The world’s leading meat, fish and dairy companies are putting long-term growth at risk by failing to invest in alternative protein businesses, according to an investor advisory and research network supported by asset managers worth $5.9tn.
The Fairr initiative — Farm Animal Investment Risk & Return — says that only five out of 60 leading listed international food groups have backed plant-based meat alternatives grown in laboratories as well as dairy alternatives. These are Tyson Foods and Hormel Foods of the US, Canada’s Maple Leaf, China Mengniu Dairy and Vietnam Dairy.
The organisation, whose members include leading asset managers such as Aviva, Schroders and University of California’s investment assets, has ranked the groups based on how they manage risk, including issues around the environment and antibiotics. It says the lack of investment in the alternative protein sector poses as big a business risk as food safety and greenhouse gas emissions, pointing to innovation that could “fundamentally disrupt the market”.
The market for alternative proteins is forecast to reach $5.2bn by 2020, growing to a third of the broader protein market alongside meat and fish by 2054.
“There is a tremendous pipeline of innovation happening in this space. Meat, fish and dairy companies that aren’t taking this into account in their business strategy and R&D investments risk failing to leverage a growing market opportunity and put their long-term value at risk,” said Aarti Ramachandran, head of research and corporate engagement at Fairr.
For example, plant-based products, such as soy and almond milk now make up 10 per cent of the overall dairy market. With concerns rising about the environmental and other sustainable impacts surrounding intensive livestock production and possible regulation to moderate growth in the animal protein sector, “companies may be unprepared and face significant impacts if sustainable proteins take market share in the near term”, said Fairr.
Imogen Rose-Smith, investment fellow at University of California, said: “As the world in general is eating more protein, [the report] helps us think about how can we investors respond to that.”
The latest research by Fairr analysed the environmental and social commitments of 60 of the world’s largest meat and fish companies, ranking them according got the level of risk they face.
European fish farming groups led by Marine Harvest of Norway were among the companies with the best practices, along with Fonterra, the New Zealand dairy group, and Cranswick, the UK’s pig and poultry producer.
The report said that 36 of the groups were categorised as “high risk”, including India’s Venky’s and Sanderson Farms, the third largest poultry producer in the US.
According to the analysis, 46 of the companies ranked “high risk” on antibiotics usage, with little or no measures in place to reduce excessive use of the medication.
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