Canada’s plant-based protein sector attempts to fight inflation

(Toronto) The plant-based protein industry is focused on improving the price, taste and texture of its products as it navigates a period of consumer distrust fueled by inflation.

This is what industry experts, including Bill Greuel, CEO of Protein Industries Canada, are finding, a non-profit organization that receives funding from Innovation, Science and Economic Development Canada to invest in protein manufacturing. plant-based foods and ingredients.

A lot of work is being done in Canada to improve things like the ability of vegan cheese substitutes (“fauxmages”) to melt or the texture of plant-based meat substitutes, Mr. Greuel said in an interview on the sidelines of the “Plant Forward” conference in Toronto, focused on this industry.

“Canada is making great progress,” said Mr. Greuel, calling price, taste and texture the “Holy Trinity of consumer needs.”

But inflation and rising interest rates have made consumers more sensitive to price differentials, and therefore less willing to try plant-based substitutes, he admits.

In addition to innovating in terms of taste and texture, the industry must also strengthen its manufacturing and processing capacity in Canada, in order to reduce the price differences between meat substitutes and conventional meat, underlines Mr. Greuel.

“Our belief is that if we create economies of scale in ingredient manufacturing, it will provide more options for food manufacturers, more options for consumers. And this is our path to relieving some of the inflationary pressures in the plant-based food sector, by scaling up ingredient manufacturing here in Canada. »

The economic outlook for the plant-based protein industry was the subject of a presentation by two speakers from Ernst and Young at Wednesday’s conference in Toronto.

Huzaifa Akhtar, vice president of the economic council, and Mauricio Zelaya, partner and national leader in economics, told participants that companies in the sector are working on several fronts to stay ahead. This involves improving existing products and researching new ones, said Mme Akhtar. “We’re really seeing a huge surge in innovation across the board,” she said.

It’s also important for businesses to mitigate potential supply chain disruptions by reshoring nearby and diversifying the sources of their plant inputs, she said.

Slower growth

Longer term, Greuel believes strong growth was still expected for the industry, but not at the high pace previously envisioned.

Companies like “Beyond Meat” made headlines when they launched products, including at major fast food chains, that promised to mimic the taste and texture of a beef burger. But the initial enthusiasm has faded in recent years and resulted in a decline in stock prices.

Growth ambitions in the plant protein industry have been reduced, admits Mr. Greuel. “At the start of the COVID pandemic, we were seeing double-digit compound annual growth rates. Now we’ve had a market correction, and I think it was justified. »

Recent estimates are more conservative, around 6% to 8%, he says. “It’s still important. »

Scaling up manufacturing and processing in Canada is a challenge, however, because these projects require a lot of growth capital, Greuel noted.

“The cost of an ingredient manufacturing plant is measured in hundreds of millions of dollars: it is very difficult to finance in the traditional (venture capital) models that we have in Canada,” he said. deplored.

“The other problem is that you can’t finance an entire processing facility with debt financing in traditional markets, because the cost of servicing the debt then becomes too high. »

That’s why it’s important to find ways to encourage more private sector investment, Greuel said.

Government regulation is also a major concern, he adds, because it takes much longer in Canada than in the United States for new foods to be approved – sometimes several years longer.

While the last federal budget mentioned “regulatory sandboxes” to help businesses stimulate innovation, Mr. Greuel recalls that “these are all things we have heard before.”

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