More supply, more interest, and higher prices for meat and dairy are making plant-based alternatives more attractive. However, there is no real transmission of the protein yet. Experts say fair prices should change that. The fact that profit margins on meat substitutes are ten times higher than those on meat is not very beneficial.

Anna de HaasSeptember 11, 202205:00

Just as with a classic butcher, sausages hang from the ceiling at the entrance to Breda’s De Vegetarische Slger factory. But these “beloved sausages” are made of cloth. It’s an ironic nod to the meat industry, because as the name suggests, only vegetarian products are made here.

Today, thousands of kilograms of fake chicken are here again with the help of some heat, water, and soy protein. “But that wouldn’t get most people very excited,” says plant manager Toine van Loon, pointing to the brown chips of the “protein structure” emerging from the device. The semi-finished products are cut into pieces, bleached and soaked by machines downstream. Shiny and smelling like chicken seasoning, they have become “chicken fingers”, the most popular product among the most famous vegetable butcher in the Netherlands.

protein transfer

How much work and costs are involved in producing meat? The animal that must be raised needs several kilograms of feed alone. Moreover, it often consists of the same ingredients as those found in a regular veggie burger: corn, grains, and soybeans. This raises questions. Chicken nuggets with vegetables from De Vegetarische Slager cost around €25 per kilo at Albert Heijn; The same amount of chicken fillet cubes without the star of Beter Leven, less than 10 euros. how is that possible?

Research by ProVeg, which is committed to introducing more plant-based foods, has recently shown that The price gap between animal products and their plant-based alternatives dwindles due to rampant inflation. But although prices vary by chain of stores and producer, it is clear that eating animal protein is often cheaper.

Not perfect Climate Agreement. It’s been agreed that less animal protein and more vegetable protein should end up on our plates: the so-called protein transition. But while Unilever’s acquisition of De Vegetarische Slager in 2018 was a new sign that meat alternatives are being taken seriously in the food industry, there’s no real transition to vegetables just yet.

high profit margins

Shouldn’t we pay too much for “simple” meat alternatives? “In order to get cheaper, it must first be taken up on a large scale,” insists Hugo Verquel, CEO of De Vegetarisch Slager. Although the meat substitute is gaining popularity, the total market share in the meat industry now Only about 4 per cent. “That really needs to be increased to 10 or 15 percent for the necessary increase in scale and cost savings.”

Pricing specialist Oliver Hagenbeck of consultancy Simon Kucher agrees. “The meat sector has had decades to operate increasingly cheaper, for example by raising animals faster and slaughtering them more efficiently.” Most producers of meat substitutes are just beginning to come into the picture. They still have to invest heavily in the development and quality of their products. “This costs money.”

Hagenbeck says this is partly because profit margins are much higher than they are for meat. “For meat, this is between 0 and 20 percent, while with meat substitutes it can easily go as high as 30 to 40 percent.” This sounds skewed, but it’s better explained, according to a pricing specialist. Partly because producers still have to invest a lot, but also because of the competition.

“There are a lot of different brands on the vegetable shelves, while meat is almost always sold under a private label,” Hagenbeck explains. That competition on the shelves requires more publicity. “Of course this only costs money.” Especially when the competition consists of fellow players with big names behind them, such as Valess (FrieslandCampina), Garden Gourmet (Nestlé) and Vivera (part of meat giant JBS).

offer vegetables

The producers themselves refer to supermarkets. “It varies by product, but sometimes they apply profit margins of tens of percentages above our prices,” says Mark van Norlos, marketing director for meat substitute manufacturer Schouten. The company has been active for 35 years and manufactures products for private labels for large plates, among other things.

Although Van Norlos believes margins are disproportionate – “prices are a barrier to consumers” – he is also happy that stores are offering meat alternatives an increasingly larger stage. Competitor De Vegetarische Slager doesn’t want to say much about supermarket margins: “They set final prices and that’s their right.” Fairwill says he is pleased that the retailers are actively contributing to the vegetable’s growth.

