- As alternative proteins go mainstream, Nestlé and Tesco named best prepared companies. Costco called out for inadequate response.
- Market for alternative proteins, such as ‘Impossible Burgers’, to expand by over 8% a year and reach $5.2 billion by 2020.
- $2.4 trillion investor coalition doubles support in 18 months, and calls on 16 food multinationals to plan for shift to alternative proteins.
(London, 13 Feb 2018). A new report entitled ‘Plant-based profits’, backed by a $2.4 trillion coalition of 57 large investors, has urged global food companies to diversify their protein sourcing away from a reliance on animal proteins. An analysis of 16 multinationals concluded that Nestlé and Tesco were best positioned to benefit from a transition to alternative plant-based proteins. Other companies engaged included Kraft Heinz, General Mills and Unilever.
The investor coalition is coordinated by theFAIRRinitiative, founded by private equity pioneer Jeremy Coller, and includes pension funds such as AP2, AP3 and AP4 and institutional investors such as Aegon, Aviva Investors, Coller Capital and Nordea.
The report highlights projections that the market for alternative proteins, including innovative foods such as the ‘Impossible Burger’, which use plant-based ingredients to produce more sustainable, healthy foods that emulate meat, is set to expand at a compound annual growth rate of 8.29% in the next four years, and could reach $5.2 billion by 2020. Just 18 months after launch, the Impossible Burger is now available in over 500 US restaurants and has received funding of over $250m from mainstream investors including Singaporean sovereign wealth fund Temasek. Prominent meat industry players Cargill and Tyson Foods recently announced investments in cultured meat start-up, Memphis Meats.
The 16 multinationals were evaluated on areas such as business strategy, monitoring processes, R&D investment levels and consumer engagement to understand how companies are positioned to capitalise on the rising demand for alternative proteins.
The report finds:
- Nestlé and Tesco are best prepared
- All companies market at least one own-brand alternative protein product
- Only three companies have set some type of goals to increase their portfolio of alternative proteins (M&S, Nestlé and Unilever)
- All companies lack a coherent strategy for how to market and promote alternative protein products on supermarket shelves to drive sales.
Sasja Beslik, Head of Group Sustainable Finance, Nordea:
“Sustainable protein is a fast-emerging issue for the food industry, and it is important for long-term investors to know if the companies they invest in understand the related risks and opportunities. FAIRR’s sustainable protein engagement offers practical guidance to companies to ensure they have a business strategy that is robust enough to respond to a changing food supply chain. For us as investors, this engagement also helps us to be on top of the developments in this space as well as to identify food companies that proactively invest in innovative solutions.”
Jeremy Coller, Founder of the FAIRR Initiative and CIO of Coller Capital:
“Today’s Plant-Based Profits report shows that alternative proteins are rapidly going mainstream. From meatpackers to supermarket stackers the global food sector is rapidly taking notice of plant-based alternatives to animal protein products, and that is driving 8% annual growth in the alternative proteins market.
“It’s significant that all of the food producers and retailers engaged by investors now market at least one own-brand alternative protein product.
“Ultimately, this trend is driven by the inability of the global meat industry to manage the environmental, public health and animal welfare challenges that the world’s current demand for animal protein creates; and that is generating remarkable opportunities for food companies and their shareholders.”
Duncan Pollard, AVP, Stakeholders Engagement in Sustainability, Nestlé:
“At Nestlé, we recognize that for a business like ours to be successful, we must take a long-term view. We have the responsibility and the opportunity to shape the sustainable production and consumption of food to preserve our planet for future generations. The development of the protein supply chain is an issue with the potential to radically reshape the supermarket shelf of the future. We very much welcome the support of those investors who want to act today to stay ahead of the curve in the economy of tomorrow.”
Tesco and Nestle were praised for:
- Livestock emission targets: Both companies have targets to reduce GHG emissions in supply chains containing high levels of livestock. Tesco has set a target to reduce agricultural emissions by 15% by 2030.
- Investor engagement: Both companies gave detailed answers to the investor coalition’s questions and held candid discussions with investors.
- Monitoring: Nestlé monitors the proportion of R&D investment dedicated to discovery projects on plant proteins, and tracks what percentage of its proteins are derived from plant-based ingredients.
- Innovative consumer marketing: In January 2018, Tesco introduced 20 ready meals with plant-based options under a wide consumer brand, created by their director of plant-based innovation.
Costco and Whole Foods were both criticised for failing to adequately respond to investor requests for information or further meetings. Costco, which has a large footprint from its meat sales, was singled out by investors for failing to recognize protein diversification as a material issue.
FAIRR’s sustainable protein engagement was originally launched in September 2016 and has engaged with 16 large food retailers and producers. The investor coalition backing the engagement has grown from 40 investors managing $1.25 trillion in 2016, to 57 investors with over $2.4 trillion in AUM today. Over 42% of investors backing the engagement were from the US.
Notes to editors
For more information or for exclusive interviews with the FAIRR team, please contact:
- Mike Weber, ESG Communications,
t: + 44 (0) 7932 577 755 | e: [email protected];
- Full copies of the report available at: fairr.org
- Note that a total of $2.4 trillion investors backed FAIRR’s ‘sustainable protein engagement’ which is the subject of this release. The FAIRR initiative as a whole has investors with over $4.1 trillion of assets under management participating in its activities.
- Investors that took part in the engagement are: Achmea Investment Management; ACTIAM; Active Earth Investment; Aegon NV; AP2; AP3; AP4; As You Sow; Australian Ethical Investment Ltd; Aviva Investors; Barrow Cadbury Trust; Boston Common Asset Management; Bridges Fund Management; Calvert Research and Management; CANDRIAM Investors Group; Christian Super; Church of Sweden; Clean Yield Asset Management; Coller Capital; Congregation of Sisters of St. Agnes; Congregation of St. Basil; Dana Investment Advisors; Dignity Health; Domini Impact Investments LLC; Folksam; Franciscan Sisters of Perpetual Adoration (FSPA); Green Century Capital Management; Impax Asset Management; Jeremy Coller Foundation; JMG Foundation; Joseph Rowntree Charitable Trust; Maryknoll Sisters; Menhaden Capital Management; Mirova; New Crop Capital; Nordea; Northwest Coalition for Responsible Investment; Pax World; Raiffeisen Capital Management; Robeco; Seventh Generation Interfaith Coalition for Responsible Investment; Socially Responsible Investment Coalition; Sonen Capital; Stray Dog Capital; Swift Foundation; Tellus Mater Foundation; The LankellyChase Foundation; The Polden Puckham Charitable Foundation; The Sustainability Group of Loring, Wolcott & Coolidge (LWCO); Trillium Asset Management; Triodos SRI Fund; Unitarian Universalist Congregation at Shelter Rock; Walden Asset Management; WWF-Switzerland; WWF-UK; Zevin Asset Management. Some investors declined to be named.
- The 16 companies engaged by the investors were: General Mills; Kraft Heinz; Mondelez International; Nestlé SA; Unilever; Ahold-Delhaize; The Co-operative Group; Costco Wholesale Corporation; Kroger Company; Marks & Spencer; Wm Morrison Supermarkets; Ocado; Sainsbury’s; Tesco; Walmart; Whole Foods Market.
The FAIRR (Farm Animal Investment Risk & Return) investor network is a Coller Initiative. It is a collaborative forum for investors that aims to raise awareness of the material impacts factory farming and poor animal welfare can have on investment portfolios, and works to help investors share knowledge and form collaborative engagements on these issues.