Cookie settings

Cookies are small text files stored on your device to identify you and can be used to remember user preferences and analyse traffic to further improve our website. We may share information about your use of our site with our social media, advertising and analytics partners. By clicking "Accept all cookies", you agree to the use of all cookies as described in our cookie statement or "Accept only essential cookies" to only use cookies that are necessary for the functioning of our site.

Read our cookie statement here.

You can choose to adjust your preferences at any time.

Wholesale Banking

Appetite for change: How meat and dairy alternatives are moving from niche to normal

Animal husbandry to produce meat and dairy is a highly resource-intensive activity that has profound effects on land use and quality. The global meat and dairy industry contributes 60% of agriculture’s greenhouse gas emissions (1) and in 2018 we consumed 385 million tonnes of meat worldwide, accounting for at least 1.7 gigatons of CO2 emissions, 380 million hectares of land and consumption of 87 billion square meters of water (2). That is a huge environmental impact – from just meat and dairy.

A woman eating a plant-based burger

One way to reduce that impact is through a switch to plant-based alternatives such as almond milk, tofu and veggie burgers. If only 10% of the global animal-based food market was replaced by these alternatives by 2030, it would lead to CO2 savings equivalent to 2.7 billion trees (3). “A shift away from animal protein – that is, the growth of technologies to do with plant-based or cultured meat alternatives, connects with the climate change agenda and many of the UN's Sustainable Development Goals,” says Mark Cliffe, Global Head of New Horizons at ING. “And it is a radical transformation of the industry.” 

Increasing the proportion of protein derived from plants would also create a more localised supply – with all the attendant environmental benefits – and according to Cliffe could prove transformative in enhancing food security. “It's essentially doing away with the need for animal raising,” he says. “This is a huge game changer, once the technology is perfected.” This will be a long-term process, however. Demand for meat was still on the rise globally prior to Covid-19, as wealth increased in emerging markets, which is historically associated with higher consumption (4).

Choice cuts

Meanwhile, the market for meat and dairy alternatives is growing, and the outlook for the kind of shift we need to make is promising. Consumers want more environmentally friendly products, and that trend dovetails neatly with attempts to reduce meat and dairy consumption for health reasons. There are demographic reasons for optimism here, too, with younger generations keen to reduce their meat and dairy consumption (5). “If the next generation embraces the idea that we need less or no meat and dairy, this will give another boost to alternatives,” says Kiran Sanchit, ING’s Head of Food & Agribusiness for EMEA. “At the same time reducing the amount of meat being produced.”

Sales of alternative meat and dairy products have grown by nearly 10% a year in the EU and the UK over the past decade, according to research by ING’s Economics Department. The dairy alternatives market in the region is expected to be worth €5.5 billion in 2025, and the retail value of meat alternatives is expected to reach €2.5 billion. At the same time, there have been breakthroughs in the production of plant-based alternatives, with heavy investment by fast-moving consumer goods companies, start-ups such as Beyond Meat, and incumbent meat and dairy companies such as Tyson and Hormel Foods. Fast-food outlets are also now seeking to capitalise on this trend – a “McPlant” product line has been slated for 2021.

Lunch box with plant-based alternative

Close the gap

Plant-based alternatives still tend to be more expensive than traditional meat and dairy products, and ING has identified this as one of the three biggest barriers to market growth, along with user experience and distribution and availability. But prices are dropping as choice and competition grow and technology becomes less expensive, and competitive markets such as the UK have closed the gap more than most. Cliffe expects the trajectory to mimic wind and solar power: for a long time they were more expensive than conventional energy, but now prices are dropping considerably thanks to technological development.

Investors and banks are becoming more selective about their investments, with tighter ESG requirements. ING, for instance, is in the process of working sustainability targets into its credit agreements with several clients, which if met will improve the terms of the companies’ credit. "These kinds of moves may have a knock-on effect on the meat and dairy industries”, says Sanchit. “The market may be growing fast, but even faster growth is possible as flavouring, texture, quality and pricing improve further,” he says.

Changing consumer preferences and growing concerns about unsustainable consumption patterns are taking what has traditionally been a niche market and thrusting it into the mainstream. As public and political pressure to decarbonise the economy grows, and supermarket shelves are increasingly given over to plant-based alternatives, are we witnessing the slow decline of meat and dairy?

Sources:

  1. theguardian.com
  2. azocleantech.com
  3. azocleantech.com
  4. agriculture.gov.au
  5. plantbasednews.org