Veganism is a lifestyle adopted by more and more people every year. There are many reasons for a person to stop eating and consuming goods which come from animal productions. Although some people argue that veganism should be an individual choice, others think it is an extreme position which can damage some industries, leading them to shut down. The ones who adopt a vegan life argue that it is a way of spreading love, kindness, taking care of the environment, promoting a conscious consumption and a healthy lifestyle.
In fact, veganism is defined by the Vegan society as a philosophy and a way of living which excludes all forms of exploitation and cruelty of animals, for food, clothing or any other purpose. The main goal of veganism is then to promote the development and the use of animal-free alternatives for the benefit not just of animals, but as well for humans and the environment.
The awareness of animal health and animal cruelty, conscious consumption, or the protection of the environment encouraged people to shift from animal to plant-based food products. Indeed, the demand has changed, and the global vegan food market was valued at $14.2 billion in 2018 and is expected to reach $31.4 billion by 2026, registering a compound annual growth rate of 10.5% in this period. Furthermore, according to the vegan society, from 2012 to 2017, meet-free food demand grew 987%. The internet searches for veganism have also doubled in the past year. Therefore, the supply side started to see the vegan industry as an opportunity to do business and increase profits.
According to Animal Rights Sweden, 1.4 million people are now vegetarian or vegan and in people under thirties, the number is even higher, corresponding to 20%. In America, the reality is similar, according to The Economist, 25% of people between 25-34 years old are vegetarian or vegan. In Portugal it corresponds to 1.2% of the whole population, however there is a tendency to increase in the next few years. The evolution of the number of vegans specialty in the millennials generation has changed the market needs, forcing the supply to respond according to it. Quoting The Economist: “Where millennials lead, businesses and governments will follow”.
The changes in demand can define the way the markets work, and the case of the plan-based goods is a good example for that. The market for meat-free products around the world is being driven by a rising inclination towards healthy lifestyle since an excessive consumption of animal-based meat may result in diet-related diseases such as obesity, type-2 diabetes, heart diseases, and certain cancers, while the consumption of plant-based products can even reduce the risk of having such diseases by building a better immunity.
On the other hand, the increase in disposable income, mainly in Europe and America and the growth of government initiatives also lead to a change in lifestyle. According to Mercy for Animals Organization, in 2018, the German government announced that it would invest USD 780,000 in research activities to make plant-based substitutes more meat-like in texture as conventional meat. In 2016, the Chinese government outlined a plan to reduce its citizens’ meat consumption by 50%. The Good Food Institute, a US-based non-profit organization, funded top universities with USD 3 million for plant-based meat research. Beyond Meat, which is one of the key players in the plant-based meat industry, has successfully introduced its plant-based burger products through research conducted by the University of Missouri, which enabled the government to invest more in research activities. Therefore, ongoing R&D activities, along with considerable investment by government bodies, will fuel the demand for vegetarian and vegan foods in the coming years.
There is also data that shows us the growth of the global plant-based meat industry being influenced by the rising flexitarian population—flexible vegetarians who are seeking to reduce their meat consumption. They substitute some of the meat products in their daily or weekly diet for plant-based alternatives.
Supply started to respond to these changes and if we think about ten years ago, the brands which supplied vegan goods were few and without diversification, meaning that the prices were high, and most brands did not have competition. As we may imagine, the brands that were in the market started having more profits since there was few competitors and the demand started to increase. In the long run, firms outside this niche started to find out that vegan markets were becoming profitable, seeing this as an opportunity to increase their returns. Brands reacted, and the number and variety of products available on the market started to increase while prices decreased. Nowadays, it is easier to find a vegan option in most restaurants because firms want to supply also the niches.
Firms in Portugal also have reacted to the change in preferences and according to Associação Vegetariana Portuguesa, vegan stores increased 541% from 2008 to 2018 and the tendency is to have even more in the future.
At least for now, while we do not have a huge number of firms and we do not achieve yet perfect competition, creating vegan burgers, vegan milk, vegan cheese and so on, could be a way of increasing revenues by the fact that vegan products are usual more expensive than the “normal” goods. However, it is expected that in the long run, the differences between vegan products’ prices and “normal” products’ prices start to disappear. In fact, it is expectable for the long run that with the entering of more firms, the profits will tend to zero, benefiting consumers. For now, consumers are taking advantages from the increase in the variety of products, experiencing an increase in their welfare.
Businesses are then being affected by changes in preferences, and supply must react to this if they want to survive and maintain a good image in the market. However, if firms catch the opportunity and start investing in R&D to achieve profits in the future since it is expectable that the vegan market keeps following an increasing pattern. Having this in mind, this is not just an opportunity to firms to have higher returns as it also yields positive externalities to the environment and to the society as a whole. By saying that, investing in the plant-based market is a way of achieving positive business results while being ethical and conscious.
References:
Jemima Webber. (2017, December 29). Demand for Vegan and Vegetarian Food Increased by 987% in 2017. Retrieved November 2, 2020, from LIVEKINDLY website: https://www.livekindly.co/just-eat-veganism/
Sharma, N., & Manepalli, N. (2019, July 8). vegconomist – the vegan business magazine. Retrieved November 2, 2020, from vegconomist – the vegan business magazine website: https://vegconomist.com/market-and-trends/growing-consumer-preferences-toward-vegetarian-and-flexitarian-foods-to-drive-the-demand-for-vegetarian-and-vegan-products/
Research and Markets. (2020, February 21). The Future of the Vegan Food Market to 2026: Global Industry Overview, Value Chain Analysis, Lucrative Segments, Key Player Profiles, Winning Strategies. Retrieved November 2, 2020, from Prnewswire.com website: https://www.prnewswire.com/news-releases/the-future-of-the-vegan-food-market-to-2026-global-industry-overview-value-chain-analysis-lucrative-segments-key-player-profiles-winning-strategies-301009214.html#:~:text=According%20to%20the%20report%2C%20the,product%20type%20and%20distribution%20channel
Fortuna, G. (2020, February 27). EU pressed to address meat reduction, plant-based diet in new food policy. Retrieved November 2, 2020, from www.euractiv.com website: https://www.euractiv.com/section/agriculture-food/news/eu-pressed-to-address-meat-reduction-plant-based-diet-in-new-food-policy/
Grandviewresearch.com. (2019). Vegan Food Market Size & Growth Trends | Industry Report, 2019-2025. [online] Available at: https://www.grandviewresearch.com/industry-analysis/vegan-food-market.
Merryn Somerset Webb (2019). The veganism boom does more for food company profits than the planet. [online] Financial Times. Available at: https://www.ft.com/content/79c2aa16-35f1-11e9-bb0c-42459962a812.