Vegan rise squeezes meat, dairy sectors

Vegan foods are emerging as a future headwind to the dairy and meat sectors.

Industry research company IBISWorld found sales of vegan food products increased in Australia over the past five years.

Vegan food products are increasing in popularity in Australia, emerging as a future headwind to local dairy and meat sectors, but domestic pressures are being offset by export opportunities.

Industry research company IBISWorld found sales of vegan food products increased in Australia over the past five years and the number of people following a vegan diet was expected to keep rising over the next five.

The research company argued the increased interest in vegan food products could represent a threat to local demand for Australian meat and dairy, which was already affected by high domestic prices. But despite this local threat, the overseas demand for Australian meat and dairy products continued to drive exports.

IBISWorld said Australia’s pristine environment and reputation as a producer of high-quality food products had boosted exports of meat and dairy products over the past five years.

James Caldwell, senior industry analyst at IBISWorld, said the Australian meat processing industry generated more than 60 per cent of its revenue from overseas and he expected that share to rise over the next five years.

“With the focus on exports, they are driving the domestic price up and reducing their domestic base,” he said. Mr Caldwell, however, warned the risk for the meat and dairy industry was it could become over-reliant on exports, particularly to countries like China.

“The Chinese government has shown they are not above cutting you off to make a political point, so that is the real risk for these industries,” he said.

Mr Caldwell said the quality of vegan products was increasing quickly to match the demand.

“Unilever recently launched a plant-based alternative to its Magnum ice-cream products and popular food chains Hungry Jacks, Schnitz and Grill’d have all recently added plant-based options to their menus, in an attempt to take advantage of rising demand,” Mr Caldwell said, adding that food-based innovations had allowed manufacturers to produce plant-based foods that mimicked the taste and texture of meat products.

“Eric Schmidt, the director of Alphabet, Google’s parent company, recently listed plant-based proteins as the most important trend in the technology industry, ahead of self-driving cars and 3D printing,” Mr Caldwell said.

An increasing concern among Australians about their impact on the environment was behind the increase in demand for plant-based products, according to IBISWorld analysts, along with health awareness.