$506 M invested in cultured meat in H1 2021
2021 can be considered "the year of cultivated meat", as the sector has attracted more than $500 million in funding for cell-cultivated meat technologies in the first half of the year. A recent report from FAIRR found out the number of firms adopting formal targets for protein diversification grew from zero to seven in three years with Unilever, Conagra, Nestle and UK retailers Tesco and Sainsbury’s amongst best-performing firms.
Amazon (Whole Foods), Costco and Kraft Heinz are the worst performers, with the majority of food companies (72%) so far failing to set any quantifiable targets for protein transition, despite a 43% growth in dollar sales of plant-based foods in two years.
A five-year investor engagement with 25 leading global food retailers and manufacturers on protein transition finds evidence of clear leadership and reports that the number of firms adopting formal targets to grow their alternative protein offerings is on the rise – growing from 0 in 2018 to 28% of companies in 2021.
However, it also warns that the majority (72%) of food companies are yet to adopt protein diversification targets as part of their decarbonization efforts. That’s despite booming consumer demand for meat and dairy alternatives, and recent warnings from the IPCC that atmospheric methane gas has hit an 800,000-year high and “strong, rapid and sustained reductions” in methane emissions (32% of which currently come from livestock) are urgently needed if we are to achieve the goals of the Paris Agreement.
These are some of the key findings from ‘Appetite for Disruption: The Last Serving’, new research launched by the $40 trillion-backed FAIRR Initiative, which assesses how 25 food companies are responding to the rise of alternative proteins (including both plant-based and cultivated ‘meat’).
Signs of progress praised by investors include:
7 of 25 (28%) global food retailers and manufacturers now have targets to expand their alternative protein portfolio, up from zero in 2018. For example, Unilever has committed to reaching $1.2 billion in sales of meat and dairy alternatives between 2025-27.
Five firms (Unilever, Tesco, Nestle, Sainsbury’s, Conagra) are praised for being “pioneers” on sustainable protein research and innovation. See 1 below for a full snapshot of company rankings.
48% of companies now track and publicly disclose their emissions from animal agriculture (Scope 3), up from just 21% in 2019; and 52% of the companies in the engagement now have a net-zero ambition (up from just 8% in 2019).
UK retailers Tesco and Sainsbury’s show global leadership on protein diversification and innovation in contrast to their US and European peers. Tesco has committed to a 300% increase in sales of meat alternatives by 2025, and pledged to halve the environmental impacts of the average basket in the UK. Sainsbury’s has publicly endorsed the need to re-align diets in order to reduce emissions, and has plans to grow the volume of sales of plant-based protein and dairy – following a staggering 40% increase in plant-based diets in the UK in 2020. Both firms also have ambitious science-based targets to reduce their emissions in line with a 1.5-degree pathway. M&S is also highlighted for its partnership with ENOUGH, a mycoprotein start-up, and commitment to increase sales from its Plant Kitchen.
68% of firms have Scope 3 targets for reducing agricultural emissions in their supply chains. Scope 3 emissions represent, on average, 92% of each company’s total GHG emissions, most significantly from animal protein supply chains at both the farm level and in feed production.
However, such is the demand for alternative proteins – which tend to offer a more sustainable alternative to meeting global protein demand than current meat production – that investors warn many companies are still behind the curve, failing to protect themselves from costly climate risks from meat and dairy production, reputational damage and looming regulation on protein transition.
Areas of concern include:
72% (18/25) of food brands have yet to establish formal targets to diversify their protein sources despite high consumer demand, showing a lack of clear strategy around a growing market trend and valuable climate mitigation tool. Dollar sales of plant-based foods grew 43% in the last two years, and the US meat and dairy alternatives market grew 300% from 2019 to 2020.
US companies underperform dramatically in comparison with their global peers. Amazon (Whole Foods), Costco and Kraft Heinz are the poorest performers in FAIRR’s ranking (see 1). Leading US retailers Amazon, Costco, Kraft Heinz and Kroger do not report their Scope 3 emissions relating to animal agriculture, a critical measure of the environmental footprint of their meat supply chains. Furthermore, Costco grew its beef sales by 34% in 2020 in contrast to 2019, and does not disclose how it is addressing the environmental impacts of its meat supply. Meanwhile, consumer demand for alternative protein products in North America is soaring: plant-based milk is already purchased by 39% of US households and plant-based food sales rose nearly twice as much as overall U.S. retail food sales last year.
"Food retailers and manufacturers have a vital role to play in the transition to a low-carbon economy, but FAIRR’s report shows that the majority of leading food companies still lack concrete targets to address climate risks in their protein supply chains or to meet booming consumer demand for alternative meat and dairy products.
Whilst many companies are lagging, we are pleased that FAIRR has seen visible leadership from 28% of the largest food retailers and manufacturers, including leading UK supermarkets, as well as remarkable innovation in sustainable protein. This has been the year of cultivated meat with a record $506 million invested in lab-grown meat alternatives, which is now taking its place alongside plant-based protein on investment agendas," commented Jeremy Coller, Chair of the FAIRR Initiative and Chief Investment Officer, Coller Capital in a press release.
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