The Growing Appetite for Meat Alternatives in China

Editor’s Note: Bits x Bites is China’s first accelerator VC to invest in early-stage food tech startups. Built by a former BCG management consultant and founder of a Shanghai-based online farmers market, the program focuses on fostering transformative businesses to tackle China’s food safety and other systematic food challenges.

Here the Bits x Bites team breaks down key trends and milestone announcements that have been happening in China—the world’s biggest market for meat. 

“Less Meat. Less Heat. More Life.”

This was Arnold Schwarzenegger’s message in a 2016 WildAid PSA campaign inviting the world to eat more consciously to mitigate climate change. The campaign came on the heels of China’s new guidelines to reduce domestic meat consumption by 50% by 2030. The announcement earned high praise from green advocacy groups worldwide. If China meets its target, says WildAid, the cutback will translate into a one-billion-ton reduction in livestock-related carbon emissions.

China’s declaration is not only significant in the global fight against climate change, it also speaks to the government’s commitment to curtail a looming health crisis. In recent years, the country’s diet has shifted to favor animal proteins. China now leads the world in obese children, and the World Health Organization has reported that one in three diabetes diagnoses is in China.

So what is the state of play in China’s diet transition? Could innovations in plant-based alternatives, cultured meat, and edible insects play a part in China’s food future? Could China become a haven to advance meat alternative technology development?

World’s Largest Meat Consumer

In absolute terms, the stats are alarming. Over three decades, rapidly rising living standards have turned meat from a treat for special occasions into an everyday staple. With 1.4 billion people, China is now the world’s largest meat consumer and importer. JD.com, one of China’s largest e-commerce companies, signed an agreement to purchase more than $2 billion of US beef and pork from the Montana Stock Growers Association (MSGA) and from Smithfield Foods.

The silver lining is that the growth rate of animal protein has begun to taper off as China’s economy slows, according to Rabobank. Demand growth in beef has dropped from 10% in 2000 to under 2% in 2017.  The demand for pork has peaked, well ahead of most official forecasts. Food companies now notice an undercurrent of shifting appetites toward healthier products.

Renewed interest in plant-based ingredients

The recent meat craving might have steered interest away from vegetables; China has long traditions of a plant-based diet. Many legumes and other plant ingredients in today’s meat alternative products are found in traditional Chinese cuisines, such as tofu and seaweeds.

In recent years, the prevailing weight loss culture and health concerns are drawing Chinese urbanites back to vegetables and fruits as part of their modern diet. Celebrity-powered campaigns such as WildAid’s ShuShi and vegetarian media platforms such as Veg Planet are generating social media buzz of plant-based living as a status symbol.

Not everyone will make a drastic shift to vegetarianism, but consumers are responding to products that combine healthy eating, taste, and convenience. Fruggie, a Shenzhen-based startup, has built an enthusiastic following with a drinkable salad product that makes western-style raw salads appealing to the Chinese palate. Dumpling brand Wanchai Ferry has found that increasing vegetable content and cutting down on meat is a fast route to win sales.

The startup opportunity in China’s plant-based revolution is still wide open. The majority of meat replacement products on the market have evolved from Buddhist diet traditions with little innovation. Most mimic meat dishes such as vegetarian abalone made of starch and seaweed extracts, or vegetarian roasted pork based on vegetable protein. This leaves a gap for new brands that can draw curious consumers having second thoughts about their meat-eating habits.

An Appetite for Edible Insects

From roasted bee larvae to crickets on skewers, insects are served as delicacies in ethnic groups across China. Most of these bugs are cooked and consumed directly. Startups are starting to process insect ingredients into trendy new food products for China. Bugsolutely takes advantage of a byproduct of China’s silk production to create a snack product made of silkworm flour.

In a novel food category where consumer perception plays a critical role, China’s entomology culture can provide an easier path for market uptake. China also has a booming insect cultivation scene that supplies the cosmetic and pharmaceutical industry, making it a lower-cost input source for the edible insect sector.

A Market Opportunity Impossible to Ignore

While the animal alternative category in the west has been buzzing with innovation and growth with brands such as Hampton Creek and Beyond Meat, China’s food startup landscape is at an inflection point. Consumers are willing to pay more for innovative and healthier food products. The opportunity is ripe for local entrepreneurs who can move quickly and create something new that will have consumers lining up with excitement.

At the same time, with its irresistible market size and a growing appetite for healthier food options, China provides a fertile ground for global startups and later-stage ventures like Impossible Foods, which has just announced its Asian debut for 2018.

“Looking ahead, I think that the plant-based protein and clean meat movement that is taking off in the US will also have a huge impact in China,” says Matt Grager, WildAid climate program manager.

A Broader Vision Is Needed

In truly new technology-intensive advances such as cultured meat, China is still notably quiet. This contrasts the green tech industries such as energy storage and biofuels where Chinese firms play a leading role globally.

The types of government investment and support that helped accelerate green tech industries could be adapted to boost the innovation ecosystem for meat substitutes. From cross-boundary research collaboration to loosening regulations, a lot can be done.

Taking insect protein as an example, despite China’s culinary history with bugs, silkworm is the only insect legally permitted in packaged foods sold in China today. Allowing more insect ingredients can open up the innovation floodgate for many more startups to participate.

The dietary guidelines come at a critical juncture in China’s foodscape. The cultural shift has already begun, and investors are paying attention. There is an immense opportunity for new food companies that can capitalize on this transformation, creating innovative products that please the palate and bring climate-smart eating to the mainstream.