Pricing has become a significant pain point for plant-based meat alternatives in light of the cost of living crisis over the past year.
Localised production and ingredient sourcing are potential pathways for plant-based protein companies to rationalise product costs. Moving forward, price parity will be a crucial factor in promoting the growth of the Malaysian meat substitutes market, which is set to expand at a value compound annual growth rate (CAGR) of 7.4 percent from 2023 to 2027, according to GlobalData.
Bobby Verghese, Consumer Analyst at GlobalData, said that plant-based proteins had gained considerable momentum in Malaysia in recent years, propelled by an influx of new brands and product launches. The increasing availability of these products in online and offline stores and through food service venues has encouraged Malaysians to experiment with such products.
Among meat substitute categories, soy-based products accounted for Malaysia's largest value sales share in 2022. This is partly due to the high consumer acceptance of soy products in Malaysia, as soy is a staple in the local cuisine. However, according to GlobalData, grain-based meat substitutes will gain the highest traction through 2023, underpinned by product innovation with this ingredient.
Tim Hill, Key Account Director at GlobalData Singapore, said that GlobalData's latest consumer survey indicated that health, ethicality, eco-friendliness, flavour, appearance, price, and accessibility were the critical success factors for growing the plant-based meat substitutes category in Malaysia.
In GlobalData's first quarter 2023 survey, 59 percent of Malaysian respondents said they were motivated to try plant-based food alternatives as they think these products are healthier. An additional 46 percent said they were motivated to do so as these alternatives are more environmentally friendly or sustainable. However, only 30 percent of respondents felt that plant-based food alternatives are generally cheaper than animal-based food.
Verghese added that price had gained more importance over the last year, with more cost-conscious shoppers opting for cheaper animal-derived meat, milk, eggs, and seafood over plant-based alternatives. This escalated pressure on manufacturers to look for new avenues for rationalising costs.
"Even as inflation cools, they will continue to strive to attain price parity between animal meat and plant-based substitutes. Localising production close to major demand hubs and sourcing more key ingredients from domestic farms is one method more alternative protein makers are exploring for cost reduction," said Verghese.
He continued that using fresh and authentic ingredients can healthify and localise products. Localisation could significantly cut fuel costs and carbon emissions, thereby elevating the product's sustainability aspect. Manufacturers in Malaysia can leverage locally cultivated crops such as jackfruit, durian, bamboo, rice, pineapple, and banana to substitute soy protein, which is primarily imported.
Alternatively, Hill said that instead of focusing on price parity with meat, plant-based meat substitute producers could focus on delivering more value for money with a superfecta of nutrition, taste, sustainability, and localisation.
"Though it is a daunting challenge for research and development teams, developing less processed products with more natural ingredients can also be a great way to add more value to the product," said Hill.
These factors can help plant-based meat substitutes grow beyond the niche consumer base of vegetarians, vegans, and flexitarians to the broader mass-retail market. As a result, production volumes would increase, and with a greater economic scale and influence, the prices of plant-based proteins would progressively decrease.