If dairy is the new beef, where do the alts fit?
Prime Future 66: the newsletter for innovators in livestock, meat, and dairy
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Move over hippies and hipsters, man buns and punk rock. The new counter culture move is….drinking milk?
“I traveled around Europe this summer. I drank icy frappes on the beaches of Greece and stirred foamy café au lait at the bistros of Paris. I was in a simpler, more sensible world, one without an alt mylk or nondairy creamer in sight. The real international delight, I realized, is pouring whole, full-dairy milk into your coffee; it is perhaps the most civilized activity in which a person can partake.”
….her answer edged on spiritual fulfillment. “There’s this quest for absolution in the foods we eat,” she said. “I think consumers were fed this lie by what I call the Goop Industrial Complex that if you cut dairy from your diet you will have more energy, clearer skin, and you will never ever fart ever again. But the case against dairy ignores many of the complexities of our food system, and I think people are starting to realize that.”
Now set that against this other recent headline:
When I hear people talking about the ultimate demise of animal protein as we know it, I assume it’s either an alternative protein investor who has capital on the line, or someone who wants to be seen as a forward thinker, even in the industry. It sounds more futurist to describe a future without plant fed animal protein than it is to say “I think there’s a market for plant based or cell cultured protein but not necessarily at the expense of plant fed protein.” It sounds more contrarian to say “livestock production will end in 10 years” than it is to say here are the markets where alternative protein is likely to take share but here’s where it’s unlikely to gain traction.
There’s little reward for a nuanced position in most conversations right now though…
Consider this quote by Jeff Bezos:
"I very frequently get the question: “What’s going to change in the next 10 years?” That’s a very interesting question.
I almost never get the question: “What’s not going to change in the next 10 years?” And I submit to you that that second question is actually the more important of the two.
You can build a business strategy around the things that are stable in time. In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff I love Amazon, I just wish the prices were a little higher.” Or, “I love Amazon, I just wish you’d deliver a little slower.” Impossible.
So we know the energy we put into these things today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it."
How great is that?
That framing is likely to generate the richness of a whole lotta nuance, the tension of simultaneously asking what will change and what will remain the same. And when it comes to the impact of alternative proteins in milk or meat, it’s largely TBD.
How do alternative milks & alternative meats fit with our ‘beef on dairy’ series?
Kinda like this:
This is obviously a wildly oversimplified drawing of wildly complex markets. Pricing for beef, pork, chicken, eggs, and milk have always been dynamic. These are competitive, commodity driven markets with so many interdependencies with macro factors and grain markets and processing capacity and export markets, and, and.
Alternative milks have captured up to 16% market share, depending on who you ask. Does that impact dairy milk prices? You betcha. Now what happens if something similar happens in meat over the next 3-10 years, will it impact meat prices? You betcha. I put a square around both of them above because they are x factors moving forwards, unknowns…let’s ignore those who speak with certainty about the future (in either direction) and assume the impact will fall somewhere between ‘zero’ and ‘destruction’.
Market share for alternative milk has been a driver of milk prices, and market share for alternative meat could become a driver of meat prices…but what if market share for alternative milk becomes an indirect driver of meat prices and market share of alternative meat becomes an indirect driver of milk prices. 🤯
What is the increasing link between beef and dairy? The increasing supply of beef-dairy crosses flowing from dairy producers into the beef value chain.
I suppose the potential mega trend is that protein markets could get even messier with more x factors:
What happens to beef prices when a rancher generates more revenue selling carbon credits than selling weaned calves?
What happens to infrastructure heavy industries with super high asset specificity when the fickleness of consumer fads bears down in unpredictable ways?
What happens to dairy profitability when plant based ground chicken gets traction?
What happens to the broader animal protein industry when the ethanol mandate disappears? increases?
What happens to cattle feeder profitability when plant based milk loses market share?
I think I’m with Bezos:
It’s important to ask what will change in 10 years; it’s critical to ask what will stay the same.
Kick this to the nuanced thinkers in your network to see what they’d add to this discussion:
ICYM the ‘beef on dairy’ series so far
If dairy is the new beef, are cow-calf producers necessary? (link)
If dairy is the new beef, what are the dairy drivers? (link)
💡3 reasons why dairy is the new beef (link)
I’m interested in all things technology, innovation, and every link in the animal protein value chain. I grew up on a farm in Arizona, spent my early career with Elanco, Cargill, & McDonald’s before moving into the world of early stage Agtech startups.
I’m currently on the Merck Animal Health Ventures team. Prime Future is where I learn out loud. It represents my personal views only, which are subject to change…’strong convictions, loosely held’.
Thanks for being here,
Janette Barnard