The market opportunity for meat and dairy alternatives in China is a topic of discussion as Beyond Meat considers restructuring its operations in the country due to lackluster demand. Matilda Ho, managing director at Chinese VC firm Bits x Bites, highlighted the challenges faced by alternative protein companies in China during a recent panel debate. She noted that many startups in this space have exited China since 2022, and Beyond Meat currently only has one full-time employee in the country.
Ho emphasized that tofu, a traditional Chinese food invented over 2,000 years ago, remains a formidable competitor to plant-based meat. Tofu is cheap, tasty, soy-based, and clean-label, but its short shelf-life poses a challenge. Ho believes that the focus should be on developing a better tofu to solve the protein security challenge in China.
However, the market for dairy alternatives is growing rapidly in China. Chinese consumers are familiar with soy milk, as many grew up making their own at home. This familiarity has paved the way for diverse products like coconut milk and various plant-based milks to gain popularity. The high density of coffee shops in Shanghai also creates opportunities for the use of plant-based milks.
Dao Foods International, an investor in the alternative protein industry in China, shares the enthusiasm for plant-based dairy. While they acknowledge the challenges faced by startups in the plant-based meat sector, they remain positive about its potential. Dao Foods is investing in companies that can overcome negative consumer perceptions of mock-meat products with convincing and appealing alternatives.
When it comes to consumer messaging, taste, price, and convenience are still the top factors driving purchase decisions in China. Health and nutrition are also becoming increasingly important. While moral considerations currently have less sway over mainstream Chinese consumers, this could change with the younger generation. Raising awareness and highlighting the benefits of alternative proteins to consumers and the planet is crucial.
In terms of infrastructure, China has a competitive advantage in fermentation capacity. Dao Foods advises international companies to take advantage of this to lower costs, achieve price parity, and create more appealing products for mainstream consumers. The Chinese government is also supportive of new proteins, aligning with the goals of alternative protein companies in the country.
Regarding cultivated meat, there are existing pathways for government approval of novelty products and ingredients in China. However, a clearly defined pathway for cell-based meat is still lacking. The investment community has shown some momentum in plant-based venture investments, but mainstream investors still lack sufficient knowledge about alternative proteins.
Startups in the alternative protein sector in China face challenges in fundraising, particularly due to the economic downturn. Dao Foods not only provides funding but also helps entrepreneurs refine their narrative, business model, and offers mentorship and incubation services to better position them for future funding opportunities.
In conclusion, while the market for plant-based meat in China is still nascent and faces challenges, there is significant growth potential for dairy alternatives. Overcoming negative consumer perceptions, raising awareness, and building a supportive ecosystem are key factors for success in the alternative protein industry in China.