Plant-Protein Companies Look to Asian Markets for New Growth

Urbanization, a growing middle class and increasing concerns over food security are all coming together to drive increased consumer demand for plant-based protein products — imitation burgers, eggs and more — across China and Asia overall. Many US-based food-tech companies are responding by expanding their product distribution across the region.

Among the companies that have done so recently, or will do so this year, are Impossible Foods and Just. The American food-tech companies are eyeing markets like Hong Kong, Singapore and even China, with its 1.4 billion consumers.

The Asia expansion is partially one thread in a global trend. There’s a “consumer mega-trend of a shift toward plant-based protein,” said Michal Klar, founder and CEO of plant-based investor FFN Ventures, speaking at the Rethink Agri-Food conference held in Singapore recently. While that mega-trend is most visible in the US and other western countries, speakers at the conference stressed that it’s happening in Asia too.   

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Among the food-tech companies are looking to take advantage of that by expanding their distribution in Asian markets is

Just, the San Francisco-based startup formerly known as Hampton Creek, expects to begin selling its products in China sometime this quarter. That will make the company the “first plant-based company to enter China,” CEO and cofounder Josh Tetrick said at the Singapore conference.

It’s potentially a huge market for Just Egg, the firm’s plant-based egg substitute. “China consumes more eggs than any other country in the world,” and it also faces numerous food safety challenges and land and water issues, Tetrick noted. A key advantage for Just Egg, Tetrick believes, is that it’s made from the mung bean, which is a common ingredient in Chinese cuisine.

The company started offering Just Egg at a Singapore hotel in November, and plans to further expand its distribution in the city-state soon as well.

Another US company that’s looking to Asia for growth is Redwood City, Calif.-based Impossible Foods, which launched its plant-based burgers in Hong Kong in early 2018. It expanded to nearby Macau last July and will begin distribution in Singapore later this year, according to COO David Lee. Singapore’s sovereign wealth fund, Temasek, led a $75 million funding round for Impossible in 2017.

Other companies, including some local ones, also see Asia as a prime market for plant-based proteins. For example, there’s Right Treat, a Hong Kong-based startup that offers Omnipork, a plant-based imitation ground pork specifically formulated for Chinese cuisine. Pork is by far the most commonly used meat in Chinese cooking. Right Treat launched Omnipork in Hong Kong and last year started distributing in Singapore as well.

A major reason why Asian consumers are turning toward plant-based protein is  concern surrounding food security — that is, the availability of food, and a person’s ability to access it. Such a concern is almost unheard of in the US, Tetrick said.

“In Asia, within the first 60 seconds of sharing what we’re doing, people use the phrase ‘food security.’ No one in California or Alabama talks about food security,” he said. “There is a different sense of urgency and awareness around how critical these issues are in Asia. That helps stimulate some of the adoption that we’re beginning to see.”

Other factors are at play as well, in Asia as well as around the world. “It’s an intersection of several things, from health and wellness, to the environment, to people looking at their values and saying, ‘I want to do better for myself, for my children, and for the planet,’” said Julie Mann, global plant-protein program manager at Ingredion. “These are all coming together and merging, and I really see that as one of the reasons why this has been driven so strongly in the last couple of years.”

Investors and big food conglomerates are taking notice as well. Plant-based meat maker Beyond Meat is getting ready for an initial public offering, while companies like Cargill, Tyson Foods and General Mills have eachs made investments in plant-based protein startups in the past two or three years, including Puris Proteins, Memphis Meats, Beyond Meat and Super Meat.

Meanwhile, in 2017, Danone acquired WhiteWave Foods, which produced organic and plant-based foods and drinks; in October, Danone said it intends to triple its global plant-based product sales, from about $1.9 billion to $5.7 billion, by 2025.

Sales of plant-based foods are now nearly $4 billion a year in the US, and growing quickly, Klar said at the Singapore conference. However, the exact size of the plant-based protein market in Asia, and its potential for growth, remains unknown. “There’s very little data,” he said. “It’s much smaller than the West, but it’s clearly picking up, especially in the last two years, starting in places like Hong Kong and Singapore.”

There’s no doubt that demand for meat will grow strongly in Asia in coming years, with a recent forecast saying the demand will jump 19% between 2013 and 2025. Factors behind this rise include a growing population as well as an increasing middle class with more money to spend on meat.

Yet traditional protein sources leave a lot to be desired. “Asia’s meat, seafood and dairy industries face a range of badly managed sustainability risks – from emissions to epidemics, fraud to food safety, and misuse of antibiotics to misuse of labour,” reads a report from Farm Animal Investment Risk and Return (FAIRR). Such challenges should open the door for plant-based proteins to gain market share across the region.

That’s just one reason why food-tech companies are bullish on the future of their industry, in terms of both markets to conquer and new products to develop.

“There’s a lot more out there,” Tetrick said. “We have barely scratched the surface on what the plant kingdom is capable of.”

From a business perspective, food-tech startups need to play to their strengths and be realistic, he added. “It’s critical for us to realize that we need partners to do a lot of the things we’re not necessarily good at doing”, he said. Partnerships should allow for greater scale, which of course will drive down costs.

“Young companies have to recognize they’re good at some things and not good at other things,” Tetrick said. “If they can recognize the difference between the two, I think that will ultimately get these products down to a cost where everyone can enjoy them.”

Tags: Agtech

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