Big Ag wants a cut of booming fake-meat market

Burcon NutraScience

09/09/2019 11:00

By Rod Nickel and Tom Polansek
    WINNIPEG, Manitoba/CHICAGO Sept 9 (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. urn:newsml:reuters.com:*:nL1N21S1RV
    "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.  urn:newsml:reuters.com:*:nFWN25O0JN
    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. urn:newsml:reuters.com:*:nL8N24X9QJ
    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.  urn:newsml:reuters.com:*:nL2N25U0FY
    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.
    

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FACTBOX: Plant-based meat alternatives     urn:newsml:reuters.com:*:nL8N24XA11
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 (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)
 ((rod.nickel@tr.com; 1 204 230 6043; Reuters Messaging:
Twitter: @RodNickel_Rtrs))