Sharing the latest insights into the food and agribusiness sector
For what seems like an age, the Irish (and global) meat industry has been under fire. In fact, if we were to base our entire view of the world on what appears on social media, one would be forgiven for assuming that meat no longer plays a major factor in the western civilization diet. You might even expect that the biggest change in Ireland over the next 20 years will be the widespread disappearance of the country farm, and with it – for good or bad – part of Ireland’s agricultural identity.
The statistics, however, suggest that farmers/meat processors/butchers/retailers have nothing to fear. That meat, is in fact, not dead. Here’s why:
1: The Importance of Quality
As has been documented by various studies across the globe, people in the west are becoming more and more health-conscious.
The quality of food that we choose to consume has come under the spotlight in recent years, with many shifting from processed foods (e.g. packets of ham, which are often created from the undesirable leftovers of the actual animal, and possibly cancerous nitrites), to excellent quality, traceable, domestic meat.
In fact, a study by the ADHB1 in late 2018 found that 61% of people would be willing to pay extra for better quality meat.
Lest we forget, there are still reems of scientific studies out there that heap praise upon meat and its many health benefits (e.g. meat is great for the skeletal system, and a source of iron/zinc/omega 3/magnesium/creatine – which are important for the maintenance of a healthy body).
Bearing in mind that a refocus on quality domestic produce would be more conducive to a sustainable future – not to mention domestic economic growth – and the benefits appear endless.
For those that fall into the 61% (those sourcing their meat from the more expensive aisles, or the local butchers) and 39% categories (those settling for the 18% mince and chicken goujons), the non-meat-based ‘direct’ substitutes appearing in the frozen food aisle (e.g. meat-free chicken fingers) are not a great alternative.
And, to take us back to Economics 101, the increased focus on quality causes meat to behave more like a ‘giffen good’ than a ‘substitute good’.
Ireland’s population, due in part to comparably high (by European standards) birth rates and positive net migration, is set to rise by 20% over the next three decades.
Average meat consumption would therefore have to fall by approximately the same factor over the same period in order for consumption levels to just remain as they are now.
Historically, average meat consumption in the US has been highly-correlated with that of the UK and Ireland. As of 2018, US citizens – who have also claimed to be making attempts to cut down on meat, have actually increased their consumption levels.
Such a trend is likely being replicated domestically.
3: Rising Incomes
When comparing consumption across different countries we understand that, typically, the richer we are, the more meat we eat.
Average annual income levels have been growing consistently over the past number of years, rising from c. €36,000 in 2013 to c. €39,000 in 2018.
There is no reason to believe that Ireland, the home of arguably the best quality meat in the world, will be bucking the trend any time soon.
4: Social Media Distortions
As mentioned earlier, social media can be safely considered the biggest distorter of relevant news in the western world.
Rarely referred to in the mainstream, and even less well understood, is that the influence social media has on the behaviour of the human population is massively over-estimated.
American politics provides a particularly good example of how a small minority of people can silence the many, ultimately causing shocks like that of the 2016 US Presidential Election.
This is an extreme example, but it is representative of the types of emotionally-fuelled uproars that are enabled by social media; for all the commendable aspects of veganism and vegetarianism – such as animal welfare concerns – this wave of moral uproar displays similar characteristics to those found among the American political left-wing.
If one thing is true, it’s that social media has proven its ability to create massive distortions between what appears to be going on in the world, and what is actually going on.
5: Veganism Overemphasised?
For all of the research published regarding the exponential surge in the popularity of non-meat diets in the west, vegans still only represent an estimated 2%-4% of the population, with 6%-8% identifying as vegetarian (Taoisigh included).
This leaves approximately 92% of the population remaining on the meat train. While not a tiny proportion of the population, these reported numbers are far less staggering than some influencers would have us believe.
In other words, there is no data-based indication that veganism poses a major immediate threat to meat.
However, whether or not veganism is a passing trend, there is clear evidence that a shift towards the purchasing of greater quality food is something that is here to stay. So, whether or not some of that comes in the form of veganism, it is those vendors who place a real focus on actual quality that will be sure to win out.
In other words, quality meat farmers/manufacturers/retailers might actually be playing on the same side as vegans!
Taking the research into account, one can see that that the apparent threat to the meat industry is at worst, overblown, and at best, non-existent.
However, as the industry ages, that is not to say that non-innovators will have an easy time of it. As with any industry, those who differentiate and innovate leave the pack behind.
As the brick-and-mortar retail apocalypse continues, the conventional retailer/butcher that fails to climb aboard the e-commerce train will soon find themselves left behind. As a result, the true market innovator and leader of change stands to benefit the most from any future trends.
A Note On Supply Chain Management & Vertical Integration
In the current climate, it would be remiss of me to ignore the topical issues of the meat supply chain and the problems facing beef farmers at present.
It is clear that there are issues along the supply chain that are making some stages unviable over the medium term. This has been brought to light in particular by the Irish Cattle and Sheep Farmers’ Association, who claim that beef farmers are not receiving sufficient consideration for their role in the industry.
As is the case with any commercial issues, the problem can be dealt with in one of two ways; by the government, or the market.
As it stands, with housing supply, infrastructure spending, taxation, and climate change being the hot topics of conversation in the run up to the election, the farmers have thus far been largely ignored.
It is likely to be the case that – particularly if Fine Gael and/or Fianna Fáil win/retain power – a laissez-faire approach will be adopted.
In such a case, and as often occurs in testing times for an industry, the future industry leaders may ultimately come to be those that are first to undertake synergy-driven vertical integration moves.
With horizontal mergers thus far representing the flavour of the day within the industry, it would appear that there is much to be gained by combining the efforts of the various stages of the meat supply chain. Such moves would help to ameliorate the pain faced by those key players that find themselves at the base of the ladder, while also allowing the manufacturers and retailers to enjoy significant cost benefits.
You can find out more about Eoin O’Nuallain, Corporate Advisory, by visiting his LinkedIn profile.