companies who are
targeting the market for a mostly plant-based diet, Macciocchi said. The
company is also considering repurposing an animal-feed plant in
Rotterdam to produce human-grade soy products, he said. ADM has expanded
its plant-protein team of scientists and marketers in the past three
years even as it aims to cut its overall workforce.
"We've dedicated a significant amount of our team - the technical side
of our team, as well as the commercial side of our team - to plant-based
proteins," Macciocchi said.
Cargill [CARG.UL] in August announced an additional $75 million
investment in North American pea-protein producer Puris - which supplies
Beyond Meat. That triples its original $25 million investment in January
2018.
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A burger patty made with black beans and canola protein powder at
Burcon's alternative meats protein lab in Winnipeg, Manitoba, Canada
August 23, 2019. REUTERS/Shannon VanRaes
Cargill's customers have been clamoring for pea or soy protein products,
including alternative meats, said Laurie Koenig, who leads a Cargill
unit developing such items.
"We've never seen this kind of pull before from the market," Koenig
said.
Like ADM and Cargill, Bunge is now looking to supply ingredients to
startups and large companies involved in the imitation-meat trend, Bunge
CEO Greg Heckman said in an interview.
"There's just so many ways that it is touching our business," he said.
SEEDS OF A NEW MARKET
Seed developer Corteva has discussed expanding into research or small
acquisitions in vegetable seeds in part to take advantage of increasing
demand for plant-based proteins, Chief Executive Jim Collins told
Reuters. Corteva's ability to research breeding and genetics of corn and
soybean crops could be applied to vegetables, he said.
"The whole vegetable-seed industry is interesting to me," Collins said.
Rival Bayer also could enter the market as a provider of plant-based
meat alternatives, an executive said in August, without providing
details. The company, which sells seeds and farm chemicals, said it also
offers products for plant-based protein sources such as soybeans, tree
nuts and peas.
Toronto-based pork processor Maple Leaf two years ago bought U.S.-based
Lightlife Foods, a plant-based burger-maker, to expand its reach into a
market with boundless potential, chief executive Michael McCain said.
While the trend is starting in North America and Europe, it will expand
worldwide within a decade, McCain said.
Marfrig Global Foods SA <MRFG3.SA> is making a plant-based burger for
the Brazil market - made from soy supplied by ADM, and sold at Burger
King starting in November.
ADM is building a pea protein plant in North Dakota, while France's
Roquette and Verdient Foods, backed by Hollywood director James Cameron,
are building plants in Manitoba and Saskatchewan respectively.
Fake meat makers largely rely on soy, wheat, and peas, according to the
Good Food Institute, which promotes the alternatives. But a wide variety
of other crops play a role, presenting an opportunity for companies that
maintain relationships with farmers.
In a Winnipeg, Manitoba laboratory that doubles as a kitchen, a Burcon
NutraScience <BU.TO> food scientist grills black bean burger patties
that are held together with canola protein, rather than the usual eggs -
making such burgers appealing to vegans. The company makes protein
ingredients from canola, pea and soy, and business is brisk.
"The plant-protein industry is as hot as it's ever been," said Burcon
vice-president Martin Schweizer.
(Reporting by Rod Nickel in Winnipeg, Manitoba, and Tom Polansek in
Chicago; additional reporting by Tina Bellon in New York and Karl Plume
in Chicago; Editing by Caroline Stauffer)
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