By Stephanie Yang
Beyond Meat Inc. and Impossible Foods Inc. are considering China
as their next big market for plant-based meat products, but local
startups aim to leverage their own knowledge of Chinese tastes to
gain an edge over the U.S. companies.
China is emerging as an attractive market for alternative-meat
makers because purchasing power and meat consumption have grown at
a rapid clip in the world's most populous country. In addition,
Chinese officials have encouraged meat alternatives amid a deadly
swine epidemic that has wiped out as much as half of China's pig
population and pushed up pork, beef and poultry prices.
Impossible Foods, based in Redwood City, Calif., unveiled its
plant-based meat burger in China last month at a Shanghai trade
fair attended by President Xi Jinping, while rival Beyond Meat,
based in Los Angeles, has made plans to enter China next year.
Chinese entrepreneurs aren't sitting still. China has a
tradition of vegetarian meals, and Buddhists in China have been
offering their own meat alternatives for centuries. A number of
companies are now rushing their own meat substitutes to market,
betting they can better cater to Chinese appetites.
During the traditional Mid-Autumn Festival holiday in September,
Beijing-based startup Zhenmeat, founded this past May, received
attention by using e-commerce platforms to sell thousands of
traditional mooncakes made with a plant-based pork substitute.
The company is now refining its product, in hopes of getting it
onto the menu of a Beijing vegan-friendly restaurant by early next
year -- a first step toward broader commercialization.
"We are short on money, we are short on [a
research-and-development] team, and we are short on time, because
we just entered this market this year. Our advantage is we know the
consumer," said Vince Lu, Zhenmeat's founder.
The new wave of food suppliers will depend heavily on the
patronage of a younger generation of Chinese consumers who are
increasingly health-conscious and less likely to equate a lack of
meat with economic hardships, as has been the case historically in
China.
Domestic Chinese entrants can benefit from lower production
costs and might be able to bypass some regulatory hurdles. "The
biggest winners will be the domestic companies," said Nick Cooney,
an early backer of Beyond Meat and the founder of Lever VC, a New
York-based early-stage venture fund that has invested in two
Chinese alternative-protein startups this year. "We certainly
expect that there will be a Beyond Meat or Impossible Foods of
China -- probably several of them."
Chinese officials have touted the virtues of protein
alternatives -- warning about an uptick in health issues such as
obesity and diabetes -- while raising concerns about nutrition and
food security.
The development of the plant-based food industry is a good way
of "nurturing our people's nutrition and health," said Sun Junmao,
deputy director of the Institute of Food and Nutrition Development
at the Ministry of Agriculture and Rural Affairs, at a November
food conference in Beijing.
"That guidance and general direction from the government will be
very helpful, because it can help set the tone for the overall
society," said David Yeung, founder of Hong Kong-based Green
Monday, the maker of OmniPork, a plant-based imitation of China's
most popular protein.
Green Monday, which was founded in 2012 and launched OmniPork
last year, recently introduced several alt-meat dishes at Wagas, a
chain of 75 cafes with locations in 10 cities across mainland
China. Green Monday is also working on the mainland with Taco Bell,
a subsidiary of Yum China Holdings Inc., on a fish-flavored
eggplant taco with imitation ground pork.
Partnerships such as the one between Taco Bell and Green Monday
are an attempt to tailor products specifically for the China
market. Impossible Foods, in addition to the meatless burger it
unveiled at the trade fair in Shanghai in November, also showcased
plant-based stewed meatballs and traditional dumplings to signal
its commitment to winning over mainland Chinese consumers.
Impossible Foods is hoping to enter China once it receives
regulatory approval of soy leghemoglobin, the substance that makes
its burgers have a red hue and appear to bleed, a spokeswoman said.
The company doesn't know when approval might occur, she said.
Beyond Meat aims to have production running in China by the end
of 2020, though a spokeswoman couldn't confirm exact timing. "China
is a key, long-term strategic region for growth," she said.
Jose Cil, chief executive of Burger King's parent-company,
Restaurant Brands International Inc., also sees tremendous
opportunity in China. The company is still determining what
supplier it would look to use in China, he said, adding that it
wants one that could provide plant-based patties that would
withstand flame grilling.
In an attempt to better understand the Chinese market, New Crop
Capital -- which invests in alternative-food startups, including
Beyond Meat -- forged a partnership with Dao Foods International,
the food-focused arm of Dao Ventures Group, a social venture
fund.
"The one thing we are smart enough to know is that we have no
idea how to get into China," said Chris Kerr, New Crop Capital's
chief investment officer.
In August, Dao Foods launched a roaming boot camp to support
plant-based enterprises, starting in Shanghai. The event drew about
50 entrepreneurs and 30 investors, according to Dao Ventures
founder Tao Zhang. Mr. Zhang said his initial plan was to help
transplant Western products into China. But after a yearlong
feasibility study, he decided to focus more on homegrown
startups.
"Chinese entrepreneurs tend to learn things very quickly,
especially with the help of investment dollars. And this sector is
getting a lot of attention from investors," Mr. Zhang said.
--Heather Haddon contributed to this article.
Write to Stephanie Yang at stephanie.yang@wsj.com
(END) Dow Jones Newswires
December 04, 2019 16:17 ET (21:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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