Veggie burgers and oat yogurt are the future, but ‘fair prices’ are still a long way off

More supply, more attention and higher meat and dairy prices make plant-based alternatives more attractive. Yet there is no real protein transition yet. Fair prices should change that, experts say. The fact that the profit margins on meat substitutes are ten times higher than those on meat is not very helpful.

Just like with the classic butcher, sausages hang from the ceiling at the factory entrance of De Vegetarische Slager in Breda. But these ‘cuddly sausages’ are made of fabric. It is a mocking nod to the meat industry, because as the name suggests, only vegetarian products are made here.

Today, thousands of kilos of fake chicken are here again with the help of some heat, water and soy protein. ‘But this will not make most people very enthusiastic’, says factory manager Toine van Loon, pointing to the brown strips of ‘protein structure’ that roll out of the machine. The semi-finished products are cut into pieces, blanched and marinated by machines in a factory downstream. Shiny and smelling like chicken spices, they have become ‘chicken sticks’, the most popular product of the Netherlands’ most famous vegetable butcher.

protein transition

How much more work and costs are involved in the production of meat? The animal that has to be raised for it needs many kilograms of feed alone. Moreover, it often consists of the same ingredients as those of the average veggie burger: corn, grain and soy. That raises questions. The vegetable chicken pieces from De Vegetarische Slager cost almost 25 euros per kilo at Albert Heijn; the same amount of chicken fillet cubes without a Beter Leven star, more than 10 euros less. How is that possible?

Research commissioned by the organization ProVeg, which is committed to more plant-based foods, recently showed that the price gap between animal products and their plant-based alternative is shrinking due to the screeching inflation. But although prices vary by supermarket chain and product, it is clear that eating animal protein is often still cheaper.

Not ideal, given the climate agreement. It has been agreed that less animal and more vegetable protein should end up on our plates: the so-called protein transition. But while the acquisition of De Vegetarische Slager by Unilever in 2018 was a new sign that meat substitutes are being taken seriously in the food industry, there is no real vegetable transition yet.

High profit margins

Aren’t we paying way too much for those ‘simple’ meat substitutes? Hugo Verkuil, CEO of De Vegetarisch Slager, is adamant: ‘In order to become cheaper, it must first be eaten on a large scale.’ Although the meat substitute is gaining popularity, the total market share in the meat industry is now only around 4 percent. ‘That really needs to be increased to 10 or 15 percent for the necessary increase in scale and cost savings.’

Price specialist Oliver Hagenbeek of consultancy firm Simon Kucher agrees. ‘The meat sector has had decades to work increasingly cheaper, for example by raising animals faster and slaughtering them more efficiently.’ Most producers of meat substitutes are just coming into the picture. They still have to invest heavily in the development and quality of their products. ‘That costs money.’

Partly because of this, the profit margins are much higher than with meat, says Hagenbeek. ‘For meat, these are between 0 and 20 percent, while with meat substitutes it can easily be 30 to 40 percent.’ That seems skewed, but is best explained, according to the price specialist. Partly because producers still have to invest a lot, but also because of competition.

‘There are a lot of different brands on the vegetable shelf, while meat is almost always sold under a private label,’ Hagenbeek explains. That competition on the shelf requires more advertising. “That just costs money, of course.” 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).

Vegetable advance

The producers themselves point to the supermarkets. ‘It differs per product, but it sometimes happens that they apply profit margins of tens of percents on top of our prices,’ says marketing manager Mark van Noorloos of meat substitute manufacturer Schouten. The company has been active for 35 years and makes products for the private labels of large-scale gritters, among other things.

Although Van Noorloos thinks the margins are disproportionate – ‘prices form a barrier for consumers’ – he is also pleased that the stores are giving meat substitutes an increasingly larger stage. Competitor De Vegetarische Slager does not want to say much about supermarket margins: ‘They determine the final prices and that is their right.’ Verkuil says he is pleased that the retailers are actively contributing to the vegetable growth.

