Dive Brief:

A new report backed by investors and the Farm Animal Investment Risk and Return (FAIRR) initiative is urging food manufacturers to transition to more plant-based proteins.

The report evaluated 16 major food companies, including Nestle, General Mills and Unilever, to evaluate which businesses were best positioned to benefit from a switch to plant-based proteins.

Some companies fared better than others, but all of them lacked a coherent strategy for how to market and promote alternative protein products on supermarket shelves to drive sales, according to an article by Food Bev Media.

Dive Insight:

Many large food manufacturers stand to benefit from growing demand for plant-based proteins, according to a new report by various investors and the Farm Animal Investment Risk and Return (FAIRR) initiative. That said, the proverbial grain of salt must be taken when reading their new report, as it's rather transparent where these organizations stand on current meat processing standards.

Still, the new measure offered some insight into where alternative plant proteins could be headed.

The report, titled "Plant-Based Profits," was funded by 57 investors, including Aegon, Aviva Investors, Coller Capital and Nordea. It evaluated 16 large food manufacturers based on areas such as business strategy, monitoring processes, R&D investment levels and consumer engagement. By looking at these elements, the report deduced which companies are best positioned to take advantage of the rising demand for alternative proteins.

Nestle and Tesco came out on top in this study, with what it calls "leading approaches." The four winning factors they share include: strong programs to tackle livestock emissions, acknowledging the risks associated with animal protein consumption, development of protein alternatives, and strong engagement with investors. Last year, Nestle acquired Sweet Earth Natural Foods, a maker of frozen vegetarian products ranging from breakfast burritos to meat analogues with names like Hamless Ham and Benevolent Bacon, for an undisclosed amount.

Costco did not fare as well. The wholesaler placed at the bottom of the study’s list for reasons such as a "lack of discussion of livestock’s environmental impacts," and no plans to diversify its protein options. In 2017, Costco sold 87 million rotisserie chickens, and announced it would be opening a new $300 million poultry processing plant in Nebraska next year.

The Plant-Based Profits report also pointed out that the alternative protein space lacks a clear, universal marketing message. Everything from where the products are placed in the supermarket to the wording on the labels is mixed, which could be holding plant-based proteins back from getting into more shopping carts.

The report’s solution is a rather vague one. It suggests a marketing plan that “is based on capturing and growing market share in every category where animal proteins are widely consumed.”

Placing meat alternatives alongside traditional meat has proven to be a winning strategy for the Beyond Burger brand. The plant-based meat maker reported triple-digit revenue growth in 2017, and says that roughly 70% of its customers are meat-eaters. In addition, its packaging doesn’t include the words vegan or vegetarian, which many turn off some shoppers.

The report points out that the market for alternative proteins could reach $5.2 billion by 2020, which backs many of their points about a need for companies to develop more plant-based alternatives now to meet that future demand.

Many prominent meat manufacturers, from Tyson Foods to Cargill, see the new emerging market as an opportunity for growth and are investing in plant-based alternatives. It's unlikely that this report will influence consumer demand for these products, or change how businesses view the nascent space. The fact that a protein giant like Tyson is immersed in plant-based meats through its investment is a testament to the promise it holds. Despite their rapid growth in recent years, the latest version of plant-based meats are still a young industry that still has time to find its way.