Sunday, 2022 December 4

Does artificial meat have a future in China?

Over the last few years, we witnessed the birth of a new industry: artificial meat.

The premise of artificial meat is simple—it’s meant for those who prefer to avoid real meat for health or religious reasons, but still want to experience its taste and get enough nutrition, particularly protein.

However, it appears that what was once a promising industry is slowing down due to resistance. Companies such as Beyond Meat, which started the artificial meat trend, have since seen a decline in popularity and revenue.

Why do we need to produce artificial meat?

American nutritionist John Harvey Kellogg—yes, of Kellogg’s cereal fame—was probably the first to propose the development of meat substitutes as early as the mid-1890s. It was his work that led to the development of the first two kinds of plant-based meat products in the United States, and the introduction of commercial meat substitutes into the market, which gradually spread from the US to Europe, Australia, and China.

The development of artificial meat has been largely motivated by the need to address issues such as food security and the carbon footprint of the meat industry.

Reducing the carbon footprint

According to a post by the World Wildlife Fund in 2019, traditional livestock farming is the largest source of greenhouse gases, particularly methane and nitrous oxide. In fact, its emissions exceed the total emissions of cars, trucks, planes, trains, and communications.

Statistics from PricewaterhouseCoopers and sustainability-focused investment company Blue Horizon have shown that if plant-based meat accounted for just 10% of the meat market, this would reduce carbon dioxide emissions by 176 million tons every year, equivalent to the total carbon absorption of 2.7 billion trees.

Moving towards plant-based meat would also result in more efficient use of natural resources and agricultural land.

Addressing potential food shortages

Artificial meat can also supplement the gaps caused by meat shortages that may occur in the future.

Population growth data shows that the global population will increase to 10 billion by 2050, and the demand for food will increase by more than 56%. Should that occur, our current food system and supply will not be able to meet the demand for protein, resulting in a worldwide food crisis if no action is taken.

Due to the cyclical nature of traditional livestock farming, supply may not always be consistent. The production of artificial meat, on the other hand, can be increased to meet market demand.

Health and food safety

Finally, compared with traditional meat, artificial meat is healthier.

According to Beyond Meat’s official website, the long-term consumption of ordinary meat will increase a person’s risk of cancer by 16% and heart disease by 21%. Artificial meat is safer and prevents the spread of many zoonotic and animal diseases, such as mad cow disease, foot-and-mouth disease, and African swine fever.

Technological advancements also mean that scientists will be able to control and adjust the nutritional components in artificial meat while retaining the taste and appearance of traditional meat. Animal hormones, antibiotics, and other unknown substances in traditional meat would be a thing of the past. There would also be a wider range of healthy options for vegetarian, kosher, and halal diets.

The frenzy surrounding artificial meat

It’s no wonder that on paper, the future of artificial meat is bright.

In 2019, Beyond Meat, the “first artificial meat stock” bet on by Bill Gates, was listed on the NASDAQ. It became the stock with the best first-day gains since the 2008 financial crisis.

China’s capital markets also saw a similar level of excitement. An artificial meat craze took hold of the country, with food manufacturers Shuangta Food, VV Group, and other companies pulling out multiple trading limits on A-shares (domestic shares traded in China’s stock markets).

According to statistics from the 2021 White Paper on Insights into China’s Plant-Based Meat Industry, from December 2019 to 2020, a total of 21 investment events were held for plant-based meat companies, and there was a surge in financing with a year-on-year increase of 500%, accounting for about 10% of the entire food and health care products industry.

The frenzy was also largely due to the African swine fever that was sweeping the nation at the time. Pork was in short supply and prices skyrocketed. The arrival of artificial meat provided a new way for domestic capital markets to make money during the pork shortage. In addition, China’s pledge to reach peak carbon emissions by 2030 and carbon neutrality by 2060, and the public’s changing views of healthy consumption, led to growing interest in artificial meat among investors.

In 2020, USD 2 billion (more than RMB 10 billion) of venture capital was invested in the global artificial meat industry. At the same time, the amount of funding raised by various artificial meat companies almost doubled compared with the previous year.

However, capital began to decline in 2021.

