Meat and dairy are past their peak: vegetable alternatives will reach a turnover of 7.5 billion euro on the European market in 2025, ING calculated. Yet meat substitutes will not outperform the meat market yet.
Forty years to go
Consumption of meat and dairy products in the EU – including the UK – has reached its peak: around a quarter of Europeans expect their meat consumption to fall, as is already the case for dairy products. In contrast, between 2010 and 2020, retail sales of meat and dairy alternatives in Europe grew by almost 10% each year. Sales of meat substitutes even increased by 121%, from 625 million euro in 2010 to 1.38 billion euro in 2020. Sales of vegetable dairy went from 1.5 billion to 3 billion euro over 10 years.
While some argue that meat and dairy will eventually be completely replaced by plant-based alternatives, ING researchers do not believe this is realistic. Indeed, substitutes currently represent only 0.7% of the meat market and 2.5% of the dairy market. Even assuming current strong growth (+10%), it would take almost until 2060 before the alternatives could outperform the meat and dairy market.
Benelux among top users
According to ING, three barriers determine what future growth will look like. Price is a first factor: currently meat and dairy alternatives are slightly more expensive, and full price equality for all types of products is not to be expected. The second element is the user experience: will taste and nutritional value improve even further? The third crucial factor is distribution and availability, which is currently the subject of much work in both the retail and catering sectors. For example, McDonald’s has just announced the launch of a new line of meat substitutes.
There are also significant differences between European countries. The United Kingdom is by far the most developed market, accounting for 440 million euro in 2019. In addition to the United Kingdom, Germany, Italy, the Netherlands and France also have retail sales in excess of 100 million euro. Consumption per person is highest in Scandinavia, the Benelux and the United Kingdom, but lowest in Southern and Eastern Europe. Belgians spend an average of 2 to 5 euros a year on vegetarian alternatives, the Dutch already spend more than 5 euros.
Cheese pulls dairy down
Within the dairy sector, there is a big difference between cheese substitutes and alternatives to milk. Vegetable ‘cheeses’ are still a premium and niche product, which also find it more difficult to approximate the properties of animal cheese, while milk alternatives already represent almost 10% of the European milk market. In Belgium this is as high as 14%, in the Netherlands the share is 12%. As a result of this ‘negative cheese effect’, the total category of dairy alternatives ‘only’ accounts for a market share of 3%.
Given the current level of investment and innovation in the food industry and supply chain, ING concludes in its new research report that the barriers will be significantly lowered over the next five years. Many meat and dairy producers in particular realise that they are in a low-growth market and cannot afford to lose consumers. Producers in the beef and pork segment and in North-Western Europe, in particular, see their sales under threat and therefore have to make the switch.
As a result, the market for meat and dairy substitutes is expected to grow to 7.5 billion euro in 2025: 2.5 billion euro for meat alternatives and 5 billion for non-animal dairy – although that term is no longer officially allowed to be used in the EU. European market share will thus increase to 1.3% and 4.1% respectively.
