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Mock meat makers set their sights on Australia

New Zealand's Sunfed Meats woos poultry-lovers with Chicken Free Chicken

At A$10 for a 300-gram package, Sunfed's Chicken Free Chicken sells for considerably more than actual chicken. (Photo by Geoff Hiscock)

SYDNEY -- New Zealand's Sunfed Meats made its international debut when it began selling its "Chicken Free Chicken" in Australia, following U.S. rival Beyond Meat into one of the world's most carnivorous countries.

Sunfed founder Shama Sukul Lee is confident that the move is just a first step for the Auckland-based imitation meat maker, which eventually plans to expand across Asia.

Global meat consumption grew 58% over 20 years to reach 360 million tons in 2018, according to a forecast by the OECD. That growth, however, has sparked concerns about the safety and sustainability of animal farming -- particularly in China, where a swine fever epidemic has decimated herds.

Such concerns, Lee believes, will give Sunfed an advantage in wooing consumers.

"Meat is the new tobacco, the new fossil fuel of the food world," she told the Nikkei Asian Review. "It is a risky business and for too long, all we've been doing around the world is to scale up and exploit our resources. ... At Sunfed, we don't want to be a new problem. We are a regenerative protein company, using pulses like yellow peas that are environmentally sustainable, enrich the soil and have a minimal water footprint."

Lee, a former software engineer, set up Sunfed with her husband Hayden Lee in 2015, and in 2016 secured seed capital from U.S. and U.K. investors to commercialize their protein product in New Zealand.

Sunfed Meats CEO Shama Sukul Lee says her plant-based protein product represents the "next generation" of food. (Photo courtesy of Sunfed Meats)

Sunfed raised 10 million New Zealand dollars ($6.7 million) last November in a fundraising round led by Sydney-based Blackbird Ventures. This enabled the company to expand to Australia in June, when it began selling Chicken Free Chicken in Coles supermarkets across the country.

The Lees now hold a 58% stake, while Blackbird has 11%. Other backers include Australian angel investor Chris Hadley, New Zealand retailer and "green" investor Sir Stephen Tindall's K1W1 Fund and the New Zealand government's Venture Investment Fund.

Imitation meat is still a tiny fraction of the size of the conventional meat industry, which is worth $1.4 trillion globally. The market for plant-based meat substitutes was worth just $4.2 billion in 2017, according to a recent report by Portland, Oregon-based Allied Market Research, though that figure is expected to grow to $7.5 billion by 2025, with the fastest growth -- about 7% annually -- to come from Asia.

Lee says Sunfed's foray into Australia has been encouraging.

"Consumer reaction has been really good. Demand has surpassed our projections and is mimicking what happened in New Zealand." The company launched Chicken Free Chicken in its home market in July 2017.

A Coles spokesperson said its range of chilled health foods had registered double-digit growth in the past year and that customers were "delighted" to see more meat-alternative products on its shelves.

Still, price may be an issue for some shoppers. Sunfed's 300-gram "chicken" pack sells for A$10, or about A$33 per kilogram. A fresh chicken sells in the same supermarket for A$8 a kilogram.

Lee, however, says she is not concerned about the price differential. "Our chicken product goes further -- it has double the protein, so that in terms of bang for your buck, it does pack quite a punch."

Lee is also optimistic about Sunfed's future expansion in Asia, noting that New Zealand and Australia enjoy a high level of trust in the region for producing safe, clean food. "We have spent the last four years building our technology. We use a clean water process with no chemicals, and we have designed our infrastructure so that we can scale up rapidly," she said.

Scaling up will help address the price issue, Lee added, saying it is only a matter of time before Sunfed's product is cheaper than chicken. "Our plant-based protein product is fundamentally more cost-efficient and is continually getting better. We are inherently more competitive" than animal protein.

Beyond Meat, which sells its made-from-peas Beyond Burger in Coles supermarkets, is also making inroads in Australia's high-value food market.

U.S.-based Beyond Meat brought its pea-based Beyond Burger to Australian supermarkets late last year. (Photo by Geoff Hiscock)

Like Sunfed, the U.S. company is bullish on the outlook for its plant-based burger patties, ground meat and sausages, particularly in Asia. Chief financial officer Mark Nelson told analysts last month that Beyond Meat will aggressively target Asia, a market he said has a "desperate need" for its products.

Australia is one of the most meat-hungry countries in the world -- per capita consumption in 2018 topped 100 kg, according to a recent OECD forecast -- but it also has a growing number of consumers willing to try alternatives.

According to research firm Roy Morgan, 14% of Australians are "metrotechs" -- young, culturally diverse urbanites with a high level of social awareness -- and nearly a fifth of those embrace vegan and vegetarian food. This makes Australia an ideal testing ground for plant-based food makers to fine-tune their products before launching in Asian megamarkets such as China, India and Indonesia.

As consumer demand for plant-based meat alternatives grows, U.S.-based nonprofit Good Food Institute says the next opportunity is in building supply chains and lifting production capacity. The institute's food service analyst Zak Weston said recently, "Over and over again, from producers to investors, what we're hearing is that production capacity is where the real need is."

Scaling up production will be a big challenge. The institute estimates that plant-based meat is just 1% of the U.S. meat market, and about a tenth of a percent of the global market.

Lee is undeterred. She says Sunfed can be financially viable not only in developed countries but also in low-income, high-population parts of the world. "We represent the next generation of food," she said.

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