The large supermarket chains do not want to say anything about the profit margins they use for meat or meat substitutes. They believe that criticism that they are slowing down the sale of plant-based alternatives is unjustified. ‘We support the movement towards a more plant-based diet,’ says a spokesperson for Albert Heijn. To this end, the company says it is not only expanding its range considerably, but also introducing more own-brand products. “Where the price is equal to that of the meat products or cheaper,” reports a spokesperson. The same story can be heard at Jumbo about equivalent prices and a growing range: ‘We endorse the transition to a more plant-based diet’, the spokesperson emphasizes.

Niche product

But if the supermarket chains really want to contribute to this vegetable rise, why do the profit margins differ so widely? ‘You see that supermarkets also determine their prices on the basis of rotational speed’, explains specialist Hagenbeek. ‘Much less meat substitutes are sold than meat, which means that products are thrown away more often. That is settled in the margins.’

He does not rule out the possibility that the supermarkets also benefit from the fact that the meat substitute is still a niche product. ‘Consumers who buy meat substitutes often buy them with a certain awareness, for example because of animal welfare or the environment. Supermarkets probably abuse their willingness to pay to a certain extent.’

More importantly, the meat substitute is not yet a signal product, a product of which customers know exactly what it costs. Hagenbeek: ‘As a supermarket, you want to keep the prices of signal products such as bananas and meat as low as possible, so that the consumer does not go over to the competition.’ Shops sometimes even settle for a negative margin: ‘As long as they make a profit on the rest of the shopping basket.’ Suffering a loss on a pork chop is therefore fine. But suffering a loss on plant-based alternatives is unthinkable for the time being, ‘in any case, as long as customers do not yet make the choice for a supermarket dependent on the supply of meat substitutes’.

meat tax

If it is up to the meat substitute producers and interest groups, it is therefore not the meat substitute that is too expensive. ‘Meat is simply too cheap’, says manufacturer Schouten. A statement that sustainability professor Arjen Wals of Wageningen University endorses. ‘The actual costs of production are not included in the prices. If you look at the impact on the climate and animal welfare, we should pay a lot more for our meat.’

For that very reason, the True Animal Protein Price Coalition (Tapp) strives for a fair meat and dairy price, which includes environmental damage. ‘Because of the climate, but also for the farmers who now have too little left over,’ says director Jeroen Remmers. With the extra tax, the collective wants to compensate the emissions of the meat sector and at the same time invest in making livestock farming more sustainable.

A motion for such a fair meat price – better known as the infamous meat tax – has already been shot down in The Hague. The VVD, CDA and SP, among others, are skeptical about the plan. Remmers does not consider the chance that they will come around quickly. According to the lobbyist, there is already evidence that it works. Out research by RIVM and VU University Amsterdam It was found that a meat tax in combination with the provision of information about the impact on the environment can reduce the meat consumption of households by 36 percent.

It is clear that (part of) the livestock sector is still resisting the meat tax and a protein transition. A week ago, the sector launched another promotion campaign under the name Nederland Vleesland, aimed at boosting the faltering image of meat. The move was met with considerable criticism on social media.

thinking vs. to do

‘There is already an increased awareness of meat in society,’ says sustainability professor Wals. ‘But there is still a gap between thinking and doing.’ According to Wals, the prize can play an important role in bringing about a 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 must be accessible to everyone’.

The producers also see that realistic and affordable prices are essential. ‘Do we still have work to do there? Of course,’ concludes Verkuil director of De Vegetarische Slager. Yet one thing is even more important. ‘Taste, taste and taste’, says Verkuil resolutely. ‘That 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 transition will ultimately succeed. According to Verkuil, the tipping point is already in sight. ‘Especially among young people, a clear trend is already visible.’ More and more companies in the meat sector are also seeing that it is smart to invest in plant-based alternatives. This is not necessarily a problem for De Vegetarische Slager and colleagues. ‘The more parties join in, the more innovation takes place. In 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 meat substitute, he won’t come back.” At the factory in Breda, the following pieces of fake chicken are blanched and removed from the machine. ‘Now they are nice and tender’, says manager Van Loon with satisfaction. The meat lover will not just run away from these chicken pieces.