Soy-Based Chicken Startup Sees Meat Inflation Boosting Sales
(Bloomberg) -- The food inflation that’s gripped the world in the past year and raised prices of everything from cheese to steak is good news for the plant-based food market.
That’s the view of Next Gen Foods Pte, a Singapore-based startup that makes faux chicken from soy. Soaring beef and poultry prices are key drivers of food inflation, and the shrinking price gap is making plant-based alternatives much more attractive for consumers, Chief Executive Officer Andre Menezes said.
“The higher inflation is coming from guess where -- meat,” Menezes said in an interview from Chicago. “It’s extremely inefficient, the resources are becoming more and more expensive as they become less available. And this is the macro trend that is actually driving the plant-based industry.”
Next Gen has raised $30 million in seed capital so far, valuing it at about $180 million as of July. Investors include Singapore’s state-owned investor Temasek Holdings Pte, venture capital funds K3 Ventures, GGV Capital and Bits X Bites, and food and beverage maker Yeo Hiap Seng Ltd. The funds will be used to launch Next Gen’s flagship Tindle plant-based chicken in the U.S.
Food prices have been surging in much of the world as the Covid-19 pandemic upended supply chains. With global food costs at a decade high, households have switched away from meat to less expensive but poorer-quality sources of calories, such as starchy staples, cereals, oils and ultra-processed foods. In the U.S., an acute worker shortage in meatpacking that has no end in sight means meat prices are likely to stay elevated in the near future.
“You have a scenario in which supply chains are extremely under pressure, many things are simply not arriving on time and not delivering,” Menezes said. “That’s not necessarily negative. For us any challenge that we face, actually we’re facing much less than the meat industry would.”
Today alternative proteins make up a tiny fraction of the global $1 trillion meat industry. That number will climb, with Bloomberg Intelligence estimating that retail sales of plant-based meat and dairy could swell to $162 billion in the next decade from $29.4 billion in 2020.
There are strong signs of consumer interest in the sector. Plant-based products are becoming more readily available at supermarkets, more restaurants are offering such options on their menus and companies like Beyond Meat Inc., Oatly Group AB and Impossible Foods Inc. have raised billions of dollars. The challenge for alternative-protein makers is now to compete with conventional meat products on price.
Over time, plant-based products will become cheaper than meat, which will get more expensive, Menezes said. Plant-based protein requires less resources like land, water and energy to produce. With production expanding and consumers eating more, that will create the volumes needed to bring costs down.
“Our goal is to go after every single category that animal farming is today present,” he said, adding that the company could target beef, pork, seafood or dairy next. “Anything is possible.”
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