Plant-Based Meats Have Huge Potential in China, But Beijing Wants a Homegrown Champion

October 5, 2019, 12:00 PM UTC

Beijing has put China on a diet.

In 2016 the Ministry of Health halved its official guidelines for the recommended daily intake of meat — a radical diet plan that could trim $100 billion from the bloated meat retail market. While that’s bad news for traditional butchers, it’s a positive sign for the burgeoning alternative meats industry, which is eager to grab a slice of China.

“Asia in general and China in particular are essential markets for us,” Impossible Foods CEO Pat Brown said during the Fortune Global Sustainability Forum in China’s Yunnan province early last month. The nation of 1.4 billion hungry mouths is the world’s largest market for meat, consuming 86 million tons of it every year—more than twice the amount eaten in the U.S., the world’s second most carnivorous nation.

However, while Impossible and its best-known rival, Beyond Meat, are stars of the plant-based protein space in the West, neither of the alternative meat makers have entered the mainland China market. Impossible’s entrance to China has been roadblocked by bureaucracy.

Impossible uses protein created from lab-grown heme—an iron-containing molecule—to replicate the taste of meat in its famous ground beef substitute. Before Impossible can be sold in China, the State Administration for Market Regulation needs to sign-off on the artificial heme’s safety and, so far, the approval process has been characteristically slow.

Beyond’s entryway should be less complicated, because its “meat” is made from non-genetically modified ingredients like peas and beets—ingredients that aren’t subject to the same levels of scrutiny as Impossible’s heme, which is harvested from a genetically modified yeast. Beyond has yet to enter the mainland either but, in a note sent to Fortune, said it “expect[s] to continue to grow” its presence in Asia.

Uncooked Beyond Meat Inc. plant-based burger patties sit in the kitchen inside a TGI Friday's Inc. restaurant in Moscow, Russia, on Friday, Sept. 27, 2019. McDonalds Corp. has selected Beyond Meats faux-meat patties for a plant-based burger test in Canada. Photographer: Andrey Rudakov/Bloomberg via Getty Images
Uncooked Beyond Meat Inc. plant-based burger patties sit in the kitchen inside a TGI Friday’s Inc. restaurant in Moscow, Russia, on Sept. 27, 2019.
Andrey Rudakov—Bloomberg via Getty Images

Mocking meat

If and when the two fake-meat darlings of the West do enter China, however, they’ll be joining the party a few centuries late.

Mock meat has been a part of China’s culinary toolkit since the Tang dynasty some 1,400 years ago, when an imperial official hosted a banquet and served imitation mutton and pork, both made from vegetables. In the time since, the variety of meats replicated in Chinese cuisine has ballooned. One of China’s leading vegetarian meat manufacturers, Whole Perfect Foods, has a catalogue of over 300 products, including vegetarian oyster sauce, abalone and bacon, altogether generating annual sales of $44.6 million.

According to the Good Food Institute, the Chinese market for “alternative meat” is already the largest in the world, chalking up sales of $910 million in 2018—compared to $684 million in the U.S.—which is a 14% increase over the year before. But Nick Cooney, managing partner at Lever VC, an investment fund focused on plant-based food, says the industry is undergoing a modernization, creating opportunities for new companies.

“In China there are some market leaders for plant-based meat but the quality of the products and their marketing hasn’t changed much in decades. There’s a really huge opportunity there for new, innovative companies and it’s basically a wide-open space,” says Cooney, who founded the Good Food Institute but no longer works with it.

For Cooney, the distinction between modern and “traditional” fake meat makers comes down to technology and marketing. The new plant-based meats are then marketed towards meat-eaters rather than vegetarians. To offer meat-eaters a more compelling alternative, nouveau manufacturers use more technologically advanced mixing equipment to produce more “realistic” products that more closely match the texture and taste of meat, or use biotech to cultivate new ingredients altogether.

“There’s great potential for ‘clean meat’ development in China because it ticks all the key checkpoints of China’s development goals: it’s very high-tech, there’s the space to be a global leader, it’s environmentally sound and it helps address food security, making sure there’s sufficient protein to meet demand,” Cooney says.

