As consumer demand for dairy and meat alternatives increases, established food manufacturers are looking to supplement their offerings by entering into M&A transactions with emerging meat and dairy alternative manufacturers. According to a recent report by the Good Food Institute (GFI), there have been 46 completed investments and acquisitions of vegan food manufacturers in 2018 alone, with the largest acquisition having a value of $12.5 billion. Many leaders in the meat industry are starting to acquire and invest in the dairy and meat alternatives market to tap into consumer demand. Investing in vegan alternatives is essential for food manufacturers to show growth to their investors and shareholders. GFI has shown that in 2017-2018, U.S. retail food sales grew 2% overall, whereas plant-based meat sales grew by 23%, exceeding $760 million in sales.
Although dairy and meat alternatives have been available since the 19th century, technology advancements and a cultural shift can help explain the recent surge in interest in vegan and vegetarian alternatives over the past 3 years:
- Technology. With today's technology, plant-based alternatives are not compromising on taste. While past vegan food manufacturers were not able to create plant based burgers that accurately mimicked the taste and texture of a meat burger, current options such as the Beyond Meat burgers not only feel and taste like a normal burger but are also found in the refrigerated meat case in grocery stores which makes the meat alternative more appealing to meat eaters as well as vegetarians or vegans.
- Cultural shift. Individuals in Canada are cutting down on their intake of meat for health and environmental reasons. The new Canadian Food Guide launched in January encourages Canadians to incorporate more plant-based proteins into their diet. Canadian consumers are also beginning to take notice of the health benefits that come with eating more vegetarian and vegan meals. An estimated 6.4 million Canadians follow a diet that partially restricts meat.
As meat and dairy alternatives continue to become more readily available to consumers and cultural shift towards reducing meat-based protein continues, food manufacturers will be looking to expand their vegetarian and vegan alternatives to take advantage of the increased demand from consumers. As Bruce Friedrich, the Executive Director at GFI, recently stated: "we're just at the beginning of [a] tremendous growth period for both the plant-based and cell-based industries."
The author would like to thank Fatima Anjum, summer student, for her assistance in preparing this legal update.
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