Meat Companies Aren’t Worried About Demand Amid Vegan-Burger Boom
Meat Companies Aren’t Worried About Demand Amid Vegan-Burger Boom
(Bloomberg) -- Vegan burgers might be all the rage, but that doesn’t mean the world’s meat-producing giants are worried about demand.
The top executives at Brazil’s JBS SA and BRF SA say global demand for animal proteins will continue increasing for decades, buoyed by rising income levels and population growth in developing nations such as China and India.
With protein consumption set to grow by over 70% through 2050, according to projections from the United Nations, the long-term outlook remains bright for the meat industry, JBS’s Gilberto Tomazoni and BRF’s Lorival Luz said at a Bloomberg event in Sao Paulo.
“We’re seeing growth in all regions, including developed nations,” JBS Chief Executive Officer Tomazoni said. “It is a given fact.”
JBS rose 3% Wednesday in Sao Paulo, the most among rivals. It was closely followed by BRF, which jumped 2.8%.
Rising consumer scrutiny over health, animal welfare and environmental concerns are causing a seismic shift in the protein world as traditional meat companies face a swell of competition from plant-based producers such as Impossible Foods Inc. and Beyond Meat Inc.
The beef industry is being blamed for contributing to global warming by emitting methane, while grass-fed cattle ranching is cited as a main cause for increasing destruction of the Amazon in Brazil.
But the meat executives say plant products will likely play a complementary role in meeting booming protein demand. That will create an opportunity for traditional players to further diversity portfolios, according to Luz, the CEO at BRF.
Meat producers are also doing more to increase sustainability than many consumers realize, and suppliers need to close the gap between perception and reality when it comes to environmental and animal welfare concerns, the executives said. Both JBS and BRF have policies that avoid sourcing from recently deforested areas.
“There is a lot being done, but we do poorly on communicating it,” Luz said.
Meanwhile, the spread of African swine fever will create long-term shifts for the global protein industry, the executives said.
The disease has decimated the hog herd in China, the world’s biggest pork consumer. Still, the impact on demand is likely to be temporary rather than structural as the Asian nation should be able to eventually restore normal production levels.
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The U.S. is set to benefit from rising Chinese demand even as American pork exports are curbed by tariffs amid the trade war.
That’s because producers in Europe and Brazil are redirecting their supplies to China, and that will open a supply gap in other markets including Japan and South Korea, Tomazoni said. JBS is also taking advantage of its presence in Australia, which has given it privileged access to the Chinese beef market.
A protein shortage in China because of swine fever is likely to boost bilateral trade agreements as part of the Asian nation’s efforts to increase supply alternatives and keep food inflation under control, Tomazoni said.
It will also likely speed up Chinese investments to increase the scale and safety of production, reducing the country’s dependence on small producers, according to Luz.
--With assistance from Fabiana Batista.
To contact the reporters on this story: Gerson Freitas Jr. in São Paulo at gfreitasjr@bloomberg.net;Tatiana Freitas in São Paulo at tfreitas4@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi
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