Cows and the industries that depend on them are on very rough terrain. The beef and dairy sectors need to start paying far more attention to the environmental and obesity impacts of their products and production processes. If they don’t, they will face declining fortunes and irrelevancy. Yet that’s a fate they can begin reversing now if they take the right steps.
The trends are ominous. Environmental activists have been pointing out the brontosaurus-sized carbon footprint of eating small amounts of beef, comparing it to the minuscule atmospheric impact of plant-based alternatives. Upstart companies like Impossible Foods and Beyond Meat have developed great-tasting and wildly popular burger substitutes.
The beef industry’s cousin – the dairy industry – is also suffering. Milk consumption continues to decline despite the industry’s marketers having convinced celebrities to wear milk mustaches for 21 years. And recently, a report from think tank RethinkX predicted the dairy and cattle industries will be defunct by 2030, as scientists develop new types of meat- and milk-type products that are tastier and easier on the environment at a lower cost.
If you work in these industries, these trends and predictions should be scary enough. But even scarier is that the sectors appear to have been too focused on cows and cow production to even notice. They risk even more decline unless they re-define why they are in business: to give consumers the types of meaty-tasting protein and healthier drinks they want now, even if it means turning away from cows. Industries that cling to the “cow model” must retool themselves before the non-cow-based industries poach more of their business.
Consumers are newly aware of the impact of cows on the environment and their own health. The United Nations says that beef production accounts for” 14.5% of greenhouse gas emissions()”:http://www.fao.org/news/story/en/item/197623/icode/, and some estimates are even higher. While beef is the worst offender, dairy production has a far greater environmental impact than even pigs and poultry.
Deforestation to make room for the cattle industry is also a major reason why Amazon rainforests are burning, a threat to a region called the “lungs of the earth.” And early this year a report in The Lancet, a highly regarded medical journal, blamed cattle production for more than half the food industry’s greenhouse gas emissions. The report urged that meat consumption be reduced in half by 2050.
Meat consumption remains strong, but people are eating less beef. Per capita consumption is down about one-third since the peak in the 1970s. However, sales of plant-based “meats” have risen by 31% in grocery stores alone over the past two years. Impossible Burgers can be found in 17,000 restaurants, including the Impossible Whopper now offered at Burger King, and Beyond Meat’s Beyond Burgers at 53,000 restaurants. Just last week, restaurant behemoth McDonald’s announced it will test its new P.L.T. – plant, lettuce and tomato – “burger” in select Canadian restaurants.
The dairy industry has also missed the mark. It has been concentrating on increasing milk production per cow — up 13% from 2009 to 2018 – rather than on milk consumption, which has plunged from 30 to 18 gallons annually since the 1970s. In contrast, consumption of plant-based milk-like beverages has gone up by 9% from 2017 to 2018 alone. All told, dairy milk sales are projected to decline by 27% between 2013 and 2023 while sales of non-dairy alternatives are expected to rise by 108% over the same period.
Yet the beef and dairy industries don’t seem to be worrying, much less innovating. Other companies are reading the tea leaves of consumer sentiment, listening to the science and developing blockbuster plant-based alternatives. As reported by Nielsen, 21% of meat buyers are buying alternatives.
The problem is that the cow-based industries are focusing on cows, not consumers. The sectors are shying away from owning the public health and environmental problems they have helped create. Instead, they are wasting time trying to legislate/restrict how the word “meat” or “milk” is used in packaging and advertising. The U.S. Cattleman’s Association petitioned the US Department of Agriculture last year to stop vegan meat alternatives from using the word “meat,” even “plant-based meat,” in their labeling. Two years ago the dairy industry asked the USDA to do the same thing and ban the word “milk” from soy-based products.
Cow-based industries should stop yelping and learn from the cautionary tale of automakers, which let Tesla pioneer the clean-energy car alternative and have had to scramble to catch up. They can learn from Coca-Cola, which circled the wagons around its iconic red can and ignored trends towards healthier beverages for over a decade. They can take lessons from conservative and complacent Blackberry, which opened the door to iPhone and Android smartphone dominance.
If they don’t change, the meat and dairy industries risk becoming irrelevant. Awareness will continue to spread on the environment and health impacts of meat. And millennials – a quarter of whom say they are vegetarian or vegan – will become an even bigger consumer segment.
Here is what the beef and dairy industries should be doing:
- Redefine their businesses from offering cow-based products to delivering “clean” protein. While the cost of alternative beef and dairy products is higher today, the RethinkX report predicts that the cost of plant proteins will be five times cheaper by 2030 and 10 times cheaper by 2035 than existing animal proteins. These industries need to anticipate this eventuality and aggressively move to identify and adopt innovative non-animal protein products and practices. Pursuing the current course is a losing proposition.
- Lead – not fight — the change to “better-for-you” meat and dairy. Digging in on label specifications will not deter this tsunami of change. It would be much wiser to develop more plant-based alternatives instead of letting new companies run away with the business. These industries should note that despite the sluggish initial response to healthier beverages by the soft drink industry, that sector has come around – and today no longer looks like the industry of the 1980s in which companies like Coca-Cola sold primarily carbonated beverages. Today Coke and PepsiCo deliver a range of beverages to meet a wide continuum of consumer demands.
- Think like consumer marketers, not like commodity product sellers. The “cow” industries never learned the lessons of the 1970s when soft drinks overtook milk consumption. Milk producers missed that consumers were shifting their preferences to more refreshment beverages. The milk industry’s attachment to cow-sourced products remains entrenched. But it must change to providing nutrition and protein solutions that consumers now need from dairy and meat.
While many consumers will still want their burgers and cow milk, it won’t be enough to save the cattle industry. I’m waiting for at least one beef or dairy producer to soon break away from the herd, show some leadership, and move in this new direction. Otherwise, the herd will be culled.
Read in Forbes