Beyond Meat’s poor performance and financial losses exceeded the market’s expectations, and its share price also dropped nearly 90% from its peak. According to its financial report, in Q1 2022, Beyond Meat earned USD 109 million in revenue, up 1.19% compared to the same period in the previous year; however, it suffered a net loss of USD 100.5 million, and its profits decreased by 268.44% year-on-year.

China’s capital markets were no exception. Only four investment events were held in a single year, most of them for series A financing.

It turned out that consumers still preferred the original taste and relatively lower price of traditional meat. Many felt that artificial meat did not live up to its claims of lower calories and similar taste, and that the actual product differed too much from the advertisements.

Artificial meat is also quite expensive. For example, in Freshippo in Hangzhou, a 230g box of new plant-based “braised beef” is priced at about RMB 30, the same price for 500 g of fresh beef. On Tmall, a 226g box of Beyond Meat beef burgers is about RMB 26, while elsewhere in the same app one can buy an entire kilogram of beef patties for RMB 99. According to market statistics, the average price of artificial meat is 40% higher than that of real meat.

Image courtesy of Airam Dato-on

The acclimatization of artificial meat in China

Despite the decline, artificial meat is still finding its way into our diets. Over the past couple of years, it’s been served at Starbucks, KFC, and several other popular restaurant chains. Mooncakes, rice dumplings, and spring rolls with artificial meat as an ingredient have also started to appear. But at present, compared with European and American markets, artificial meat still has a long way to go in the Chinese market.

The East Asian palate is arguably very different from its European and American counterparts. Attitudes to meat differ significantly—according to data from the Spectator Index, the average American consumes 120 kg of meat per year, while the average Australian eats 111 kg, and Italians eat 90 kg. In comparison, the average Chinese person consumes 58 kg of meat per year, and Japanese people eat even less at 45 kg.

The cut and appearance of the meat matter as well. One of the reasons plant-based meat has done relatively well in Europe and America is due to its easy substitution for ground meat, which accounts for about 60% of the meat consumed in dishes such as hamburgers, sandwiches, hot dogs, and pasta.

Artificial meat is less adaptable for Chinese cuisine, which features different cooking techniques and requires different forms and cuts of meat. At present, artificial meat is still relatively unsuited to cooking techniques that involve cubing, dicing, mincing, and slicing.

One such company is aiming to tackle this issue—GrainMeat, a Chinese artificial meat brand established in 2019, focuses on plant-based meat R&D and is committed to creating artificial meat that meets local food needs, such as artificial pickled fish slices, artificial beef slices for hotpot dishes, and artificial chicken for braised chicken rice. However, it’s clear there’s still a long way to go for R&D.

All hail the soybean

As well as having to compete with real meat, artificial meat has another strong competitor that’s been around for far longer in the Chinese market—soybean products.

At present, there are two kinds of artificial meat: plant-based meat made of soybean protein and lab-grown meat made using stem cells (these come from plants rather than captive or slaughtered animals). The former is more mainstream in the Chinese market.

Technically speaking, nearly every Chinese has eaten artificial meat if we go by the former definition—we’re just used to calling it tofu. From upscale vegetarian restaurants to street food, tofu has appeared on countless menus and taken on different forms. Fried tofu puffs, dried tofu, smoked tofu, you name it.

Image courtesy of Sherman Kwan

In terms of flavor variety and value for money, tofu and other soy-based products are unbeatable. It’s also much more readily accepted by the masses as a familiar ingredient in many common dishes.

It seems to be an uphill battle for artificial meat in China, as exemplified by reactions to Beyond Meat’s latest attempt to launch a plant-based minced pork product in China. As columnist David Fickling comments in Bloomberg Opinion: “You wouldn’t try to sell coal to Newcastle. So how would you rate your chances of peddling meat substitutes to the country that invented tofu?”

There’s a significant gap between what companies can currently create and Chinese consumers’ preferences—a gap that needs to be bridged before artificial meat can go mainstream. Whether that’s possible remains to be seen.

This article was adapted based on a feature originally written by Yuan Guo Bao and published on YuanGuoBao (WeChat ID: yuanguobao1982). 36Kr Global is authorized to translate, adapt, and publish its contents.

KrASIA Connection
KrASIA Connection
KrASIA Connection features translated and adapted content published by 36Kr.com, the largest and most influential tech portal in Chinese language.
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