Plant for growth

It’s no secret that the plant-based food industry is growing at an exponential rate. People are making a concerted effort to eat more healthily and more sustainably, and are scouring the shelves for meat-free options, writes Neil Hansford, food technology expert, Air Products.

Global sales of plant-based alternatives to meat are expected to top £3.2bn next year, according to analysts Research & Markets, with growth showing no signs of abating in the following years.

The sector has now well and truly taken off and is well established within the food industry. We’re seeing more and more of the big players, most recently McDonalds with the upcoming launch of the McPlant burger, accepting the fact that plant-based options are expected by a growing number of customers. But in the past, before its longevity was assured, the early trend provided an opportunity for smaller businesses to get in on the ground floor, and many have taken this first step in recent years.

Specialist start-ups and established SMEs alike have jumped, and are still jumping, at the chance to market their products to a wider audience.

However, as is the way when this happens, some are destined to succeed and others to fail. While demand for plant-based food now seems unlikely to fall, not all the ideas around it will capture the public imagination. The problem for smaller firms is that this uncertainty generates a large operational risk. Additionally, not all eventualities can be planned for – something which we have all become painfully aware of over the past year. Smaller companies relying on fewer big contracts have found themselves affected even more by Covid as the food service industry has shut down, with restaurants no longer taking orders and this shortfall needing to be replaced quickly by retail business.

Bigger companies can take a hit on a line of products that don’t quite capture the public imagination – it’s a calculated risk which can be absorbed by greater profit margins and the success of other areas of their businesses. Those on the first or second rung of the ladder don’t have that luxury, so have to find other ways to break into the market without taking an unacceptable financial risk.

This is something we have seen at Air Products through our work with SMEs recently: there is a genuine desire and excitement to break into a growing market but an understandable reticence to invest heavily in the short to medium term. As well as seeking expert advice on the benefits gas can provide to extend shelf life, companies come to us to find equipment which facilitates the freezing or chilling of their products in the most efficient way, seeking to use cryogenics to bring increased flexibility compared with blast or mechanical freezers. However, start-ups and SMEs either can’t afford or justify the risk of paying for them outright – particularly amidst such an uncertain landscape. Having said that, without them they can’t ramp up operations quickly enough to expand and flourish.

One solution is a rental business model, which can make the difference between smaller businesses being able to invest or having to step back. Renting offers flexibility and gives a more manageable way for them to stay in the game as they look to find a way to compete with the bigger players. Crucially, it does so while reducing the financial risk of taking that step.

Whether it’s plant-based food or any other new trend, smaller companies face an uphill battle to compete with established sector businesses as they try to carve out a living for themselves. However, the rental model for capital equipment is just one example which can be used to illustrate a wider point – that it is possible for these companies to take advantage of new trends without risking their futures. The key lies in flexibility – being able to ramp operations up and down according to how busy they are. This flexibility should be central to the business model of anyone trying to gain a foothold in the food manufacturing industry. Those who can use it to navigate peaks, troughs and even pandemics will stand the best chance of finding their big break.

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Food and Drink Technology