CAMBRIDGE, MA - JUNE 25: Frozen Impossible Foods soy-based vegan beef is prepared by Abby Hakmi at Clover Food Labs in Cambridge, MA on June 25, 2019. As the popularity of plant-based foods grows, keeping up with demand for one especially popular meat substitute is proving to be difficult - almost impossible. Some local restaurants that advertise the Impossible Burger havent been able to serve the product to customers lately because of a nationwide shortage of the beef alternative. Launched out of Redwood City, Calif., in 2011, Impossible Foods makes meat burgers from genetically engineered soy heme protein, which gives the patty a taste and texture that resembles beef. A spokeswoman for Impossible Foods said the burgers popularity has soared since the company introduced a new recipe in January, with revenue growing 50 percent so far this year. (Photo by Jonathan Wiggs/The Boston Globe via Getty Images)
Frozen Impossible Foods soy-based vegan beef is prepared by Abby Hakmi at Clover Food Labs in Cambridge, Mass. on June 25, 2019. Launched in 2011, Impossible Foods makes meat burgers from genetically engineered soy heme protein, which gives the patty a taste and texture that resembles beef.
Jonathan Wiggs—The Boston Globe via Getty Images

Surviving the aporkalypse

China’s protein of choice is pork. Last year, consumers devoured 55 million tons of the other white meat—more than 50% of the total consumed globally. Since then, however, China’s pork stocks have been decimated by an outbreak of African swine fever (ASF), which is harmless to humans but lethal to pigs.

Rabbobank estimates half of China’s pig stock, or 200 million hogs, have died or been culled since August 2018 in a bid to stop the epidemic from spreading. However, cases of ASF have appeared in neighboring Vietnam, Myanmar, Mongolia, along the Korean peninsula and across Asia.

As a result, Chinese pork prices have skyrocketed, jumping 47% in August to around $4 per kilogram. Beijing unleashed 20,000 tons of pork reserves into the market last month, to lower prices and ease panic buying in the run up to the holidays, when pork dumplings are traditional culinary fare. Beijing has even exempted U.S. pork from some of the Trade War tariffs as China’s pork imports surged 76% in August.

For David Yeung, founder of plant-based pork substitute OmniPork, the timing is somewhat fortuitous. We began developing the product in 2016. Obviously, back then I didn’t know that African Swine Fever would happen in 2018, but what I did know is that the industrial animal rearing food system is not sustainable. It was only a matter of time before the system crumbled or completely collapsed,” Yeung says.

The Hong Kong-based OmniPork is made from a combination of soy, pea, mushroom and rice. It was developed by a team of Asian-Canadian scientists, is manufactured in Thailand, and ships to five markets in Asia. In October, the company will enter mainland China when OmniPork launches a virtual store on Alibaba’s Taobao.

“The world is undergoing a massive paradigm shift in consumer patterns,” Yeung says, telling Fortune that the economic potential of plant-based meat is no longer negligible and food retailers which don’t adapt soon will become “brands of the past.”

How the sausage gets made

In the U.S., traditional meat manufacturers have already pushed into the alternative meat market. Tyson Foods, the world’s second largest butcher, launched an alternative meats brand in June, and Virginia-based pork producer Smithfield Foods followed suit in September, with the launch of a soy-based product line.

Smithfield was acquired by China’s WH Group in 2013, creating the world’s single largest pork producer. Profits at China’s WH Group fell 16.9% in the first half of the year owing to the ASF crisis, but the Chinese parent company hasn’t announced plans to pursue plant-based proteins in its home market—yet.

WH Group didn’t respond to Fortune’s request for comment but Ryan Xue, a representative for the China Plant Based Food Alliance (CPBFA)—a government advisory committee formed under the State Administrator for Market Regulation—says China’s top three meat manufacturers, including WH Group, are all members of the alliance.

“For those meat producers, their business is really about protein and, in terms of animal protein, growth is slowing down,” Xue says, “It makes sense for them to consider plant-based alternatives, which will have significant growth in the next two years.”

Moreover, it would be better for Beijing if the future of China’s plant-based meat was homegrown.

Correction: This article was updated October 9 to amend Beyond Meat’s ingredients; Beyond does not use soy, as previously reported.

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