Big supermarket chains don’t want to say anything about the profit margins they use for meat or meat substitutes. They believe the criticism that they are slowing down the sale of plant-based alternatives is unjustified. “We support the movement toward a more plant-based diet,” says spokesperson Albert Heijn. To that end, the company says it is not only expanding its range significantly, but also offering more private-brand products. “When the price is equal to the price of meat products or cheaper,” a company spokesperson said. The same story can be heard in Jumbo about equivalent prices and increased range: “We are in favor of moving to a more vegan diet,” the spokesperson asserts.

A market that specializes in focusing on a particular product

But if supermarket chains really want to contribute to this rise in vegetable prices, why do profit margins vary so widely? “You see that supermarkets also set their prices based on the speed of rotation,” explains specialist Hagenbeck. Meat substitutes are sold much less than meat, which means produce is thrown out more often. This is settled in the margins.

He does not rule out the possibility that supermarkets can also benefit from the fact that meat substitute is still a niche product. They are often purchased by consumers who buy meat substitutes with a certain awareness, for example because of animal welfare or the environment. Supermarkets may abuse their willingness to pay up to a point.

More importantly, the meat substitute is no longer a reference product, one whose exact price customers know. Hagenbeek: “As a supermarket, you want to keep the prices of signal products like bananas and meat as low as possible, so the consumer doesn’t go into competition.” Sometimes stores even accept with a negative margin: “As long as they make a profit from the rest of the cart.” So suffering from losing a pork chop is a good thing. But losing vegetarian alternatives is unthinkable at the moment, “in any case, as long as customers do not yet make a choice for a supermarket based on the supply of meat substitutes.”

meat tax

If it were up to meat substitute producers and interest groups, a meat substitute wouldn’t be so expensive. “Meat is simply too cheap,” says the manufacturer Schouten. Statement supported by Sustainability Professor Arjen Wals from Wageningen University. Actual costs of production are not included in the prices. If you look at the impact on climate and animal welfare, we should be paying a lot for our meat.

True Animal Protein Price Alliance (TAPP) For this very reason, it strives for a fair price for meat and dairy, including damage to the environment. “Because of the climate, but also for the farmers who now have very little left over,” says Director Jeroen Reimers. With the additional tax, the group wants to offset the meat sector’s emissions while at the same time investing in making livestock farming more sustainable.

A proposal for such a fair price for meat – known as the notorious meat tax – has already been dropped in The Hague. VVD, CDA and SP, among others, question the plan. Mentors don’t think about the opportunity to appear quickly. According to the lobby member, there is already evidence of his success. Outside Research by RIVM and VU University Amsterdam He found that a meat tax while providing information on the impact on the environment could reduce household meat consumption by 36 percent.

It is clear that (part of) the livestock sector is still resisting the meat tax and protein shift. A week ago, the sector launched another Promotional campaign under the name Nederland Vleesland, with the aim of enhancing the image of distressed meat. The move was met with much criticism on social media.

Think vs. to do

“There is already a growing awareness of meat in the community,” says sustainability professor Wals. “But there is still a gap between thinking and doing.” According to Wals, the award can play an important role in bringing about real cultural change. Now you are forcing people with less money to live sustainably at the expense of their own wallet. This makes it something elitist, while sustainability should be within everyone’s reach.

Producers also consider realistic and reasonable prices to be essential. Do we still have work to do there? Of course,’ concludes Verkuil’s director for De Vegetarische Slager. However, there is one more important thing. “Taste, taste, and taste,” Fairwill says firmly. This is ultimately what you have to use to convince the consumer. That’s why we still invest a lot of time and money in it.

The producers are convinced that the protein transfer will eventually succeed. According to Verkuil, a tipping point is already looming. “There is a clear trend that is clearly visible, especially among young people.” More and more companies in the meat sector are seeing it smart to invest in plant-based alternatives. This is not necessarily a problem for De Vegetarische Slager and his colleagues. The more parties joined, the more innovation happened. This way, meat substitutes will automatically become cheaper.

The only competition that Verkuil is afraid of? poor. “Once a meat lover has tried a dirty alternative to meat, it won’t go back.” In the Breda factory, the following pieces of imitation chicken are blanched and removed from the machine. “Now they are kind and affectionate,” says Director Van Loon with satisfaction. Meat lovers won’t just run away from these chicken nuggets.